Sri N Mohd. Farooq, Hyderabad V. ACIT, Kurnool

ITA 1052/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59226 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 28-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: K A SAI PRASAD
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBE R. ITA NO.1051/HYD/2010 : ASSESSMENT YEAR 2001-02 ITA NO.1052/HYD/2010 : ASSESSMENT YEAR 2002-03 SHRI N. MOHD. FAROOQ, NANDYAL. (PAN - AAGPF 2155 F ) V/S ASST. COMMISSIONER OF INCOME - TAX CIRCLE-1, KURNOOL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.A.SAI PRASAD RESPONDENT BY : SHRI B.V.PRASAD REDDY DATE OF HEARING 9. 1.2012 DATE OF PRONOUNCEMENT 25.1.2012 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST SIMILAR BUT SEPARATE ORDERS OF THE CIT(A)-IV, HYDER ABAD DATED 25.5.2010 FOR THE ASSESSMENT YEARS 2001-02 AND 2002 -03. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1051/HYD/2010 : ASSESSMENT YEAR 2001-02 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPE AL ARE AS FOLLOWS- 1. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5 LAKH ( WHICH WAS SHOWN BY THE APPELLANT AS AGRICULTURAL INCOME) MADE BY THE ASSESSING OFFICER UNDER OTHER SOURCES, ESPECIALLY W HEN: (I) THE LEARNED ASSESSING OFFICER IN HIS REMAND REPORT CLEARLY CONFIRMED AFTER FURTHER ENQUIRIES, AS OBSERVED BY T HE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IN PARA 10 OF HIS ORDER, THAT THE BROTHERS OF THE APPELLANT, BY WAY OF SWORN DEPOSITIONS, HAD AGREED TO PAY AN AMOUNT OF R S.5 LAKHS IN LIEU OF THE 10 YEARS AGRICULTURAL INCOME A ND THAT THE ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 2 PAYMENT WAS NOT MADE SO FAR AND THE EXISTENCE OF THE AGRICULTURAL LAND AND INCOME THEREON WAS NOT DISPUT ED BY THE ASSESSING OFFICER; (II) THE APPELLANT HAD ADMITTED THE INCOME FROM AGRICULT URAL AT RS. 5 LAKH FOR RATE PURPOSE ONLY, BUT DID NOT INVEST/DEPOSIT/CREDIT THIS AMOUNT ANYWHERE. 2. FOR THE ABOVE, AND ANY OTHER GROUND OR GROUNDS T HAT MAY BE URGED DURING THE COURSE OF HEARING, THE APPELLANT P RAYS THAT THE HONBLE INCOME TAX APPELLATE TRIBUNAL BE PLEASED TO DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 5 LAKHS. THUS, THE ONLY DISPUTE INVOLVED IN THE ABOVE GROUND S OF THIS APPEAL RELATES TO AN ADDITION OF RS.5 LAKHS, MADE BY THE A SSESSING OFFICER AND CONFIRMED BY THE CIT(A), TREATING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED FOR THE ASSESSMENT YEAR 2001-02, AS INCOME FROM OTHER SOURCES. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE, AN EX- MINISTER IN THE GOVERNMENT OF ANDHRA PRADESH, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2001-02 ON 28.3.2002 , DECLARING TOTAL INCOME AT RS.70,601, BESIDES AGRICULTURAL INCOME OF RS.5 LAKHS. THE ASSESSMENT, WAS ULTIMATELY COMPLETED, VIDE ORDER OF ASSESSMENT DATED 27.12.2006 PASSED UNDER S.144 READ WITH S.14 7 OF THE ACT, ON A TOTAL INCOME OF RS.12,98,300, MAKING INTER-ALIA A N ADDITION OF RS.5,00,000, WHICH WAS MADE BY THE ASSESSING OFFICE R, TREATING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS INC OME FROM OTHER SOURCES, WITH THE FOLLOWING OBSERVATIONS- DESPITE CALLING FOR PROOF AND EVIDENCE, THE ASSESS EE DID NOT CHOOSE TO SUBSTANTIATE HIS CLAIM. HENCE, THE AMOUN T OF RS.5 LAKHS SHOWN IN THE RETURN IS TREATED AS NON-AGRICUL TURAL INCOME FROM UNEXPLAINED SOURCES, AS INTIMATED IN THE LETTE R DATED 15.12.2006, AND THE SAME IS BROUGHT TO TAX. 4. ON APPEAL, BEFORE THE CIT(A), THE ASSESSEE SUB MITTED THAT HE AND HIS BROTHERS HAD INHERITED SUBSTANTIAL AGRIC ULTURAL LANDS, OUT OF WHICH HIS SHARE WAS TO THE EXTENT OF 19 ACRES. THO UGH HIS BROTHER ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 3 TOOK CARE OF SUCH AGRICULTURAL LANDS AND CULTIVATED THE SAME, NO AGRICULTURAL INCOME WAS SHARED BY THEM WITH THE ASS ESSEE FOR THE LAST TEN YEARS, AND DURING THE PREVIOUS YEAR UNDER CONSI DERATION, THEY AGREED TO PAY A SUM OF RS.5 LAKHS, I.E. RS.50,000 P ER ANNUM TO THE ASSESSEE RELATING TO EARLIER TEN YEARS. IT WAS ALS O SUBMITTED THAT NO AMOUNT WAS PASSED ON AND PAID TO HIM. IT WAS ALSO SUBMITTED THAT IT WAS A MERE BOOK ENTRY AND THAT THE ASSESSEE HAS NOT INVESTED OR DEPOSITED ANYTHING FROM OUT OF SUCH RECEIPT. AN AF FIDAVIT IN CONFORMITY TO THE FACTS NARRATED ABOVE WAS FURNISHED, AND IT W AS ALSO AGITATED THAT THE PROVISIONS OF S.68 OR 69A ARE NOT APPLICAB LE IN RESPECT OF THIS AMOUNT, SINCE THE ASSESSEE DID NOT INVEST OR DEPOSI T ANYTHING FROM OUT OF THIS AMOUNT. THE CIT(A) WAS OF THE VIEW THAT THE SUBMISSIONS OF THE ASSESSEE BEFORE HIM CONSTITUTED ADDITIONAL EVI DENCE, AND AS SUCH CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER, VIDE HIS LETTER DATED 17.1.2008. IN RESPONSE, THE ASSESSING OFFICE R SUBMITTED HIS REMAND REPORT DATED 5.2.2008 COUNTERING THE SUBMISS IONS OF THE ASSESSEE AND REITERATING HIS STAND AND JUSTIFYING T HE ADDITION OF RS.5 LAKHS MADE, TREATING THE AGRICULTURAL INCOME DECLAR ED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. AFTER FORWARDING A C OPY OF THE REMAND REPORT OF THE ASSESSING OFFICER TO THE ASSESSEE, AN D CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THEREON, THE CIT(A) CON FIRMED THE ADDITION OF RS.5 LAKHS MADE BY THE ASSESSING OFFICE R. 5. AGGRIEVED, ASSESSEE PREFERRED THE PRESENT APPEA L BEFORE US. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE IMPUG NED ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE ALONGWITH HIS BRO THERS INHERITED LARGE EXTENT OF AGRICULTURAL LANDS, WHICH, INCLUDIN G THE EXTENT COMING TO THE SHARE OF THE ASSESSEE, HAVE BEEN CULTIVATED BY THE BROTHERS OF ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 4 THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT THOUGH HIS BROTHERS HAVE AGREED DURING THE YEAR UNDER CONSIDER ATION, TO PAY LUMP SUM CONSIDERATION IN LIEU OF THE AGRICULTURAL INCOM E DERIVED BY THEM BY CULTIVATING THE LAND FALLING TO THE SHARE OF THE AS SESSEE. IT IS QUANTIFYING THIS AMOUNT, THAT THE ASSESSEE HAS DECL ARED AGRICULTURAL INCOME OF RS.5,00,000 IN THE RETURN, FOR RATE PURPO SES ONLY. HOWEVER, DISBELIEVING THE ENTIRE AMOUNT OF AGRICULT URAL INCOME CLAIMED BY THE ASSESSEE AND THE VERSION OF THE ASSESSEE IN THAT BEHALF, THE ASSESSING OFFICER MADE ADDITION OF RS.5,00,000 AS I NCOME FROM OTHER SOURCES. THE CONTENTION OF THE ASSESSEE IS THAT TH OUGH THE BROTHERS AGREED TO PAY LUMP SUM CONSIDERATION FOR THE EARLIE R TEN YEARS, HE HAS NOT RECEIVED ANYTHING DURING THE YEAR UNDER CONSIDE RATION, AND WHAT WAS SHOWN AS AGRICULTURAL INCOME WAS MERE BOOK ENTR Y. DURING THE REMAND PROCEEDINGS, THE ASSESSING OFFICER DEPUTED H IS INSPECTOR TO MAKE NECESSARY ENQUIRIES WITH REGARD TO AGRICULTURA L INCOME. IN HIS REPORT, WHICH WAS ANNEXED TO THE REMAND REPORT OF T HE ASSESSING OFFICER, WHICH FURNISHED IN THE PAPER-BOOK FILED BY THE ASSESSEE, THE BROTHERS HAVE AGREED TO PAY RS.50,000 FOR THE LAST TEN YEARS. ACCORDING TO THE ASSESSEE, NOTHING WAS IN FACT RECE IVED, THOUGH LUMP SUM AMOUNT WAS AGREED TO BE PAID BY THE BROTHERS. ACCORDING TO THE DEPARTMENT, IT WAS THE ENTIRE AMOUNT OF RS.5 LAKHS WHICH WAS SHOWN BY THE ASSESSEE AS AGRICULTURAL INCOME, WHICH WAS L IABLE TO BE TREATED AS INCOME FROM OTHER SOURCES. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AND MORE PARTICULARLY, T HE REPORT OF THE INSPECTOR, WHO MADE LOCAL ENQUIRIES FROM THE BROTHE RS OF THE ASSESSEE, WE ARE OF THE VIEW THAT DISBELIEVING THE ENTIRE AMO UNT OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FIELD FOR THE YEAR UNDER APPEAL IS NOT JUSTIFIED. IN OUR CONSIDERED VIEW, I T WOULD BE FAIR AND PROPER TO TREAT AN AMOUNT OF RS.50,000 INCOME OF TH E ASSESSEE FROM AGRICULTURE. WE DO SO ACCORDINGLY, AND DIRECT THE A SSESSING OFFICER TO ACCEPT THE GENUINENESS OF THE ASSESSEES CLAIM AS T O THE AGRICULTURAL ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 5 INCOME ONLY TO THE EXTENT OF RS.50,000, OUT OF THE TOTAL AMOUNT OF RS.5,00,000 DECLARED BY THE ASSESSEE AS AGRICULTURA L INCOME. THUS, THE ASSESSEE GETS A RELIEF OF RS.50,000, WHICH IS A CCEPTED AS HIS SHARE OF AGRICULTURAL INCOME, AND THE BALANCE ADDITION OF RS.4,50,000 MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A ) IS UPHELD. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ITA NO.1052/HYD/2010 : ASSESSMENT YEAR 2002-03 8. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPE AL ARE AS FOLLOWS- 1. THE CIT(A) IS NOT JUSTIFIED IN REJECTING THE GROUN D IN REGARD TO CORRECTNESS OF THE INITIATION OF PROCEEDINGS U/S 14 7 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUST IFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DI SALLOWING THE AMOUNT OF RS.1,68,000 AS EXEMPTION U/S 10 3. THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE MULTI PLE GROSSING UP OF THE PERQUISITES RELATING TO TAX BORNE BY THE EMPLOYER 4. THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDIT ION OF RS.50,000/- WHICH WAS SHOWN BY THE ASSESSEE AS AGRI CULTURAL INCOME AS INCOME FROM OTHER SOURCES 5. FOR THE ABOVE, AND ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED DURING THE COURSE OF HEARING, THE ASSESSEE PR AYS THAT THE TRIBUNAL BE PLEASED TO DIRECT THE ASSESSING OFFICER (I) TO ALLOW THE EXEMPTION U/S 10 (II) NOT TO WORKED OUT MULTIPL E GROSSING UP OF PERQUISITE AND (III) TO DELETE THE ADDITION O F RS.50,000/-. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE LOWER AUTHORITIES. IT IS EVIDENT FROM THE ORDERS O F THE LOWER AUTHORITIES THAT THE ASSESSMENT WAS REOPENED AS THE ASSESSEE HA D CLAIMED EXEMPTION UNDER S.10 OF RS.1,68,000 IN THE RETURN O F INCOME. IN THE ABSENCE OF ANY EXPLANATION OR JUSTIFICATION FURNISH ED IN SUPPORT OF THE SAID CLAIM FOR EXEMPTION, ASSESSMENT WAS REOPENED. WE FIND NO ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 6 INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN THAT BEHALF AND THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE SAME. SIMILA RLY, WITH REGARD TO THE MERITS OF THE EXEMPTION CLAIMED UNDER S.10 OF T HE ACT, IT IS THE CASE OF THE ASSESSEE THAT SUCH CLAIMED WAS MADE BAS ED ON FORM 16 ISSUED TO HIM. THAT EXPLANATION OF THE ASSESSEE IS NOT TENABLE BECAUSE NOTWITHSTANDING THE COMPUTATIONS MADE IN FORM 16, I T IS INCUMBENT UPON THE ASSESSEE TO EXPLAIN THE SAME, AS THE FACT REMAINS THAT WHATEVER IS SHOWN THEREIN IS THE CLAIM OF THE ASSES SEE, WHICH REQUIRES TO BE SUBSTANTIATED. IN THIS VIEW OF THE MATTER A ND IN THE ABSENCE OF ANY EVIDENCE ADDUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM FOR EXEMPTION UNDER S.10 OF THE ACT, THE ASSESSING OFFI CER IN OUR VIEW IS JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.10 OF THE ACT, AND MAKING THE ADDITION OF RS.1,68 ,000. 10. AS FOR THE ACTION OF THE REVENUE AUTHORITIES IN TREATING THE AGRICULTURAL INCOME OF RS.50,000 DECLARED BY THE AS SESSEE IN THE RETURN AS INCOME FROM OTHER SOURCES, WE FIND THAT T HERE IS NO DISPUTE WITH REGARD TO LARGE EXTENT OF AGRICULTURAL LANDS I NHERITED BY THE ASSESSEE, WHICH HAVE BEEN CULTIVATED BY THE BROTHER S OF THE ASSESSEE, SHARING THE AGRICULTURAL INCOME WITH THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE DELETE THE ADDITION OF RS.50,000 MADE BY THE ASSESSING OFFICER IN THIS BEHALF. 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED. 12. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE AR E PARTLY ALLOWED. ITA NO.1051/HYD/2010 SHRI N. MOHD. FAROOQ, NANDYAL. 7 ORDER PRONOUNCED IN THE COURT ON 25.1.2012 SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 25TH JANUARY, 2012 COPY FORWARDED TO: 1. SHRI MOHD. FAROOQ, (NANDYAL) C/O. M/S. CH.PARTH ASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, STREET NO.1, ASHOKNAGAR, HYDERABAD 500 020. 2. ASST COMMISSIONER OF INCOME - TAX CIRCLE I, KURNOOL 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV , HYDERABAD 4. COMMISSIONER OF INCOME - TAX III HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S.