T Subbaramaiah, Shimoga V. Income Tax Officer, Ward-1, Shimoga

ITA 1142/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8768 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A R VIVEK ADOVATE
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings

Judgement Text

ITA.1142/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.1142/BANG/2014 (ASSESSMENT YEAR : 2007- 08) SHRI. T. SUBBARAMAIAH, SUBBAIAH HOSPITAL, HAIL ROAD, SHIMOGA PAN : ARPPS8381N .. APPELLANT V. INCOME-TAX OFFICER, WARD -1,SHIMOGA .. RESPONDENT ASSESSEE BY : SHRI. A. R. VIVEK, ADOVATE REVENUE BY : DR. P. K. SREEHARI, ADDL. CIT HEARD ON : 17.12.2015 PRONOUNCED ON : 06.01.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE IT HAS ALTOGETHER TAKEN SEVEN GROUNDS OF WHICH GROUNDS 1, 2, 6 AND 7 ARE GENERAL AND DO N OT NEED SPECIFIC ADJUDICATION. GROUND 5 IS ON LEVY OF INTEREST U/S.2 34B OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT). ITA.1142/BANG/2014 PAGE - 2 02. VIDE ITS GROUND 3 ASSESSEE ASSAILS THE REOPENIN G DONE FOR THE IMPUGNED ASSESSMENT YEAR AND VIDE GROUND 4 ASSESSEE ASSAILS AN ADDITION OF RS.62,466/-. 03. FACTS APROPOS ARE THAT ASSESSEE, RUNNING A MEDI CAL SHOP AND ALSO HAVING RENTAL INCOME DECLARED INCOME OF RS.71,510/- AND AGRICULTURAL INCOME OF RS.9 LAKHS. RETURN WAS PROCESSED U/S.143 (1) OF THE ACT. THERE WAS A SURVEY CONDUCTED IN ONE M/S. SUBBAIAH HOSPITA L, WHERE ASSESSEE WAS A PARTNER, ON 27.08.2008. DURING THE COURSE OF SU RVEY IT WAS FOUND THAT ASSESSEE HAD CONSTRUCTED PART OF SUBBAIAH HOSPITAL COMPLEX BUILDING ON JAIL ROAD, SHIMOGA. IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR HOWEVER INVESTMENT IN CONSTRUCTION OF BUILDING WAS NOT SHOWN BY THE ASSESSEE. AO PROCEEDED TO ISSUE A NOT ICE U/S.148 ON 04.06.2009. ASSESSEE IN REPLY TO THE SAID NOTICE S TATED THAT EARLIER RETURN FILED BY HIM COULD BE TREATED AS ONE FILED IN PURSU ANCE TO THE SAID NOTICE. 04. DURING THE COURSE OF REASSESSMENT PROCEEDINGS A O REQUIRED THE ASSESSEE TO PRODUCE EVIDENCE FOR THE AGRICULTURAL I NCOME OF RS.9 LAKHS SHOWN BY HIM. GROSS RECEIPTS FROM SALE OF AGRICULT URAL PRODUCE WAS RS.12,56,476/- INCLUDING SALE OF COCONUTS WORTH RS. 80,000/-. ASSESSEE WAS REQUIRED TO FURNISH BILLS AND VOUCHERS IN SUPPORT O F SALE OF AGRICULTURAL ITA.1142/BANG/2014 PAGE - 3 PRODUCE SINCE THERE WAS A SUBSTANTIAL INCREASE IN A GRICULTURAL INCOME FROM WHAT WAS SHOWN BY THE ASSESSEE IN EARLIER YEARS. I N RESPONSE ASSESSEE PRODUCED SALE BILL OF ARECANUT FOR RS.3,76,476/-. ASSESSEE COULD NOT PRODUCE ANY BILL IN SUPPORT OF SALE OF BALANCE OF A GRICULTURAL PRODUCE. AO RECOMPUTED THE AGRICULTURAL INCOME OF THE ASSESSEE AS UNDER : ASSESSMENT WAS COMPLETED BY MAKING ADDITION OF RS.6 2,466/- UNDER THE HEAD INCOME FROM OTHER SOURCES, APART FROM AN AD DITION OF RS.46,743/- FOR DIFFERENCE IN INTEREST RETURNED BY THE ASSESSEE . 05. AGGRIEVED ASSESSEE MOVED IN APPEAL BEFORE THE C IT (A). ASSESSEE ASSAILED THE REOPENING OF THE ASSESSMENT STATING TH AT REASONS WERE NOT RECORDED FOR SUCH REOPENING. AS PER THE ASSESSEE, INVESTMENT IN CONSTRUCTION OF THE BUILDING ONCE IT STOOD EXPLAINE D BY THE ASSESSEE, COULD NOT BEEN CONSIDERED AS A REASON FOR REOPENING THE A SSESSMENT. WITH REGARD TO THE MERITS OF THE ADDITION ASSESSEE STATED THAT 30% EXPENDITURE RECKONED ITA.1142/BANG/2014 PAGE - 4 BY THE AO WAS A PURE ESTIMATE. AS PER THE ASSESSEE , THERE WAS NO STANDARD RULE FOR ESTIMATING EXPENDITURE FOR AGRICULTURAL EA RNINGS AND WITHOUT BRINGING IN ANY COMPARATIVE CASES ASSESSING OFFICER OUGHT NOT HAVE ADOPTED A PERCENTAGE RATE OF 30% FOR ESTIMATING THE EXPENDI TURE. 06. HOWEVER CIT (A) WAS NOT APPRECIATIVE OF THE ABO VE CONTENTIONS. ACCORDING TO HIM REOPENING WAS VALID SINCE ASSESSEE HAD NOT FURNISHED INVESTMENT DETAILS FOR CONSTRUCTION OF SUBBAIAH HOS PITAL COMPLEX AND THIS CAME TO THE KNOWLEDGE OF THE DEPARTMENT ONLY A THRO UGH A SURVEY CONDUCTED ON 27.08.2008 IN SUBBAIAH HOSPITAL, SHIMO GA. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD V. ITO [(1999) 236 ITR 34]. AS F OR THE AGRICULTURAL EXPENDITURE ESTIMATED AT 30% OF GROSS RECEIPT, CIT (A) WAS OF THE OPINION THAT ASSESSEE COULD NOT PRODUCE ANY BILLS IN SUPPOR T OF SALE OF COCONUTS AND THE EXPENDITURE OF 30% ESTIMATED ON GROSS SALES WAS JUSTIFIED. 07. NOW BEFORE ME, LD. AR STRONGLY ASSAILING THE OR DER OF LOWER AUTHORITIES SUBMITTED THAT THE REOPENING DONE FOR T HE YEAR WAS INVALID. ACCORDING TO HIM, INVESTMENT IN THE CONSTRUCTION OF BUILDING CITED BY THE AO AS A REASON FOR REOPENING, WAS COMPLETED BY THE ASSESSEE BY THE END OF PREVIOUS YEAR RELEVANT TO A. Y. 2006-07. ACCORDING TO HIM, INCOME ITA.1142/BANG/2014 PAGE - 5 COMPUTATION STATEMENT FILED ALONG WITH RETURNS FOR A. YS. 2006-07 AND 2007-08 CLEARLY PROVED THAT THE CONSTRUCTION OF SUB BAIAH HOSPITAL COMPLEX WAS OVER. AO HAD CONSIDERED THE ENHANCED RENT RETU RNED BY THE ASSESSEE FOR A. Y. 2007-08 AS PROOF OF CONSTRUCTION HAVING B EEN CARRIED OUT DURING RELEVANT PREVIOUS YEAR. ACCORDING TO HIM, THE REAS ON RECORDED WAS NOT COGENT NOR VALID. LD. AR SUBMITTED THAT THE REOPEN ING WAS SIMPLY MADE ON A CHANGE OF OPINION SINCE THE AO AT THE TIME OF PRO CESSING THE RETURN ORIGINALLY WAS AWARE OF THE CONSTRUCTION OF SUBBAIA H HOSPITAL COMPLEX. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD (320 ITR 56). 08. IN SO FAR AS THE MERITS OF THE ISSUE WAS CONCE RNED LD. AR SUBMITTED THAT IF AGRICULTURAL EXPENDITURE ESTIMATED AT 30% O NLY RESULTED IN DISALLOWANCE OF A PART OF AGRICULTURAL INCOME. NAT URE OF INCOME STILL VERY MUCH REMAINED AGRICULTURAL. ACCORDING TO HIM, AGRI CULTURAL INCOME RETURNED BY THE ASSESSEE WAS RS.9 LAKHS. AO HAD AS SESSED A LESSER AMOUNT AS AGRICULTURAL INCOME DUE TO ESTIMATION OF EXPENDI TURE FOR AGRICULTURAL OPERATION AT 30% OF THE SALE PROCEEDS. LD. AR SUBM ITTED THAT THIS WOULD NOT RENDER THE DIFFERENCE INCOME OTHER THAN AGRICUL TURAL INCOME. THUS ITA.1142/BANG/2014 PAGE - 6 ACCORDING TO HIM, ADDITION MADE UNDER THE HEAD INC OME FROM OTHER SOURCES WAS NOT WARRANTED. 09. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF AUTH ORITIES BELOW. 10. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS. IN SO FAR AS THE ISSUE OF REOPENING IS CONCERNED IT IS AN ADMIT TED POSITION THAT ORIGINAL RETURN WAS ONLY SUBJECT TO A PROCESSING U/S.143(1) OF THE ACT. WHEN ORIGINAL RETURN WAS ONLY A SUBJECT OF PROCESSING U/ S.143(1) OF THE ACT, THERE IS NO QUESTION OF ANY OPINION BEING FORMED AT THAT STAGE. HENCE ASSESSEE CANNOT SAY THAT A REOPENING WAS BASED ON A CHANGE O F OPINION. JUDGMENT OF HONBLE APEX COURT IN THE CASE OF KELVINATOR OF INDIA LTD (SUPRA), WAS BASED ON A DIFFERENT SET OF FACTS NOT COMPARABLE TO THAT OF THE ASSESSEE. INFORMATION REGARDING CONSTRUCTION OF SUBBAIAH HOSP ITAL COMPLEX, BY THE ASSESSEE HAD COME TO THE NOTICE OF THE AO ONLY ON 2 7.08.2008 WHEN A SURVEY WAS CONDUCTED IN THE PREMISES OF SUBBAIAH HO SPITAL, SHIMOGA, WHERE THE ASSESSEE WAS A PARTNER. THERE IS NO CASE FOR THE ASSESSEE THAT WHEN THE ORIGINAL RETURN WAS PROCESSED U/S.143(1) O F THE ACT, THIS INFORMATION WAS AVAILABLE WITH THE AO. IN ANY CASE I FIND THAT A SIMILAR REOPENING WAS DONE FOR A. Y. 2006-07 ALSO. FOR THA T YEAR ALSO ASSESSEE HAD ITA.1142/BANG/2014 PAGE - 7 MOVED IN APPEAL AND WHEN THE MATTER REACHED THE TRI BUNAL IN ITA NO.1141/BANG/2014, DT.31.08.2015, TRIBUNAL HAD UPHE LD THE REOPENING. 11. COMING TO THE MERITS OF THE ADDITION, IN MY OPI NION, WHEN ASSESSEE HAD SHOWN AGRICULTURAL INCOME IN EXCESS OF WHAT IT ACTUALLY EARNED, THE DIFFERENCE CANNOT BE CONSIDERED AS AGRICULTURAL INC OME. ASSESSEE WAS UNABLE TO PRODUCE SALE BILLS IN SUPPORT OF THE SALE OF CROPS EXCEPT FOR A SUM OF RS.3,76,476/-. SALE OF AGRICULTURAL PRODUCE W AS TAKEN AT THE GROSS AMOUNT BY THE ASSESSEE. AO HAS OBSERVED THAT THERE WAS SUBSTANTIAL INCREASE IN SALE OF PRODUCE SHOWN BY THE ASSESSEE C OMPARED TO THE EARLIER YEARS. HE HAD THEREFORE RESTRICTED THE REALISATION FROM SALE OF COCONUTS FROM RS.20,000/- AND ALSO ESTIMATED 30% OF THE RECE IPTS AS EXPENDITURE INCURRED FOR AGRICULTURAL OPERATION. ESTIMATED EXP ENDITURE OF 30% IN MY OPINION WAS NOT ON A HIGHER SIDE. THUS IN MY OPINI ON, THE NET AGRICULTURAL INCOME OF RS.8,37,530/- ARRIVED AT BY THE AO WAS JU STIFIED CONSIDERING THE CIRCUMSTANCES OF THE CASE. DIFFERENCE OF RS.62,466 /- WAS RIGHTLY ADDED UNDER THE HEAD INCOME FROM OTHER SOURCES. I DO N OT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF LOWER AUTHORITIES. ITA.1142/BANG/2014 PAGE - 8 12. IN THE RESULT APPEAL OF THE ASSESSEE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF JANUARY, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR