Mrs. N.Sasikala, CHENNAI V. DCIT, CHENNAI

ITA 1289/CHNY/2008

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8288 (ITAT-CHENNAI)
• Duration Of Justice: 8 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-07-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 13-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T R SENTHIL KUMAR SR
• Assessee Lawyers: G NARAYANASWAMY
• Keywords: Business income; Depreciation
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO. 1289/MDS/2008 ( / ASSESSMENT YEAR: 1998-99) MRS. N.SASIKALA 36, POES GARDEN, CHENNAI-600 086. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II(2), CHENNAI-34. PAN: AMNPS6598J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. G.NARAYANASWAMY, C.A. /RESPONDENT BY : MR. T.R.SENTHIL KUMAR, SR. STANDING COUNSEL /DATE OF HEARING : 27 TH JULY, 2016 /DATE OF PRONOUNCEMENT : 30 TH SEPTEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- I, CHENNAI DATED 28.04.2008 IN ITA NO. 104/07-08 PA SSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FO LLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD DISALLOWED RS.1,18,844/- & RS.83,812/- BEING EXPENSES 2 ITA NO. 1289/MDS/2008 INCURRED TOWARDS ELECTRICITY CHARGES & REPAIRS & MAINTENANCE RESPECTIVELY DUE TO LACK OF EVIDENCE. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,20,316/- MADE BY THE LEARNED ASSESSING OFFICER IN REGARD TO DEPRECIATION. III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.3,18,750/- MADE BY THE LEARNED ASSESSING OFFICER IN REGARD TO AGRICULTURAL INCOME . 3. SINCE AT THE TIME OF HEARING, THE LEARNED AUTHOR IZED REPRESENTATIVE DID NOT PRESS THE FIRST GROUND, THE SAME IS DISMISSED AS SUCH. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL FILED HER RETURN OF INCOME ON 25.02.1999 DECLARING HER INCOME OF RS.12,51,400/- AND AGRICULTURAL INCOM E OF RS.3,18,750/- SUBSEQUENT TO NOTICE ISSUED UNDER S ECTION 142(1) OF THE ACT ON 20.11.1998. THEREAFTER THE LEA RNED ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SE CTION 143(3) OF THE ACT ON 12.03.2001 WHEREIN HE MADE SEV ERAL 3 ITA NO. 1289/MDS/2008 ADDITIONS/DISALLOWANCES AMONGST WHICH ONE OF THE DISALLOWANCE WAS RS.2,20,316/- TOWARDS DEPRECIATION AND DISALLOWANCE OF AGRICULTURAL INCOME OF RS.3,18,750/ - BY TREATING IT AS INCOME FROM OTHER SOURCES. GROUND NO.2: DISALLOWANCE OF DEPRECIATION: 5.1 THE ASSESSEE HAD DECLARED RECEIPTS OF RS.16,34, 326/- IN HER CONCERN M/S. VINOD VIDEO VISIONS BEING THE A MOUNT RECEIVED FROM FREELANCE CAMERAMAN AND NET PROFIT AS RS.13,02,150/- AFTER CLAIMING DEPRECIATION OF RS.2, 20,316/-. ON FURTHER ENQUIRY, SOME OF THE CAMERAMEN WERE NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE AND SOME OF THEM DID NOT CONFIRM THEIR ASSOCIATION WITH THE ASS ESSEE. THOSE WHO CLAIMED TO HAVE ASSOCIATED WITH THE ASSES SEE COULD NOT PRODUCE ANY EVIDENCE TO SUPPORT THAT THEY HAVE MADE PAYMENTS TO THE ASSESSEE . FOR THESE REASONS, THE LEARNED ASSESSING OFFICER TREATED THE BUSINESS INCOME OF THE ASSESSEE TO BE INCOME FROM UNDISCLOSED SOURCE A ND ACCORDINGLY DISALLOWED THE CLAIM OF DEPRECIATION. 4 ITA NO. 1289/MDS/2008 5.2 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSES SING OFFICER ACCEPTING HIS VIEW. 5.3 BEFORE US, THE LEARNED AUTHORIZED REPRESENTAT IVE ARGUED BY STATING THAT EVEN IF THE ASSESSEE COULD N OT PROVE WITH COGENT EVIDENCE FOR THE ENTIRE REVENUE RECEIVE D FROM BUSINESS TO A CERTAIN EXTENT SHE WAS ABLE TO PRODUC E THE CAMERAMAN WHO HAD GIVEN EVIDENCE IN FAVOUR OF THE ASSESSEE, THEREFORE AT LEAST TO A CERTAIN EXTENT T HE BUSINESS RECEIPT IS PROVED. HENCE, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEPRECIATION AND ACCORDINGLY PLEADED FOR ALLOWING THE SAME AS DEDUCTION. 5.4 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AND ARGUED IN SUPPORT OF THE SAME. 5.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE ABOVE, IT IS APPARENT THAT TREATING THE ENTIRE BUSINESS INCOM E AS INCOME FROM OTHER SOURCE OF THE ASSESSEE WAS DUE TO THE 5 ITA NO. 1289/MDS/2008 REASON THAT THE ASSESSEE COULD NOT PROVE HER BUSINE SS OF PROVIDING VIDEO COVERAGE. FURTHER THERE IS NO FINDI NG BY THE REVENUE THAT THE ASSESSEE DID NOT OWN ANY DEPRECIAB LE ASSET AGAINST WHICH SHE CANNOT CLAIM DEPRECIATION. FURTHER FROM THE ENQUIRIES MADE BY THE LEARNED ASSESSING OF FICER IT IS APPARENT THAT THE ASSESSEE OWNED SHOP AND WAS IN TH E BUSINESS DURING THE EARLIER YEARS. THE GIST OF THE EXTRACT OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS REPRODUCED HEREIN BELOW FOR REFERENCE: THE ASSESSING OFFICER HAD ALSO CONDUCTED LOCAL EN QUIRIES AT THE SHOP NO.14 AND 18, PARSN MANOR, STATED TO BE TH E BUSINESS PREMISES OF MIS VI NOD VIDEO VISION. SUCH ENQUIRIES REVEALED THAT THERE WAS NO BUSINESS ACTIVITY IN THOSE SHOPS DURING' THE PAST SEVERAL YEARS WHICH ONLY INDICATED THAT THE AP PELLANT'S PROPRIETARY CONCERN HAD DISCONTINUED ITS BUSINESS L ONG AGO. SUBJECT TO THE ABOVE FINDINGS, THE ASSESSING OFFICE R CONCLUDED THAT THE CREDITS APPEARING IN THE APPELLANT'S BANK ACCOUNT DID NOT AT ALL REPRESENT THE PROFESSIONAL RECEIPTS AND THAT ON THE CONTRARY IT REPRESENTED INCOME OF THE APPELLANT FROM SOME UN DISCLOSED SOURCES CHANNELISED IN THE GUISE OF SO-CALLED PROFE SSIONAL EARNINGS. THEREFORE, THE ASSESSING OFFICER PROCEED ED TO TREAT THE NET BUSINESS PROFIT OF RS.13,02,150/- DECLARED BY THE APPELLANT'S PROPRIETARY CONCERN AS 'INCOME FROM OTH ER SOURCES' (WHICH HAS, HOWEVER, NOT BEEN CONTESTED BY THE APPE LLANT). SINCE THE CIRCUMSTANTIAL EVIDENCE ESTABLISHED THAT THE APPELLANT'S PROPRIETARY CONCERN DID NOT CARRY OUT A NY BUSINESS ACTIVITY DURING THE RELEVANT ACCOUNTING YE AR, THE ASSESSING OFFICER SIMULTANEOUSLY DISALLOWED THE DEPRECIATION CLAIM OF RS.2,20,316/-. 5.6 IT IS ALSO APPARENT THAT THE LEARNED ASSESSING OFFICER HAS ARRIVED AT HIS CONCLUSION BASED ON CIRCUMSTANTI AL 6 ITA NO. 1289/MDS/2008 EVIDENCE. FURTHER, THE REVENUE HAS NOT BEEN ABLE TO POINT OUT THE SOURCE FROM WHICH THE ASSESSEE HAD EARNED T HE INCOME WHICH SHE HAS DECLARED IN HER RETURN OF INCO ME. IN THIS SITUATION, WE ARE OF THE CONSIDERED VIEW THAT IT CANNOT BE PRESUMED THAT THE ASSESSEE WAS NOT AT ALL CARRYING OUT ANY BUSINESS ACTIVITY DURING THE RELEVANT ASSESSMENT YE AR WITH RESPECT TO PROVIDING THE SERVICE OF VIDEO COVERAGE. FURTHER, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE DI D NOT OWN ANY DEPRECIABLE ASSET FOR NOT ALLOWING THE CLAIM OF DEPRECIATION. HENCE, THE DISALLOWANCE MADE BY THE L EARNED ASSESSING OFFICER FOR RS.2,20,316/- DOES NOT SEEM T O BE JUSTIFIED. THEREFORE, WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW THE CLAIM OF DEPRECIATION OF RS.2, 20,316/- TO THE ASSESSEE. GROUND NO.3: DISALLOWANCE OF AGRICULTURAL INCOME: 6.1 THE ASSESSEE HAD CLAIMED TO HAVE EARNED AGRICUL TURAL INCOME AGGREGATING TO RS.3,18,750/- FROM PAIYANOOR FARM (RS.2,67,330) AND FROM RISHIYUR (RS.45,420). IN RES PECT TO 7 ITA NO. 1289/MDS/2008 PAIYANOOR FARMS THE ASSESSEE HAD GIVEN THE DETAILS OF AGRICULTURAL INCOME AS FOLLOWS:- FROM PAIYANOOR LAND: SALE OF KOREAN GRASS : 3,28,840 SALE OF COCONUT : 5,265 SALE OF VEGETABLES : 40,131 TOTAL :3,74,236 LESS: EXPENSES TOWARDS 1,06,906 NET INCOME 2,67,330 THE ASSESSEE HAD SUBMITTED BEFORE THE REVENUE THAT ALL THE SALES WERE MADE BY CASH. HOWEVER, SINCE NO EVIDENCE S WERE PLACED BEFORE THE LEARNED ASSESSING OFFICER FOR HAV ING EARNED AGRICULTURAL INCOME, THE LEARNED ASSESSING O FFICER TREATED THE SAME AS INCOME FROM OTHER SOURCE. 6.2 WITH RESPECT TO RISHIYUR LAND, THE ASSESSEE HAD CLAIMED AGRICULTURAL INCOME OF RS.45,420/- , BUT TH E LEARNED ASSESSING OFFICER TREATED THE SAME AS INCOME FROM O THER SOURCE BECAUSE THE LAND WAS LEASEHOLD AND THE ASSES SEE HAS NOT FURNISHED ANY EVIDENCE WITH RESPECT TO THE LEASE AND ALSO NOT FURNISHED ANY EVIDENCE FOR HAVING EARNED A GRICULTURAL INCOME. 8 ITA NO. 1289/MDS/2008 6.3 ON APPEAL, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER ACCEPTING WITH HIS VIEW. 6.4 BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIV E SUBMITTED THAT OWNING OF 23.82 ACRES OF LAND AT PAI YANOOR VILLAGE BY THE ASSESSEE HAS BEEN ACCEPTED BY THE TR IBUNAL FOR THE ASSESSMENT YEAR 1997-98 IN ITA NO.893/MDS/2 001. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMI TTED THAT THE APPELLANT HAD FURNISHED PROFIT AND LOSS ACCOUNT , COPIES OF BILLS BEFORE THE ASSESSING OFFICER VIDE LETTER DATE D 13.11.2000 TOWARDS AGRICULTURAL INCOME. HE FURTHER SUBMITTED T HAT FROM THE VAST LAND OWNING OF THE ASSESSEE SHE HAS DECLAR ED ONLY RS.3,18,750/- AS AGRICULTURAL INCOME WHICH IS QUITE REASONABLE AND CANNOT BE DISBELIEVED. THEREFORE HE PLEADED THAT; THE ORDER OF THE LEARNED ASSESSING OFFICER MA Y BE SET ASIDE. 6.5 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AND REQUESTED FOR SUSTAINING THEIR ORDERS. 9 ITA NO. 1289/MDS/2008 6.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E FACTS BEFORE US, IT IS CLEARLY ESTABLISHED THAT THE ASSES SEE OWNS APPROXIMATELY 23.82 ACRES OF AGRICULTURAL LAND IN P AIYANOOR VILLAGE AND THE SAME IS NOT DISPUTED. THE ASSESSEE HAS ALSO PRODUCED BEFORE THE REVENUE THE DETAILS OF HER AGRI CULTURAL INCOME AND CERTAIN BILLS VIDE THEIR LETTER DATED 13 .11.2000 AND THE REVENUE HAS ACKNOWLEDGED THE RECEIPT OF THE SAM E ON THE SAME DATE. AS POINTED OUT BY THE LEARNED AUTHO RIZED REPRESENTATIVE FOR THE ASSESSMENT YEAR 1997-98, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORDER DAT ED 28.02.2001 IN ITA NO.69, 63,70, 71/2000-01 HAS ESTI MATED THE ASSESSEES AGRICULTURAL INCOME IN RISHIYUR VILL AGE AT 50% OF THE AMOUNT CLAIMED WHICH WAS UPHELD BY THE TRIBU NAL VIDE ORDER DATED 16.02.2006 IN ITA NO.893/MDS/2001. CONSIDERING THESE FACTS AND THE EXTENT OF LAND HOLD ING OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE AM OUNT OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE OF RS.3,18,750/- IS QUITE REASONABLE. THE REVENUE HAS ALSO NOT MADE ANY EFFORT TO PROVE THAT NO AGRICULTURAL ACTIV ITY WAS 10 ITA NO. 1289/MDS/2008 CARRIED ON IN THE ASSESSEES FARM. THE REVENUE HAS REJECTED THE CLAIM OF THE ASSESSEE ONLY ON THE BASIS THAT TH E ASSESSEE HAS NOT PROVED WITH DOCUMENTARY EVIDENCE THAT SHE H AS EARNED AGRICULTURAL INCOME. IN NORMAL CIRCUMSTANCES FOR PETTY FARMING ACTIVITY IT IS DIFFICULT OR SOMETIMES NOT P RACTICABLE TO MAINTAIN DOCUMENTARY EVIDENCE FOR CARRYING OUT AGRI CULTURAL ACTIVITIES. IN SUCH SITUATION, THOUGH THE ONUS IS O N THE ASSESSEE TO ESTABLISH THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT, THE REVENUE SHOULD ALSO GIVE SOME LEVERAGE BY VERIFYING THE FACTS STATED BY THE ASSESSEE BEFORE SIMPLY DISR EGARDING THEIR EXPLANATION. IN THE PRESENT CASE OF THE ASSES SEE, THE REVENUE HAS NOT MADE ANY EFFORTS TO VERIFY THE CLAI M OF THE ASSESSEE. MOREOVER, SINCE THE AGRICULTURAL INCOME D ECLARED BY THE ASSESSEE IS QUITE NOMINAL CONSIDERING THE EX TENT OF LAND HOLDING WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE REVENUE BY TREATING THE AGRICULTURAL IN COME AS INCOME FROM OTHER SOURCE IS NOT WARRANTED. HENCE, W E HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO TREA T THE AMOUNT OF RS. 3,18,750/- AS AGRICULTURAL INCOME OF THE 11 ITA NO. 1289/MDS/2008 ASSESSEE AND THEREBY DELETE THE ADDITION. IT IS ORD ERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH SEPTEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 30 TH SEPTEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF