Amount given by Co-Purchaser for Services towards Arranging Sale is Income: ITAT confirms Income Tax Addition [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the amount given by the co-purchaser for service towards arranging sales is income.

The assessee filed the return of income in response to the notice under section 148 of the Income Tax Act, 1961 admitting a total income of Rs. 11,27,390/- and agricultural income of Rs.3,00,000/. The assessment under section 143(3) r.w.s.147 of the Income Tax Act was completed by Assessing Officer by making an addition of Rs.5,20,50,130/- and assessing the income at Rs. 5,27,33,455/-.

The assessee along with other 4 persons purchased 50.58 acres of land. The assessee organized all the purchases of land from 50 persons and negotiated for a total selling price for all of them. From the survey, it was found that the assessee got 148 Lacs from Mr. Nataraj Ganesh, one of the co-purchasers, who gave 70 Lacs by way of a demand draft to the assessee.

The Assessing Officer added Rs. 1.48 Crores as the income of the assessee under Section 68 of the Income Tax Act against which an appeal was filed before the Commissioner of Income Tax (Appeal) [CIT(A)] who allowed the appeal of the assessee.

The Authorized Representative reiterated the claim that Nataraj Ganesh gave the amount of Rs. 70,00,000/- to find another property for his investment.

The assessee made submissions before the Assessing Officer that, Mr. Nataraj Ganesh had paid Rs. 60 Lacs to Mr. Dhanpal. Mr. Dhanpal claimed before the Assessing Officer that the said amount of Rs. 60 Lacs is not his income, the same is held by him as the money in trust.

No enquiry or summons was received by the assessee on the sum of Rs. 70 Lacs and allowance of the said amount of Rs. 70 lakhs as an expenditure in the file of Nataraj Ganesh is a surprise to the assessee.

The two-bench member consisting of Manjunatha G (Accountant member) and Manomohan Das (Judicial member) held that the Commissioner of Income Tax (Appeal) has correctly decided the matter.

Nataraj Ganesh, the payer of the amount claimed that the amount of Rs. 70,00,000/- was paid to the assessee as the cost of the property. The claim of Nataraj Ganesh cannot be ignored as he was the payer of the money.

Thus, the appeal was decided against the assessee.

To Read the full text of the Order CLICK HERE

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