C K SUDHAKARAN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The appellant is a dealer in steel wares in Trichur under the name and style "Cherakulam Vessels". The assessee filed a return of income for the assessment year 1998-99 declaring a total income of Rs. 55,920 and agricultural income of Rs. 50,000. The return of income was accepted under Section 143(1) of the Income-tax Act. Since survey under Section 133A of the Act was carried out at the business premises of the assessee on September 8, 1997, the case was selected for scrutiny. During the course of survey under Section 133A an agreement dated May 12, 1997, executed between the promoters of City Centre Shopping Complex, Round West, Trichur, and the assessee was obtained. As per that agreement the assessee had agreed to purchase shop room No. 115 measuring 688.53 sq. ft. with proportionate common facilities in City Centre, Trichur, for a sum of Rs. 49,91,842. Further as per the agreement, the assessee had paid Rs. 12,50,000 being the token value at the time of executing the agreement and the remaining amount of Rs. 37,41,842 was to be paid in five monthly equal instalments of Rs. 6,65,000 starting from June 12, 1997, and the balance amount of Rs. 4,16,842 as the sixth and last instalment. The agreement also provided that if the second party fails to pay two consecutive instalments, the second party would lose their right to get possession of the shop room and the first party shall be at liberty to forfeit Rs. 2 lakhs being their loss from the amount paid by the second party and return back the balance, if any, without interest on completion of the work.

(2.) The assessing authority therefore noticed that the real value of investment made by the assessee in the construction/purchase of shop No. 115 admeasuring 688.53 sq. ft. with other common facilities in the City Centre was Rs. 49,91,842 as per the agreement dated May 12, 1997, and after giving credit to Rs. 12.5 lakhs admitted by the assessee and disclosed under the Voluntary Disclosure of Income Scheme the difference of Rs. 37,41,842 was taken as unexplained investment made by the assessee during the year and treated as income of the assessee for the assessment year 1998-99 under Section 69 of the Act. Aggrieved by the order of the assessing authority the assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals). The appeal was rejected. Consequently the matter was taken before the Tribunal and the Tribunal also rejected the appeal against which this appeal has been preferred.

(3.) Sri P. Balachandran, senior counsel appearing for the assessee, reiterated the contentions made by the assessee before the lower authorities. Reliance was also placed on the decision of the apex court in K. P. Varghese v. ITO and also on the decision of this Court in CIT v. Smt. K. C. Agnes . Counsel submitted that the Revenue has not discharged the burden of showing that the assessee had paid Rs. 49,91,842 for the shop No. 115. Sri P. K. R. Menon, senior counsel appearing for the Revenue, on the other hand, contended that there is clinching evidence in this case to show that the agreement dated May 12, 1997, was genuine and acted upon and therefore the Department is justified in treating the difference as income from unexplained source.