S.P.Chinnaswamy, Coimbatore V. ITO, Coimbatore

ITA 1231/CHNY/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8010 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: N G SRIDHAR RAO
• Keywords: Business income
• Section: 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI K.K. GUPTA, AOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO.1231/MDS/2010 ASSESSMENT YEAR : 2006-07 SHRI S.P. CHINNASWAMY, 10/4, V.R. GARDEN, THOTTIPALAYAM PIRIVU, CIVIL AERODROME POST, COIMBATORE-641 014. V. THE INCOME-TAX OFFICER, WARD-III(2), COIMBATORE. (PAN: AFCPC6318J ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.G. SRIDHAR RAO RESPONDENT BY : SHRI B. SRINIVAS O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(APPEALS)-I, COIMBATORE IN APPEAL NO.316/09-10 D ATED 14-05-2010 FOR THE ASSESSMENT YEAR 2006-07. 2. SHRI N.G. SRIDHAR RAO, TAX PRACTITIONER REPRESEN TED ON BEHALF OF THE ASSESSEE AND SHRI B. SRINIVAS, LEARNED DR REPRESENT ED ON BEHALF OF THE REVENUE. 3. THE FACTS THAT HAVE LED TO THIS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS HAVING AGRICULTURAL INCOME, DAIRY INCOME AND IS ALSO DOING REAL ESTATE BUSINESS. AS A CONSEQUENCE OF THE SURVEY P ROCEEDINGS CONDUCTED IN THE I.T.A. NO.1231/MDS/2010 2 PREMISES OF THE ASSESSEE IT WAS NOTICED THAT THE AS SESSEE HAD PURCHASED LAND IN APPANAICKENPATTY VILLAGE FOR A VALUE OF ` 10,07,000/-DURING THE ASSESSMENT YEAR 2006-07. THE SURVEY WAS CONDUCTED ON THE ASSESSEE S PREMISES ON 02-04-2008. THE ASSESSEE HAD EXPLAINED THE SOURCE FOR THE PURCH ASE OF THE AGRICULTURAL LAND BY SHOWING AN OPENING CAPITAL OF ` 6 LAKHS WHICH REPRESENTED HIS SAVINGS AND AGRICULTURAL INCOMES OF THE EARLIER YEARS. THE ASS ESSEE HAD ALSO MADE A CLAIM OF AGRICULTURAL INCOME OF ` 1,75,000/-. THE RETURN FILED BY THE ASSESSEE CAME TO BE PROCESSED AND THE AGRICULTURAL INCOME CLAIMED BY TH E ASSESSEE CAME TO BE DISALLOWED ON THE GROUND THAT THERE WAS NO SUPPORTI NG DOCUMENTS TO PROVE THAT THE ASSESSEE HAD DERIVED AGRICULTURAL INCOME. THE CLAIM OF THE ASSESSEE IN RESPECT OF THE OPENING CAPITAL OF ` 6 LAKHS WAS ALSO DISALLOWED BY HOLDING THAT THERE WERE NO SUPPORTING DOCUMENTS TO PROVE THE CAP ITAL ACCOUNT. 4. ON FIRST APPEAL, THE LEARNED CIT(A) HAD CONFIRM ED THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE AGRICULTURAL I NCOME OF ` 1,75,000/- BY HOLDING THAT THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE WAS IN POSSESSION OF THE 5.05 ACRES OF AGRICULTURAL LAND AS ON 7-4-19 99 AS ALSO ON THE GROUND THAT THE SAID 5.05 ACRES OF AGRICULTURAL LAND HAD, IN FA CT, BEEN REGISTERED IN THE NAME OF THE ASSESSEE ONLY ON 22-05-2006 AND THE POSSESSI ON OF THE SAID LAND WAS SHOWN IN THE SALE DEED TO HAVE BEEN GRANTED TO THE ASSESSEE ONLY ON THE REGISTRATION. IN RESPECT OF THE ADDITION OF ` 6 LAKHS THE LEARNED CIT(A) HAD REDUCED THE SAME TO ` 3 LAKHS BY ACCEPTING THE CONTENTION OF THE ASSESSE E THAT I.T.A. NO.1231/MDS/2010 3 THE ASSESSEE DID HAVE SAVINGS FROM BUSINESS INCOME. THE LEARNED CIT(A) HAD REDUCED THE ADDITION OF ` 6 LAKHS TO ` 3 LAKHS BY ACCEPTING THE CLAIM OF SAVINGS FROM BUSINESS INCOME EVEN AFTER REJECTING THE CLAIM OF AGRICULTURAL INCOME. IT IS NOTICED THAT AGAINST THE DELETION OF THE ADDITION T O THE EXTENT OF ` 3 LAKHS BY THE LEARNED CIT(A) THE REVENUE IS NOT IN APPEAL. 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN RESPECT OF THE DISALLOWANCE OF THE CLAIM OF AGRICULTURAL INCOME OF ` 1,75,000/- THE ASSESSEE HAD PRODUCED COPY OF THE PURCHASE DEED OF 5.05 ACRES OF AGRICULTURAL LAND BY THE SALE DEED DATED 22-05-2006 BEFORE THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT IN THE SAID SALE DEED THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE SELLERS OF THE LAND ON 07-04-1999 WAS REFERRED TO WHEREIN THE SELLERS HAD GRANTED THE ASSESSEE POSSESSION OF THE SAID 5.05 ACRES OF AGRIC ULTURAL LAND IN 1999 ITSELF. HE DREW OUR ATTENTION TO PAGES 40 TO 43 OF THE PAPER B OOK WHICH IS THE COPY OF THE SALE DEED WHEREIN THE SALE AGREEMENT OF 07-04-1999 HAS BEEN REFERRED TO. HE FURTHER DREW OUR ATTENTION TO PAGES 22 TO 25 OF THE PAPER BOOK WHICH IS THE COPY OF THE SALE AGREEMENT AND WHICH IS A REGISTERED SAL E AGREEMENT BEFORE THE JOINT REGISTRAR, WHEREIN IT HAS BEEN AGREED THAT THE SALE DEED IS TO BE REGISTERED WITHIN A PERIOD OF 5 YEARS. IT WAS THE SUBMISSION THAT AS THE ASSESSEE HAD MADE THE PAYMENT OF ` 1 LAKH AS AGREED IN THE SALE AGREEMENT, THE ASSESS EE HAD GOT POSSESSION OF THE SAID AGRICULTURAL LAND AND THE AS SESSEE WAS ALSO FILING HIS RETURNS WHEREIN HE HAS BEEN DECLARING AGRICULTURAL INCOME AND THE SAME HAD NOT I.T.A. NO.1231/MDS/2010 4 BEEN DISTURBED. HE DREW OUR ATTENTION TO PAGES 98 AND 99 OF THE PAPER BOOK WHICH IS COPY OF THE RETURN OF INCOME FOR THE ASSES SMENT YEAR 2005-06 FILED ON 30-03-2006 WHEREIN HE HAS SHOWN THE AGRICULTURAL IN COME AT ` 1,64,000/- + ` 50,000/-. HE FURTHER DREW OUR ATTENTION TO PAGES 6 3 AND 64 OF THE PAPER BOOK WHICH IS COPY OF THE RETURN FOR THE ASSESSMENT YEAR 2004-05 WHICH WAS FILED ON 24.03.2005 WHEREIN AGRICULTURAL INCOME HAS BEEN DIS CLOSED AT ` 1,34,000/- + ` 50,000/-. IT WAS THUS THE SUBMISSION THAT THE CLAI M OF THE ASSESSEE REGARDING AGRICULTURAL INCOME MAY BE ACCEPTED. 6. IN REGARD TO THE DISALLOWANCE OF ` 3 LAKHS AS CONFIRMED BY THE LEARNED CIT(A) IT WAS SUBMITTED BY THE LEARNED AUTHORISED R EPRESENTATIVE THAT THE LEARNED CIT(A) HAS ACCEPTED THE SAVINGS FROM THE BU SINESS AT ` 3 LAKHS AND IF THE AGRICULTURAL INCOME IS ALSO ACCEPTED, THEN THE BALANCE OF ` 3 LAKHS ADDITION WOULD NOT BE CALLED FOR. IT WAS THE SUBMISSION THA T THE ASSESSEE WAS AN AGRICULTURIST AND HE WAS NOT DOING ANY REAL ESTATE BUSINESS AS CLAIMED BY THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS DOING DAIRY FARMING AND FOR THE PURPOSE OF HIS DAIRY FARMING TH E AGRICULTURAL LANDS WERE ALSO USED FOR GROWING FODDER. IT WAS THE SUBMISSION THA T THE ADDITION AS SUSTAINED BY THE LEARNED CIT(A) MAY BE DELETED. 7. IN REPLY, THE LEARNED DR SUBMITTED THAT PAGES 26 , 27, 27A & 27B OF THE PAPER BOOK BEING THE SALE AGREEMENT ENTERED INTO BY THE ASSESSEE ON 09-04- 1999 IN RESPECT OF THE 5.05 ACRES OF AGRICULTURAL L AND WAS FRESH EVIDENCE AND I.T.A. NO.1231/MDS/2010 5 SHOULD NOT BE CONSIDERED. IT WAS THE FURTHER SUBMI SSION THAT PAGES FROM 74 TO 97 OF THE PAPER BOOK WHICH WAS THE COPY OF THE OTHE R DOCUMENTS IN RESPECT OF THE PURCHASE OF THE AGRICULTURAL LAND WERE ALSO NOT TO BE CONSIDERED AS THEY WERE FRESH EVIDENCES. IT WAS THE SUBMISSION THAT THE AS SESSEE HAD NOT PRODUCED ANY EVIDENCE TO PROVE THE AGRICULTURAL INCOME AND CONSE QUENTLY THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY T HE LEARNED CIT(A) WAS LIABLE TO BE UPHED. 8. IN RESPECT OF THE DISALLOWANCE OF ` 3 LAKHS AS CONFIRMED BY THE LEARNED CIT(A) IT WAS SUBMITTED BY THE LEARNED DR THAT THE RELIEF GRANTED TO THE ASSESSEE WAS ALSO UNCALLED FOR BUT AS THE REVENUE HAS NOT FI LED ANY APPEAL HE WAS UNABLE TO MAKE ANY SUBMISSION AGAINST THE RELIEF GRANTED. IT WAS THE SUBMISSION THAT AS THE AGRICULTURAL INCOME HAS NOT BEEN PROVED, THE SO URCE FOR AVAILABILITY OF THE OPENING CAPITAL SHOULD NOT BE ACCEPTED. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN RE SPECT OF THE SUBMISSION OF THE LEARNED DR THAT THE AGREEMENT ENTERED INTO B Y THE ASSESSEE ON 09-04- 1999 IT WAS NOTICED THAT THIS AGREEMENT HAS BEEN RE FERRED TO IN THE SALE DEED. OBVIOUSLY, WHEN AN AGREEMENT IS REFERRED TO IN THE SALE DEED, THE TERMS OF THAT AGREEMENT SHOULD ALSO BE CONSIDERED ESPECIALLY WHEN THE SAID SALE AGREEMENT IS ALSO A REGISTERED SALE AGREEMENT. OBVIOUSLY SUCH S ALE AGREEMENT CANNOT BE TREATED AS AN AFTER-THOUGHT. THIS IS BECAUSE THIS SALE AGREEMENT IS A REGISTERED DOCUMENT. AS PER THE SALE AGREEMENT, THE ASSESSEE HAS ENTERED INTO THE I.T.A. NO.1231/MDS/2010 6 AGREEMENT FOR PURCHASE OF THE SAID PROPERTY OF 5.05 ACRES OF AGRICULTURAL LAND. THE ASSESSEE HAS ALSO COMPLIED WITH THE CONDITIONS OF THE SALE AGREEMENT. THE SALE DEED FOR REGISTRATION PURPOSES WOULD SPECIFICA LLY MENTION THE HANDING OVER OF POSSESSION. THE FACT THAT THE ASSESSEE HAD HIMS ELF BEFORE THE DATE OF SURVEY BEEN FILING RETURNS OF INCOME DECLARING AGRICULTURA L INCOME CLEARLY SHOWS THAT THE ASSESSEE DID HAVE AGRICULTURAL INCOME. THE SURVEY ON THE PREMISES OF THE ASSESSEE DID NOT COME UP ANY UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. IN FACT A PERUSAL OF THE ASSESSMENT ORDER ITSELF CL EARLY SHOWS THAT THE SURVEY BROUGHT OUT DOCUMENTS WHICH SHOWED THAT THE ASSESSE E HAD PURCHASED AGRICULTURAL LANDS. THUS WHAT HAS BEEN PURCHASED B Y THE ASSESSEE IS AGRICULTURAL LANDS. NO EVIDENCE OF ANY SALE OF ANY LANDS OR OF DOING ANY REAL ESTATE BUSINESS HAS BEEN FOUND. FURTHER IN THE ASSESSMENT ORDER EV EN THOUGH THE ASSESSING OFFICER TALKS OF INCRIMINATING EVIDENCES HAVING BEE N FOUND, THE NATURE OF SUCH INCRIMINATING EVIDENCES HAS NOT BEEN DISCUSSED IN T HE ASSESSMENT ORDER. IN FACT, THE ASSESSMENT ORDER DOES NOT TALK OF ANY OF THE IN CRIMINATING EVIDENCES AND THE ADDITIONS HAVE BEEN MADE ONLY BY DISBELIEVING THE C LAIM OF THE ASSESSEE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE DID HAVE POSSESSION OF THE AGRICULTURAL LANDS AND DID HAVE AGRICULTURAL INCOME AS HE HAS DECLARED IN THE RETURNS. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE HAVING AGRICULTURAL INCOME OF ` . 1,75,000/- IS ACCEPTABLE. AS WE HAVE ACCEPTED THE FACTUM OF AGRICULTURAL INCOME IN THE HANDS OF T HE ASSESSEE, WE ARE OF THE I.T.A. NO.1231/MDS/2010 7 VIEW THAT THE SAVINGS OF THE ASSESSEE FROM THE AGRI CULTURAL INCOME IN THE EARLIER YEARS WOULD BE ADEQUATE TO COVER THE AMOUNT OF ` 3 LAKHS, WHICH HAS BEEN DISALLOWED BY THE LEARNED CIT(A). IN THE CIRCUMSTA NCES, THE DISALLOWANCE OF ` 3 LAKHS AS CONFIRMED BY THE LEARNED CIT(A) STANDS DEL ETED. THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE CLAIM OF THE ASSESSEE IN RESPECT OF THE AGRICULTURAL INCOME OF ` 1,75,000/- AND THE DISALLOWANCE OF ` 3 LAKHS AS CONFIRMED BY THE LEARNED CIT(A) STANDS DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 11. THE ORDER WAS PRONOUNCED IN THE COURT ON 14/10/ 2010. SD/- SD/- (K.K. GUPTA) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 14 TH OCTOBER, 2010. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE