JOY P CHUNGATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE matter arises under the IT Act, 1961 (for short 'the Act'). The appellant is a doctor by profession and is an assessee to income-tax under the Act. The assessment year concerned is 1992-93. For the said assessment year the assessee filed return on 23rd June, 1992 disclosing an income of Rs. 62,020 including capital gain of Rs. 3,500. The return was processed under S. 143(1) (a). Subsequently a notice under S. 143(2) was issued and the assessment was completed under s. 143(3) on 28th Aug., 1995, fixing the total income at Rs. 1,31,020 including long-term capital gain of Rs. 72,500 after allowing deduction under S. 48(2) of the Act. While computing the capital gain the assessee claimed to have received from his former tenants during the year under consideration a sum of Rs. 1,50,000 and this was shown as an additional compensation on the sale of property effected as per document No. 1488/90, dt. 19th Oct., 1990. The CIT, on perusal of the records, formed the opinion that treating this sum of Rs. 1,50,000 as additional compensation by the AO was erroneous and prejudicial to the interests of the Revenue. He accordingly set aside the assessment by invoking the provisions of S. 263 of the Act by order dt. 24th Aug., 1995, and directed the AO to redo the assessment in accordance with law. Pursuant to the order of the CIT the AO issued notice to the appellant requesting him to furnish the names and addresses of the tenants who had paid Rs. 1,50,000 as compensation for not evicting them from the property purchased. The appellant by letter dt. 28th Sept., 1995, furnished the names and addresses of the tenants from whom the said amount was stated to have been received. The AO thereafter issued notice to all the tenants calling for the details of the payment. However, the said notices were returned with the postal endorsement addressee expired. The AO thereafter noticed that the assessee had sold 14.95 cents of land and shop room thereon as per document No. 1488/1990, dt. 19th Oct., 1990, to his brother Sri Baby Chungath for a consideration of Rs. 1,50,000 and that the assessee in his return admitted a long-term capital gain of Rs. 12,200 in respect of the property sold which was accepted by the AO while processing the return under S. 143(1)(a) and the refund of Rs. 7,142 claimed was granted. The assessee had taken a stand in the return filed on 23rd June, 1992, that the balance portion of the property was also sold on 15th May, 1991, for Rs. 1,50,000 during this period. Subsequently the assessee by letter dt. 27th March, 1995, admitted that it was a mistake to mention a separate sale but in fact, the amount of Rs. 1,50,000 received from the tenants represented compensation for not evicting them. The AO took the view that the assessee's contention regarding compensation cannot be accepted as true and correct since the letters issued to the tenants from whom the assessee is stated to have received the said sum were returned unserved. The AO also noted that in the registered document of sale it was specifically stipulated that any further dealings by the tenants was to be with the purchaser and not with the assessee and also the fact that the document does not mention anything about any liability to be discharged by the tenants in favour of the assessee subsequent to the disposal of the property in 1990. It was in those circumstances the AO took the view that a sum of Rs. 1,50,000 deposited by the assessee in the Canara Bank on 3rd June, 1991, has to be treated as assessee's income from other sources.

(2.) BEFORE the first appellate authority the assessee had produced confirmation letters said to have been received from 4 persons by name Sri P.I. Mathu, Sri T.V. Chackochan, Sri P.T. Uthuppooru and Mrs. C.V. Kunhitty on 16th May, 1991, 19th May, 1991, 16th May, 1991 and 19th May, 1991, respectively. The first appellate authority, on the basis of the said confirmation letters, took the view that there was no explanation for the cash credits is not correct and accordingly the addition made amounting to Rs. 1,50,000 was deleted and allowed the appeal filed by the appellant. The Department took up the matter in appeal before the Tribunal. The Tribunal after considering the aforesaid facts and circumstances observed that if these confirmatory letters issued by the tenants in May, 1991 were actually available the assessee should have produced the same before the AO at the time of assessment itself. The Tribunal also observed that there is considerable force in the reasoning of the AO that in the document No. 1488/1990, dt. 19th Oct., 1990, it is specifically mentioned that all the future dealings by the tenants in respect of the shop rooms sold should be done with the new landlord directly and not with the assessee in the instant case. The Tribunal accordingly set aside the order of the first appellate authority and restored the order of the assessing authority.

(3.) SRI . P.K.R. Menon, learned senior standing counsel for Taxes appearing for the respondent submits that the Tribunal was perfectly justified in setting aside the order of the first appellate authority and in restoring the assessment order on the facts of the case and that no question of law much less any substantial question of law does arise from the order of the Tribunal.