COMMISSIONER OF INCOM TAX Vs. T O ABRAHAM

JUDGEMENT

(1.) The only question raised in the five connected appeals filed by the Revenue is whether the Tribunal was justified in cancelling assessments on the respondent assessees made on unexplained investment under Section 69 of the Income-tax Act (hereinafter referred to as 'the Act' for short).

(2.) We have heard learned Standing Counsel appearing for the appellant Revenue and learned counsel appearing for the assessee, Shri. T.O. Abraham. Even though notice was served on this assessee's brother, Shri. T.O. Alias, he has not chosen to engage a counsel or appeared in Court. However, we do not think there is any need to keep ITA Nos. 97 & 99 of 2011 in which Shri. T.O. Alias is the respondent assessee, pending any longer because the issue involved is one and the same and the learned counsel appearing for the respondent assessee in the connected appeals exhaustively argued the matter.

(3.) The facts leading to the disputed assessment on the respondent assessees pertain to sale of 29.5 cents of land in a prime location on the side of M.G. Road, Ernakulam, Cochin city. The property was jointly owned by family members, the eldest of whom is one Shri. M. Gopinath, who is an educated man engaged in shipping business at Cochin. One of the joint owners happened to be a Non Resident Indian and unexplained Indian Rupees credited in his Bank account led to FERA enquiry. Before the Chief Enforcement Officer, Shri. M. Gopinath, the eldest member of the family who negotiated the sale of the property with the respondent assessees, and Shri. Jayakumar brother of Mr. Gopinath gave statements, which were recorded in their own handwriting to the effect that the above referred land belonging to their family were sold on a sale consideration of Rs. 16,00,000/-(Rupees sixteen lakhs only) per cent even though in the sale deeds the value declared is only Rs. 4,00,000/- (Rupees four lakhs only) per cent. Based on the statements recorded by the Chief Enforcement Officer, the Income Tax authorities issued notice to Shri. M. Gopinath, who wrote Annexure-C letter followed by Annexure-D to the Deputy Commissioner of Income Tax in his own letter head, which are produced in ITA No. 305/2010. In Annexure-C letter, Shri. Gopinath reiterates all what he has stated before the Chief Enforcement Officer that the land belonging to the family members was sold at an agreed price of Rs. 16,00,000 (Rupees sixteen lakhs only) per cent. However, in Annexure D letter, Shri. Gopinath expressed his fears that if the contents of Annexure C letter are leaked out, there may be problem for sale of the balance portion of the property. Admittedly, the property was sold in different pieces and under different documents and it may probably to suit the convenience of the parties to make payment in black and white. Shri. Gopinath has also furnished entire details of the deposits of sale consideration made by him in Bank accounts and he has filed return after paying advance tax of Rs. 7,60,000 (Rupees seven lakhs and sixty thousand only) for the income partly accounted as capital gains and partly as income from other sources. Other family members who sold the land clearly stated before the Income Tax Officer that Shri. Gopinath being the eldest member of the family negotiated for sale of the property and what he has stated are true facts. Based on the statements recorded by the Chief Enforcement Officer and the letter written by Shri. Gopinath to the Deputy Commissioner, assessment was initiated against the respondent assessees who are brothers who purchased the property in pieces from the sellers. However the respondent assessees denied payment of any amount towards the sales consideration over and above the sale price shown in the documents. The Income Tax Officer gave an opportunity to the respondents to cross-examine Shri. Gopinath and other sellers, and the respondents declined to avail the opportunity probably because by then they had coerced Shri. Gopinath to backtrack from his letters and statements by stating before the Income Tax Officer that the cash credited in his Bank accounts is income from other sources which are commission and other brokerage received by him from the shipping business, about which no detailed explanation was offered. The Income Tax Officer overruled the objection raised by the respondents and based on the evidence available in the form of written statements recorded by the Chief Enforcement Officer from two of the joint sellers and Annexure C letter written by Shri. Gopinath and corroborative evidence of credits in the joint account of Shri Gopinath and his wife and the return filed and payment of tax by Shri. Gopinath, assessments were made under Section 69 of the Act on the excess amount paid by the respondents over the value accounted in the sale deeds by the respondents in the purchase of property.