ACIT, Circle - 1, Nellore V. Ganipineni Prasada Rao, Nellore

ITA 1140/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59183 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: A V RAGHURAM
• Keywords: Difference of opinion
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1140/HYD/2011 ASSESSMENT YEAR 2007-08 THE ACIT, CIRCLE I, NELLORE VS M/S GONIPINENI PRASADA RAO, NELLORE (PAN ACVPG9050D) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DIWAKAR PRASAD RESPONDENT BY : SHRI A.V. RAGHURAM DATE OF HEARING : 10.1.2012 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL PREFERRED BY THE REVENUE IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A) V, GUNTUR DATED 13.4.2 011 AND PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE D ERIVING INCOME FROM HOUSE PROPERTY, LIQUOR BUSINESS AND CAP ITAL GAINS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ADMITTING TOTAL INCOME AT RS.8,75,720/- BESIDES AGR ICULTURAL INCOME OF RS.25,00,000. WHILE COMPLETING THE ASSES SMENT THE ACIT, NELLORE RANGE, NELLORE, HAS DISALLOWED THE AG RICULTURAL INCOME OF RS.4 LAKHS AND TREATED IT INCOME FROM OT HER SOURCES HOLDING THAT THE AS THE ASSESSEE COULD NOT PRODUCE EVIDENCE IN RESPECT OF AGRICULTURAL LAND HOLDINGS AND THE INCOM E GENERATED AND ADDED RS.9 LAKHS U/S 68 OF THE IT ACT, AS UNEXP LAINED CASH CREDITS, HOLDING THAT THE ASSESSEE COULD NOT ESTA BLISH THE ITA NO.1140 OF 2011 M/S GANIPINENI PRASAD RAO, NELLORE 2 2 GENUINENESS OF THE CREDITS AND DETERMINED THE TOTAL INCOME AT RS.21,75,720/- AND AGRICULTURAL INCOME AT RS.21,00, 000/- WHICH RESULTED IN A TAX DEMAND OF RS.5,88,536/-. S UBSEQUENTLY, THE AO I.E. THE ACIT, CIRCLE-1, NELLORE HAS INITIAT ED PENALTY PROCEEDINGS U/S 271 (1) (C ) OF THE ACT AND LEVI ED PENALTY OF RS.4,37,581/- FOR CONCEALMENT OF INCOME. 3. AGGRIEVED BY THE ORDER U/S 271(1) (C), THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. DURING THE APPELLATE PROCEEDINGS THE LEARNED AR SUBMITTED WRITTEN SUBMISSIONS. 1. THE JCIT MERELY ON DISBELIEF AND SUSPICION RESTRICT ED THE AGRICULTURE INCOME TO RS.21 LAKHS AGAINST THE INCOM E DECLARED AT RS.25 LAKHS AND TREATED SUM OF RS.4 LAK HS AS TAXABLE INCOME. 2. THE JCIT BASED ITS ESTIMATE SOLELY ON THE ASSESSMEN T YEAR 2006-07 DISREGARDING THE AGRICULTURE INCOME CERTIFI CATE FROM STATE REVENUE AUTHORITIES IN RESPECT OF NANDAVARAM AND MANGANALLORE LANDS. 3. THE ADDITION PERTAINING TO DISALLOWANCE OF PART OF UNSECURED CASH CREDITORS, A PRE ASSESSMENT SHOW CAU SE NOTICE WAS NOT ISSUED TO THE ASSESSEE CALLING FOR H IS EXPLANATION OR OBJECTION. 4. THE LEVY OF PENALTY U/S 271(1) ( C) IS ARBITRARY AN D EXCESSIVE AND THE ADDITIONS DID NOT CONSTITUTE CONC EALMENT OF INCOME BY THE ASSESSEE. 5. THE CIT(A) HELD THAT FROM THE RECORDS IT CAN BE SEEN THAT THE AGRICULTURAL INCOME RETURNED BY THE ASSESSEE WA S NOT BELIEVED BY THE AO AND ACCORDINGLY, PART OF THE SAM E WAS ITA NO.1140 OF 2011 M/S GANIPINENI PRASAD RAO, NELLORE 3 3 DISALLOWED AND ADDED BACK. THE CIT(A) HELD THAT T HE ADDITION MADE BY THE AO IN THIS REGARD IS ON REJECTION OF EV IDENCES PRODUCED LIKE AGRICULTURAL LAND DOCUMENTS, REVENUE AUTHORITY, CERTIFICATE ETC. FURTHER, HE HELD THAT MERE REJEC TION OF ASSESSEES EXPLANATION DOES NOT TANTAMOUNT TO CONCEALMENT AND AS SUCH THE LEVY OF PENALTY ON THIS COUNT IS NOT SUSTAINABL E. 6. WITH RESPECT TO ADDITION PERTAINING TO DISALLOW ANCE OF PART OF UNSECURED CASH CREDITORS, THE CIT(A) HELD THAT T HE AO WHILE MAKING ADDITIONS OF SUCH CREDITS TO INCOME AFTER EX AMINING THE CASH CREDITORS, HAD NOT PUT HIS FINDINGS TO THE ASS ESSEE FOR REBUTTAL. THUS, HE HELD THAT THE SUBMISSIONS OF TH E AR THAT SIMPLY BECAUSE SUCH AN ADDITION WAS NOT CONTESTED W OULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEA LED THE PARTICULARS OF HIS INCOME IS NOT CORRECT IS RELEVAN T. THE CIT(A) HELD THAT THE AO HAD NOT BROUGHT ON RECORD ANY COGE NT MATERIAL WHILE IMPOSING PENALTY AND THEREFORE DELETED THE SA ME. 7. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE U S. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SHRI T. DIWAKAR PRASAD STATED THAT THE AO HAS ADOPTED A SCIENTIFIC METHOD WHILE ARRIVING AT AGRICULTURAL INCOME AND RELIED ON THE DECISION OF CIT VS. RAMANUJAM THAMPI & OTHERS (233 ITR 521) (KER. HC) AND CIT VS. R. LEELA VASANTH NAIR & OTHERS (167 ITR 837 ) (KER. HC) FOR THE PROPOSITION THAT DECLARING EXCESS AGRICULTU RAL INCOME IS A GROUND FOR IMPOSING PENALTY. THE DR ALSO SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS ONCE ADDITION OF CASH CR EDITS ARE CONFIRMED, THE PRESUMPTION OF CONCEALMENT IS INEVIT ABLE. HE RELIED ON THE DECISIONS OF WESTERN AUTOMOBILES (IND IA) VS. CIT (BOM) (112 ITR 1048) AND CIT VS. PRATHI HARDWARE S TORES (203 ITR 641) (ORISSA HC). ITA NO.1140 OF 2011 M/S GANIPINENI PRASAD RAO, NELLORE 4 4 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS YEAR AGRICULTURAL INCOME OF 25 LAKHS WAS OFFER ED SINCE SOME MORE LANDS THAN THOSE EXISTING IN THE EARLIER YEARS WAS ACQUIRED BY THE ASSESSEE. HENCE, THE DIFFERENCE OF RS.5 LAK HS IS JUSTIFIED, DUE TO INCREASE IN THE EXTENT OF LAND. 10. WE HEARD BOTH THE PARTIES. THE AO HAS NOT BROU GHT OUT ANY MATERIAL TO PROVE THE ADOPTION OF RS.21 LAKHS B Y HIM. HENCE IT IS MERELY A DIFFERENCE OF OPINION WITH RESPECT T O AGRICULTURAL INCOME THE AO HAS MERELY ESTIMATED THE AGRICULTURAL INCOME AND HAS NOT DISPUTED THE OWNERSHIP OR THE NATURE OF THE LAND. THE MERE ADDITION OF RS.4 LAKHS AS INCOME FROM OTHER S OURCES IS AD HOC AND ARBITRARY. 11. IN RESPECT OF THE CREDITOR SHRI VENKAIAH, IT I S SEEN THAT HE APPEARED BEFORE THE AO AND FURNISHED DETAILS OF THE ACCRETION TO HIS SUPERANNUATION FUND OF RS.3 LAKHS AND DECLARED THE AVAILABILITY OF THE FUNDS FROM HIS NRI SON TO THE T UNE OF RS.,11,44,050/- . THIS WOULD PROVE THE CREDIT WORT HINESS OF SHRI VENKATAIAH. 12. IN RESPECT OF CREDIT OF SHRI B. VENKATESWARULU WHO HAS LENT RS.2 LAKHS BY CHEQUE, MERE, NON APPEARANCE BE FORE THE AO WOULD NOT CALL FOR ADDITION U/S 68 AND THE FACT THA T THE CREDITOR WAS ALSO REPAID ON 17.5. 2007 PROVES THE GENUINENES S OF THE BORROWER. 13. IN RESPECT OF JOHN WESLEY, RS.1 LAKH HAS BEEN BY ICICI CHEQUE AND MERELY BECAUSE HE WAS UNABLE TO EXPLAIN THE SOURCES FOR THE SAME IMMEDIATELY, THE AMOUNT CANN OT BE ADDED ITA NO.1140 OF 2011 M/S GANIPINENI PRASAD RAO, NELLORE 5 5 U/S 68. THE AO OUGHT TO HAVE GIVEN AN OPPORTUNIT Y TO THE ASSESSEE FOR EXPLANATION OF THE SAME. 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WHERE AGRICULTURAL INCOME HAS BEEN MERELY ESTIMATED AND ADDITION HAS BEEN MADE TOWARDS UNSECURED CREDITORS WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE FOR REBUTTAL, THE PROCEEDINGS UNDER PENALTY CANNOT BE INVOKED EVEN IF THE ADDITIONS ARE CONFIRMED AS PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOT CONCEALED ANY PARTICULAR FOR IMPOSITION OF PENALTY U/S 271 (1 ) (C ). RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF 32 8 ITR 521 THE PENALTY U/S 271 (1) (C ) IS DELETED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON: 3. 2.201 2 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 3 RD FEBRUARY, 2012 COPY FORWARDED TO: 1. THE ACIT, CIRC LE I, NELLORE 2. M/S GANIPINENI PRASAD RAO, S/O RAMASWAMY NAIDU, D NO.15/536, SUBEDAR PETA, NELLORE 3. THE CIT(A)-GUNTUR 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/