Shri K.C.Palanisamy, Coimbatore V. ACIT, Coimbatore

ITA 1066/CHNY/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4919 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Reasonable cause
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NOS. 1065 & 1066/MDS/2009 ASSESSMENT YEARS : 2003-04 & 2005-06 SHRI K.C. PALANISAMY, 78, CHERAN TOWERS, GOVT. ARTS COLLEGE ROAD, COIMBATORE 641 018. PAN : AFEPP8162K (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER BENCH : THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST O RDERS DATED 16.3.2009 OF COMMISSIONER OF INCOME TAX (APPEALS)-I , COIMBATORE, CONFIRMING THE DISALLOWANCE OF A PART OF AGRICULTUR E INCOME MADE BY THE ASSESSING OFFICER. THE A.O. HAD TREATED THE DI SALLOWED PART OF AGRICULTURE INCOME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF INCOME-TAX RULES, 1962 (IN SHORT THE ACT). I.T.A. NOS. 1065 & 1066/MDS/09 2 2. THE APPEALS ARE DELAYED BY 30 DAYS. ASSESSEE HA S FILED CONDONATION PETITION FOR BELATED FILING OF APPEALS. WE ARE SATISFIED THAT REASONABLE CAUSE HAS BEEN SHOWN IN THE SAID PE TITION FILED BY THE ASSESSEE. HENCE, WE CONDONE THE DELAY AND ADMIT TH E APPEALS OF THE ASSESSEE. 3. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD DECLAR ED AN AGRICULTURE INCOME OF ` 22.92 LAKHS FOR ASSESSMENT YEAR 2003-04 AND ` 24.87 LAKHS FOR ASSESSMENT YEAR 2005-06. ASSESSEE WAS A DIRECTOR OF ONE M/S CHERAN HOSPITALS LIMITED AND AL SO ONE M/S SMS TEXTILE MILLS LIMITED. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, ASSESSEE WAS REQUIRED TO GIVE DETAILS REGARDING AGR ICULTURE INCOME AND EXPENDITURE INCURRED IN RELATION THERETO. ASSE SSEE WAS ALSO REQUIRED TO SUBSTANTIATE THE AGRICULTURE INCOME THR OUGH PROPER DOCUMENTS. ASSESSEE IN ITS REPLY STATED THAT HE WA S OWNING 16.95 ACRES AND HAD LEASED ANOTHER 32.27 ACRES LAND FROM 11 PERSONS DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2003-04. FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005- 06, CLAIM OF THE ASSESSEE WAS THAT HE HAD LEASED 7.16 ACRES FROM M/S SMS TEXTILE I.T.A. NOS. 1065 & 1066/MDS/09 3 MILLS LTD., 13.79 ACRES FROM M/S CHERAN HOSPITALS L TD. AND 29.10 ACRES FROM TEN OTHER PERSONS. AS PER THE ASSESSEE, THE AGRICULTURE INCOME SHOWN FOR ASSESSMENT YEAR 2003-04 WAS THUS F ROM 49.22 ACRES AND FOR ASSESSMENT YEAR 2005-06 WAS FROM 67 A CRES. GROSS AGRICULTURE INCOME SHOWN BY THE ASSESSEE FOR ASSESS MENT YEAR 2003-04 WAS 38.21 LAKHS AGAINST WHICH EXPENSES SHOW N WAS ` 15.29 LAKHS RESULTING IN THE RETURNED AGRICULTURE INCOME OF ` 22.92 LAKHS. FOR ASSESSMENT YEAR 2005-06, THESE FIGURES WERE 45. 22 LAKHS, 20.35 LAKHS AND ` 24.87 LAKHS RESPECTIVELY. ASSESSEE SUBMITTED BEFO RE THE ASSESSING OFFICER THAT HE WAS NOT HAVING ANY DETAIL ED ACCOUNTS FOR AGRICULTURAL ACTIVITIES AND INCOME WAS DETERMINED O N ESTIMATE. ASSESSING OFFICER NOTING THAT THE LAND WAS SITUATED AT EKKATAMPALAYAM VILLAGE, PERUNDURAI TALUK, ERODE DIS TRICT, MADE ENQUIRIES WITH TAHSILDAR, OF PERUNDURAI TALUK AND A LSO SECURED CERTAIN RECORDS FROM THE AGRICULTURE DEPARTMENT OF THE GOVERNMENT WITH REGARD TO THE NATURE OF CROP CULTIVATION AND A VERAGE YIELD THAT WAS POSSIBLE FROM SUCH LAND. BASED ON THE COPIES O F CHITTA AND ADANGAL OBTAINED FROM THE TAHSILDAR AND ALSO ON DAT A COLLECTED FROM OFFICE OF JOINT DIRECTOR, AGRICULTURE DEPARTMENT, C OIMBATORE, HE CAME I.T.A. NOS. 1065 & 1066/MDS/09 4 TO A CONCLUSION THAT THE AGRICULTURE INCOME OF THE ASSESSEE COULD NOT HAVE BEEN MORE THAN ` 2,89,565/- FOR ASSESSMENT YEAR 2003-04 AND ` 6,75,628.- FOR ASSESSMENT YEAR 2005-06. ACCORDING TO A.O., DURING THE RELEVANT PREVIOUS YEARS, THERE WAS SEVERE DROUG HT IN THE AREA CULTIVATED BY THE ASSESSEE AND THE LANDS IN ERODE D ISTRICT WERE NOT AS FERTILE AS LANDS IN COIMBATORE DISTRICT. A.O., FOR THE PURPOSE OF DETERMINING THE AGRICULTURE INCOME, TOOK 80% OF OFF ICIAL YIELD VALUE THAT HE OBTAINED FROM THE GOVERNMENT. THE ASSESSEE DID OBJECT TO THE BASIS OF ESTIMATE MADE BY THE A.O. SINCE, ACCOR DING TO ASSESSEE, THE A.O. HAD APPLIED THE ESTIMATES OF AGRICULTURE I NCOME MADE BY THE AGRICULTURE DEPARTMENT ON A NATIONAL LEVEL AND THIS DID NOT TAKE INTO ACCOUNT THE KNOWLEDGE AND FACILITIES AVAILABLE IN T HE LANDS CULTIVATED BY THE ASSESSEE. HOWEVER, THE A.O. WAS NOT IMPRESS ED. AS PER THE A.O., ASSESSEE HAD NOT SUBMITTED ANY BOOKS OF ACCOU NTS TO SUBSTANTIATE THE AGRICULTURE INCOME SHOWN. THUS, H E DETERMINED THE AGRICULTURE INCOME FOR ASSESSMENT YEAR 2003-04 AT ` 2,89,565/- AND FOR ASSESSMENT YEAR 2005-06 AT ` 6,75,628/-. THE BALANCE OF AGRICULTURE INCOME WAS CONSIDERED FOR ADDITION UNDE R SECTION 68 OF THE ACT. I.T.A. NOS. 1065 & 1066/MDS/09 5 4. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT CHITTA AND ADANGAL WERE AVAILABLE AND THE ASSESSING OFFICER OUGHT NOT HAVE TREATED SUBSTANTIAL PART OF RETURNED AGRICULTURE INCOME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. HOWEVER, LD. CIT(APPEALS) WAS NOT IMPRESSED. ACCORDING TO HIM, ASSESSEE HAD FAILED TO FURNISH BILLS AND VOUCHERS FOR SALE OF AG RICULTURAL PRODUCE AND DETAILS OF AGRICULTURE LANDS HELD BY HIM. FURTHER, AS PER LD. CIT(APPEALS), ASSESSEE HAD GONE BY ESTIMATES, WHERE AS THE ASSESSING OFFICER HAD BASED HIMSELF ON RECORDS PROC URED FROM GOVERNMENT FOR DETERMINING AGRICULTURE INCOME AND H AD ALSO CONSIDERED THE SITUATION OF THE LAND. HE, THEREFOR E, SUSTAINED THE DISALLOWANCE ON AGRICULTURE INCOME AND THE ADDITION S MADE FOR THE RESPECTIVE ASSESSMENT YEARS. 5. NOW BEFORE US, LEARNED A.R., ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT THE AREA OF LAND HELD BY THE ASSESSEE, VIZ. 49.22 ACRES FOR PREVIOUS YEAR RELEVANT TO ASSE SSMENT YEAR 2003- 04 AND 67 ACRES FOR PREVIOUS YEAR RELEVANT TO ASSES SMENT YEAR 2005- 06 WAS NEVER DISPUTED. ACCORDING TO HIM, THE A.O. HAD GONE BY THE I.T.A. NOS. 1065 & 1066/MDS/09 6 RECORDS PROCURED FROM AGRICULTURE DEPARTMENT RELATI NG TO LAND SITUATED IN COIMBATORE DISTRICT AND APPLIED SUCH DA TA OVER THE LAND OF THE ASSESSEE WHICH WERE SITUATED IN ERODE DISTRICT. AS PER LEARNED A.R., THOUGH THE ASSESSEE HAD NOT MAINTAINED REGULA R BOOKS OF ACCOUNTS, THE AREA OF LAND AND TYPE OF CROPS CULTIV ATED BY THE ASSESSEE, WENT TO SHOW THAT THE AGRICULTURE INCOME RETURNED WAS NOT EXCESSIVE OR UNREASONABLE. 6. PER CONTRA, LEARNED D.R. SUBMITTED THAT THE A.O. AND CIT(APPEALS) HAD CLEARLY NOTED ASSESSEES FAILURE T O PRODUCE ANY RECORDS IN RESPECT OF HIS CLAIM OF AGRICULTURE INCO ME. ACCORDING TO HIM, THEREFORE, THE RELIANCE PLACED BY THE A.O. ON RECORDS PROCURED FROM THE AGRICULTURE DEPARTMENT OF GOVERNMENT COULD NOT BE FAULTED. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. ASSESSEE WAS OWNING 16.95 ACRES OF LAND, THIS IS NO T IN DISPUTE. SUCH LAND WAS SITUATED AT ERODE DISTRICT IN EKKATAM PALAYAM VILLAGE, PERUNDURAI TALUK. THIS IS ALSO NOT DISPUTED. FOR 32.27 ACRES HAD BEEN OBTAINED BY THE ASSESSEE FROM 11 PERSONS IN TH E PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2003-04, ASSESSEE HAD S UBMITTED I.T.A. NOS. 1065 & 1066/MDS/09 7 UNREGISTERED LEASE DEEDS BEFORE THE A.O. AND THIS I S CLEARLY MENTIONED BY THE A.O. AT PARA 5 OF HIS ORDER. SIMI LARLY, FOR 7.16 ACRES LEASED FROM M/S SMS TEXTILE MILLS LIMITED, 13.79 AC RES LEASED FROM M/S CHERAN HOSPITALS LIMITED AND 29.10 ACRES LEASED FROM 10 PERSONS IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, ALSO, ASSESSEE HAD PRODUCED BEFORE THE A.O. THE LEA SE DEEDS CONCERNED. IN THE CASE OF TWO COMPANIES MENTIONED ABOVE, ASSESSEE ALSO PRODUCED CONFIRMATIONS BEFORE THE A.O . THESE FACTS ARE ALSO MENTIONED BY THE A.O. IN PARA 5 OF HIS ORD ER. IT IS TRUE THAT ASSESSEE HAD FAILED BEFORE THE A.O. TO PRODUCE ANY RECORDS REGARDING EARNING OF AGRICULTURE INCOME. NEVERTHEL ESS, THE ASSESSING OFFICER HAS NOT DENIED THAT ASSESSEE WAS CULTIVATIN G ONION, PADDY AND TURMERIC IN THE AREA OWNED BY AND KEPT UNDER LE ASE BY HIM. THE LEASE DEEDS PRODUCED BY THE ASSESSEE HAS NOT BEEN D OUBTED BY THE ASSESSING OFFICER NOR WERE THE CONCERNED LESSORS EX AMINED. ASSESSING OFFICER HAD GONE BY RECORDS PROCURED FROM JOINT DIRECTOR, AGRICULTURE DEPARTMENT, COIMBATORE, FOR FIXING THE AVERAGE YIELD FROM THE LAND CULTIVATED BY THE ASSESSEE. BUT, PARA 8 O F THE ASSESSMENT ORDER CLEARLY MENTIONS THAT THE DATA GIVEN BY THE A GRICULTURE I.T.A. NOS. 1065 & 1066/MDS/09 8 DEPARTMENT RELATED TO COIMBATORE DISTRICT, WHEREAS, THE LAND WHICH ASSESSEE HAD CULTIVATED WAS IN ERODE DISTRICT. NO DOUBT, THE ASSESSING OFFICER HAS MENTIONED THAT ERODE DISTRICT WAS NOT AS FERTILE AS COIMBATORE DISTRICT AND HENCE, HE WAS ADOPTING 8 0% OF THE YIELD THAT WOULD HAVE ARISEN IF THE LAND WAS SITUATED AT COIMBATORE DISTRICT, TO FIX AGRICULTURE INCOME OF THE ASSESSEE. IN OUR OPINION, THERE WERE SEVERAL ASSUMPTIONS TAKEN BY THE ASSESSING OFFICER IN FIXING SUCH AN AGRICULTURE INCOME. DATA OF ONE DISTRICT MAY NOT A LWAYS BE COMPARABLE WITH DATA OF ANOTHER DISTRICT AND TO COM E TO A CONCLUSION THAT ONE DISTRICT IS NOT FERTILE AS ANOTHER DISTRIC T, THERE HAS TO BE SOME CONCRETE REASONING. SIMILARLY, ESTIMATED YIELD OF CROPS PER ACRE GIVEN BY AGRICULTURE DEPARTMENT FOR ONE DISTRICT CANNOT B E POPULATED TO OTHER DISTRICTS. IF WE LOOK AT THE HOLDING OF THE ASSESSEE, THE AVERAGE PER ACRE AGRICULTURE INCOME SHOWN FOR ASSESSMENT YE AR 2003-04 CAME TO ` 46,567/- AND FOR ASSESSMENT YEAR 2005-06, IT CAME TO ` 37,119/-. AGAINST THIS, IF WE TAKE THE AMOUNTS FIX ED BY THE ASSESSING OFFICER, THE AGRICULTURE INCOME PER ACRE WOULD BE O NLY ` 5,883/- AND ` 10,084/- RESPECTIVELY. WE FEEL THAT BOTH THESE EST IMATES ARE ON TWO EXTREMES. IN OUR OPINION, ENDS OF JUSTICE WOULD BE MET IF THE I.T.A. NOS. 1065 & 1066/MDS/09 9 AGRICULTURE INCOME IS FIXED AT ` 15,000/- PER ACRE. HENCE, TO GIVE A QUIETUS TO THE ISSUE AT HAND, WE DIRECT THE A.O. TO FIX THE AGRICULTURE INCOME AT ` 15,000/- PER ACRE FOR THE CONCERNED YEARS. RESULT ANTLY, THE AGRICULTURE INCOME OF ASSESSEE FOR ASSESSMENT Y EAR 2003-04 HAS TO BE FIXED AT ` 7,38,300/- AND FOR THE ASSESSMENT YEAR 2005-06, IT WILL HAVE TO BE FIXED AT ` 10,05,000/-. DISALLOWANCE AND ADDITION MADE UNDER SECTION 68 OF THE ACT TO THIS EXTENT STAND DE LETED. BALANCE OF AGRICULTURE INCOME CLAIMED BY THE ASSESSEE CAN BE C ONSIDERED AS UNEXPLAINED INCOME AND BROUGHT TO TAX. ORDERED ACC ORDINGLY. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE ARE TREATED AS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 17 TH JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH JUNE, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-I, COIMBATORE / CIT-I, COIMBATORE/D.R./GUARD FILE