Lt.Col.P.R.S.Rao (Retired), Secunderabad V. Income Tax Officers, Hyderabad

ITA 1291/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74622 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1995-1996
• Appeal Filed On: 25-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHR II SOLGY JOSE T KOTTARAM
• Assessee Lawyers: GVVS MURTHY
• Keywords: Unexplained investment; Gift; Salary income; Opportunity of being heard; Source of fund; Deemed to accrue or arise in india; Additional evidence; Reasonable cause; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1290/HYD/13 : ASSESSMENT YEAR 1996 - 97 ITA NO.1291/HYD/13 : ASSESSMENT YEAR 1995 - 96 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. ( PAN AEJPP 6576 R ) V/S. INCOME TAX OFFICER, WARD 13(3), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.V.V.S.MURTHY RESPONDENT BY : SHR II SOLGY JOSE T.KOTTARAM DR DATE OF HEARING 5 . 02 .201 4 DATE OF PRONOUNCEMENT 21.02.2014 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME - TAX(APPEALS) II, HYDERABAD, BOTH DATED 6.6.2013 FOR THE ASSESSMENT YEARS 1995 - 96 AND 1996 - 97. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 . FACTS OF THE CASE , IN BRIEF , LEADING TO THE F ILING OF THE PRESENT APPEAL ARE THAT THE ASSESSEE A RETIRED LIEUTENANT COLONEL FROM ARMY WITH EFFECT FROM 1.3.1995 UNDER THE VOLUNTARY RETIREMENT SCHEME. THE ASSESSEE NEITHER FILED THE RETURNS OF INCOME UNDER S.139(1) NOR PAID ADVANCE TAX. IN THE YEAR 199 7, THE WAS A CBI ENQUIRY AGAINST THE ASSESSEE RELATING TO RS.30 LAKHS FDS SEIZED FROM HIS POSSESSION AND THE ASSESSEE WAS IN JAIL FOR 90 DAYS AND LATER ON HAD TO TRAVEL BETWEEN HYDERABAD AND DELHI TO ATTEND THE PROCEEDINGS AGAINST HIM CONSEQUENT UPON CBI E NQUIRY. THE ASSESSING OFFICER MEANWHILE ISSUED NOTICES UNDER S.148, IN RESPONSE TO WHICH NO RETURN WAS FILED, AND AS SUCH THE ASSESSING ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 2 OFFICER PASSED THE ASSESSMENT ORDER ON 31.3.2003 DETERMINING THE INCOME OF THE ASSESSEE AT RS.11,31,000 BY MAKING THE FO LLOWING ADDITIONS - ( I ) INCOME CHARGEABLE FROM SALARY RS. 2,25,000 ( II ) INCOME FROM OTHER SOURCES ( A ) DEEMED INCOME RS.7,56,000 ( B ) INTEREST ACCRUED ON FDS RS. 1,50,000 RS.9,06,000 RS.11,31,0000 3 . SIMILARLY FOR THE ASSESSMENT YEAR 1995 - 96 ALSO, THE A SSESSEE HAS NOT FILED ANY RETURN IN RESPONSE TO NOTICE UNDER S.148 OF THE ACT, AND THE ASSESSING OFFICER ULTIMATELY, AFTER RECORDING A STATEMENT OF THE ASSESSEE ON 30.3.2003, PASSED THE ASSESSMENT ORDER ON 31.3.2003 BY MAKING THE FOLLOWING ADDITIONS - ( I ) INCOME CHARGEABLE FROM SALARY RS. 95 ,000 ( III ) INCOME FROM LONG TERM CAPITAL GAINS RS. 8,11,500 ( IV ) INCOME FROM OTHER SOURCES ( A ) UNEXPLAINED INVESTMENT IN FDS RS. 5,61,000 ( B ) UNEXPLAINED INVESTMENT IN PROPERTY AT NOIDA RS. 5,25,000 ( C ) INTEREST EARNED, UTILIZED IN FDS RS. 1,32,725 ( D ) INTEREST ACCRUED IN FDS RS. 12,500 RS.12,31,225 --------------- RS.21,37,725 4 . AGGRIEVED BY THE ABOVE ASSESSMENTS, ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A), WHI CH INITIALLY HAVE BEEN DISMISSED BY THE CIT(A), VIDE ORDER DATED 27.11.2003 ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PAY THE ADVANCE TAX AND ALSO FAILED TO COMPLY WITH THE PROVISIONS OF SUB - SECTION (4) OF S.249 OF THE ACT. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 3 5 . ON APPEAL AGAINST THE SAID ORDERS OF THE CIT(A) DATED 27.11.2003, THE TRIBUNAL VIDE ITS ORDER DATED 4.10.2006 FOR THE ASSESSMENT YEARS 1995 - 906 AND 1996 - 97, OBSERVING THAT IT IS SATISFIED THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FROM FILING THE RETURNS AND PAYING THE ADVANCE TAXES IN TIME, REMITTED THE MATTER TO THE FILE OF THE CIT(A), WITH A DIRECTION TO DISPOSE OF THE APPEALS ON MERITS AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 . IN THE FRESH APPELLATE PROCEEDINGS BEFORE THE CIT(A) TAKEN UP IN PURSUANCE OF THE DIRECTION OF THE TRIBUNAL IN ITS ORDER DATED 4.10.2006, FOR THE ASSESSMENT YEAR 1995 - 96, ASSESSEE FILED PETITIONS UNDER RULE 46A, SEEKING ADMISSION OF ADDITIONAL EVIDENCE. SUCH EVIDENCE CONSISTED OF FROM 16 ISSUED BY THE MILITARY AU THORITIES FOR THE YEAR 1995 - 96 AND THE FIXED DEPOSIT DETAILS FOR THE YEARS 1994 TO 1997, ETC. WHICH COULD NOT BE FILED BEFORE THE ASSESSING OFFICER. SIMILARLY, CORRESPONDING FRESH EVIDENCE FURNISHED FOR THE ASSESSMENT YEAR 1996 - 97 CONSISTED OF APPOINTMENT TO THE POST OF ASSISTANT GENERAL MANAGER IN ECIL AND GIFT DEED DATED 5.10.1992 IN FAVOUR OF ASSESSEES WIFE, MADE BY HER FATHER CONFIRMING THE GIFT OF GOLD AND JEWELLERY AS STRIDHAN. THE SAID ADDITIONAL EVIDENCE FILED BY THE ASSESSEE HAS BEEN FORWARDED BY THE CIT(A) TO THE ASSESSING OFFICER, WHO WAS CALLED UPON TO FILE A REMAND REPORT. THE ASSESSING OFFICER VIDE LETTER DATED 25.2.2013 SUBMI T TED HIS REMAND REPORTS FOR THE YEARS UNDER APPEAL, WHICH HAVE BEEN FORWARDED BY THE ADDL. CIT 27.2.2013 . THE SAID REMAND REPORT WAS FORWARDED TO THE ASSESSEE, AND THEREAFTER, AFTER HEARING ON THE APPEALS, THE CIT(A) DISPOSED OF THE APPEALS FOR BOTH THE YEARS, ALLOWING PARTIAL RELIEF TO THE ASSESSEE AND ACCORDINGLY ALLOWING THE SAME IN PART. 7 . NOW, WE MAY DEAL WITH THE GRIEVANCES OF THE ASSESSEE IN EACH OF THESE APPEALS. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 4 8 . IN THE APPEAL FOR ASSESSMENT YEAR 1995 - 96, VIZ. ITA NO.1791/HYD/2013, T HE FIRST ISSUE ARISING FOR CONSIDERATION , RELATES TO THE DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY OF THE ASS ESSEE AT GARIVIDI, FOR THE PURPOSE OF DETERMINATION OF CAPITAL GAINS, AND THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) WAS NO T JUSTIFIED IN ACCEPTING THE FAIR MARKET VALUE OF THE HOUSE PROPERTY AS ESTIMATED BY THE ASSESSEE AT R S .3,75,000. 9 . IN THE A SSESSMENT ORDER, THE ASSESSING OFFICER MADE ADDITIONS OF RS.95,000 ON ACCOUNT OF INCOME FROM SALARY AND R S .8,11,500 UN D ER LONG TERM CAPITAL GAIN S AND R S .12,31,225 UN D ER THE H E AD INCOME FROM OTHER SOU R CES. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE MADE DEPOSITS IN DIFFERENT BANKS IN HIS NAME AND IN THE NAMES OF HIS FAMILY MEMBERS AND THESE DEPOSITS WERE STATED TO HAVE BEEN RENEWED AFTER MATURITY AND SOME OF THEM WERE WITHDRAWN FOR OTHER INVESTMENTS OR PERSONAL EXPENSES A ND DURING THE Y E AR 1998 THE TOTAL AMOUNT LYING IN FIXED DEPOSIT WAS RS.21,53,839, AND AFTER TAKING INTO ACCOUNT THE FACT THAT WIT HD RA WA LS WERE STATED TO HAVE BEEN MADE FOR HIS PERSONAL USE DURING THE FOUR Y E ARS, I.E. IN BETWEEN 1994 AND 1998, THE ASSESSING OFFICER ESTIM A TED THE AMOUNTS DE POSITED IN THE YEAR 1994 AT RS.30,00,000. HE CONSID E RED THE SOU R CE OF R S .30,00,000 AS BELOW AND CON S IDERED EACH ITEM AND ITS SOURCE AS UNDER - ( I ) SALE PROCEEDS OF THE HOU S E AT GARIVIDI RS.12,00,000 ( II ) SAV I NGS FROM OUT OF HI S SALARY RS. 3,00,000 ( III ) AGRICUL T URA L INCOME O F PAST 28 YEARS RS. 8,61,000 ( IV ) INTEREST INCOME RS. 1,32,725 ( V ) PENSIONARY BENEFITS RS. 5,06,725 (CLAIMED TO HAVE BEEN RECEIVED IN MARCH, 1995) IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ACCEPTED THE LONG TERM CAPITAL GAINS ON THE HOUSE PROPERTY, BUT ESTIM A TED THE FMV AS ON ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 5 1.4..19081 AT R S .1,50,000, HE MADE ADDITION UNDER OTHER SOU R CES: R S .5,61,000 AS UN E XPLAIN E D INVESTMENT IN FDS; RS.5,25,000 AS UN E XPLA I N E D INVESTMENT IN PROPERTY AT NOIDA AND R S .1,32,725 A S INTEREST EARNED AND RS .12,500 AS INTEREST ACCRUED ON FDS. HE ALSO ADOPTED RS.20,00 0 AS AGRICULTURAL INCOME FOR THE YEAR. 1 0 . DEALING WITH THE LONG TERM CAPITAL GAINS, THE ASSESSING OFFICER NOTED THAT THE COST OF THE HOU S E PROPERTY WOULD BE AROUND RS.70,00 0 WHICH WAS STATED TO HAVE BEEN CONSTRUCTED IN THE Y EA R 1973 AND THE SAME WAS DISPOSED OFF IN MAY, 1994 AND TO WORK OUT THE INCOME FROM CAPITAL GAINS, THE FAIR MARKET VALUE OF THE SAID PROPERTY WAS TO BE ESTIM A TED. AFTER TAKING INTO ACCOUNT THE ESCALATION IN THE COST OF THE IMMOVABLE P R OPERTI E S AND THE COST OF CONSTRUCTION IN BETWEEN THE PERIOD FROM 1970 TO 1981, THE FAIR MARK E T VALUE AS ON 1.4.1981 WAS ESTIM A TED AT R S .1,50,000 AND INDEXED COST UNDER S.148 @ 259 FIXED FOR F.Y. 1994 - 95 AT RS,3,88,500 AND COMPUTED CAPIT AL GAINS ACCOR D IN G LY AT R S .8,11,500(RS.12,00,000 (SALE CONSIDERATION) RS.3,88,500 (IN DE XED COST). DU R IN G THE APPEAL PROCEEDINGS BEFORE THE CIT(A), IT WAS SUBMI T TED T HAT THE E S TIM A TED FAIR MARKET VALUE AS ON 1.4.1981 AT RS.1,50,000 WAS ON LOWER SIDE , SIN CE BY 1980 , B E CAU S E OF SETTING UP OF FERRO ALLOYS INDUST RIES A T GARIVIDI, THE ASSESSEES PLACE HAS ACQUIRED PROMINENCE AND REQUESTED THAT FOR ESTIMATING THE LAND RATE AT R S. 1 , 100 PER SQ. YARD AND BUILT UP AREA AT RS.100 PER S Q . FT. SHOULD BE ADOPTED AS TH E FMV AS ON 1.4.1981 AND ACCOR D INGLY, RS.3,75,00 0 SHOULD BE ADOPTED AS AGAINST RS.1,50,0 00 ADOPTED BY THE ASSESSING OFFICER. 1 1 . THE CIT(A) FINDING SOME MERIT IN TH E CONTENTION OF THE ASSESSEE THAT THERE WAS SUBSTANTIAL DEVELOPMENT IN THE AREA WHERE THE PROPERTY WAS SITUATED, DIRECTED TH E ASSESSING OFFICER TO ADOPT THE FMV OF THE PROPERTY AS ON 1.4.1981 AT R S .2,50,000 AND ACCORDINGLY CALCULATE THE CAPITAL GAINS. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 6 1 2 . WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE A SSESSEE HAS NOT BEEN ABLE TO SUBMIT ANY EVIDENCE OR ANY MATERIAL TO SHOW THAT THE FMV OF RS.3,75,000 ADOPTED BY HIM, IS THE ACTUAL MARKET VALUE OF THE LAND AS ON 1.4.1981. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY COMPARABLE INSTANCES OF SALE OF PROPERTY IN THAT LOCALITY, TO SHOW THAT THE FMV ADOPTED BY HIM WAS THE ACTUAL MARKET VALUE. IN THE ABSENCE OF ANY MATERIAL TO SUBSTANTIATE ITS CLAIM, THE FMV OF RS.3,75,000 CANNOT BE ACCEPTED. IN RESPONSE TO A SPECIFIC QUERY FROM THE BENCH, AS TO WHETHER THE AS SESSEE WOULD BE ABLE TO BRING ON RECORD ANY COMPARABLE INSTANCES OF SALE, WHICH COULD ESTABLISH ITS CLAIM OF FMV, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE REPLIED IN NEGATIVE. WHEN THERE IS NO MATERIAL AVAILABLE ON RECORD, WHICH COULD CLEARL Y ESTABLISH THE FMV OF THE LAND, IN THAT LOCALITY, ONE HAS TO GO BY A REASONABLE ESTIMATE. HENCE, CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT FMV OF RS.2,50,000 ADOPTED BY THE CIT(A) IS FAIR AND REASONABLE AND NEEDS NO INTERFERENCE. ASSESSEE S GROUNDS ON THIS ASPECT ARE REJECTED. 1 3 . THE NEXT GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO THE ACTION OF THE CIT(A) IN NOT ACCEPTING THE AVAILABILITY OF FUN D S TO TH E EXTENT OF RS.5,25,000 AND INSTEAD DIRECT ING THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO THE EXTENT OF R S .5 0 % OF RS.5,25,00 0 I.E. RS.2,62,500. 1 4 . EX P LAINING TH E SOURCE FOR THE INVESTMENT OF R S .5,25,000 IN THE HOU S E PROPERTY AT NOIDA IN THE NAME OF ASSESSEES WIFE, IT WAS SUBMITTED THAT T HE INVESTMENT WAS MADE OUT OF THE SALE PROCEEDS OF R S .5,92,392, ON SALE OF GO L D OF 143 TULAS PURCH A SED FROM AGRICULTURAL INCOME FROM 1981 TO 1992 . THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NO T ED THAT SMT.O.RADHA RAO, ASSESSEES WIFES CLAIM THAT THE G OLD WAS PURCHASED FROM LOCAL VILLAGE R S AND LATER ON SOLD WAS NO T CON V IN C ING BECAUSE NO VALID ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 7 REASONS FOR PU R CHASING GOLD JEWE L LER Y FROM VILLAGERS AT A HI G H E R RATE THAN THE MARKET, WITHOUT CONSIDERIN G THE IMP U RITI E S. THE ASSESSING OFFICER ALSO NOTED THAT TH ERE W A S NO CASH AVAILABLE FOR MAKIN G SU C H PURCHASES AND THE DISCREPANCIES IN THE NATURE OF ARTICLES EVEN AFTER CON S I D ERIN G POSSIBILITY O F SOME ARTICLES BEIN G REMODELED AND THEREFORE, HE L D THAT THE PU R CH A SE AND SALE OF JEWELLERY O F 43 TULAS AND IN VE STMENT O N ITS SALE IN THE HOUSE PROPERTY AT NOIDA WAS NO T GENUINE. THE ASSESSING OFFICER ALSO NOTED THAT IN THE STATEMENT, THE ASSESSEE HAS AGREED FOR THE I N CLUSION OF TH E INVESTMENT MADE IN THE NAME OF HIS WIFE FOR BEIN G CON S IDERED IN HIS NAME, AND ACCORDINGLY , THE ASSESSING OFFICER TREATED THE INVESTMENT OF R S .5,25,000 IN THE PROPERTY AT N OIDA AS DE E MED INCOM E O F THE ASSESSEE UN D ER S.69 OF THE AC T. 1 5 . ON APPEAL, BEFO R E THE CIT(A) , IT WAS CONTENDED THAT THE ASSESSEE WAS CARRYING ON MONEY LENDIN G ACTIVITY THROUGH HIS RELATIVES ON S MALLER NOTE IN HIS VILLAGE. HE ALSO JUSTIFIED THE PURCHASE OF JEWELLERY, SOMETIMES AT A HI G H E R RATE, BY OFFERING VARIOUS REASONS. THE CIT(A) CONSIDERING THE EXPLANATIONS O F THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO R E STRI CT THE ADDITION TO 50%, WITH THE FOLLOWING OBSERVATIONS. THE E XPLANATION F I L E D BY THE APPELL A N T HAS BEEN CON S IDERED AND IT MAY B E NOTED T H A T EVEN THOUGH THERE WERE DISCREPANCIES IN TH E CON TEN TION S O F THE APPELLANT THE F ACT REMAIN S THAT HE HAD SALARY SAVI NGS AND ALSO AGRICULTURAL INCOME FOR OVER 28 YEARS AND A L SO THE PENSIONARY BENEFITS. THE CON T ENTION OF TH E APPELLANT THAT HE BOUGHT GOLD AND JEWELLERY IN SMALL QUANTITIES OUT OF H IS A G R ICULTURAL INCOME OVER THE YE A RS AND THE A C CUMULATED GOLD AND JEWELLE R Y HAS BEEN SOLD DURING THE Y E AR AND T H E SAME WAS INVESTED IN THE HOUSE CAN BE ACCEPTED TO SOME EXTENT IN VIEW OF THE DISCUSSION IN TH E PREVIOUS PARAGRAPHS. THE R E ASONS CITED BY THE ASSESSING OFFICER FOR NOT ACCEPTING THE CON TE NTION OF THE APPELLANT IS NOT J U S TI F IED. ONE SHOU L D NOT FORGET THE APPELLANT AS AN ARMY OFFICER AND HIS WIFE WERE NOT BASED IN THE VILL A GE AND THE ACTIVITIES - EITH E R AGRICULTURAL OR PURCHASE AND S A LE OF GOLD - COULD HAVE B E EN CARRIED OUT BY THE R EL A TIVES. WITH SALARY SAVINGS OF A SR. ARMY OF F ICER AND AGRICULTURAL INCOME, EVEN IF THE SALE PRICE OF GOLD JEWELLLERY ARE NOT THERE, THE APPELLANT WOULD DEFINITELY HAD AFFORDED TO INVEST ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 8 RS.5,25,000 IN THE NOIDA PROPER T Y. THE APPELLANT HAS HIMSELF SUBMITTED HAT DUE TO AFFLUX OF TIME, THERE CO ULD HA VE BEEN SOME OMISSIONS AND COMMISSIONS HERE AND THERE IN EXPLAINING THE SOU R CES BEING THE SAL E PROCEEDS OF GOLD AND ITS INITIAL ACQUISITION OF THE SAME LONG B A CK. HE HAS PRAYED THAT THE ENTIRE SOURCE AS SUCH MAY NO T BE DOUB T ED AND D I S CARDED IN TOTO. HENCE, CONSIDERING TH E FACTS AND CIR C UMSTANCES OF THE CA S E AND ALSO IN TH E IN TE RESTS OF JUSTICE, THE ADDITION OF T HE ENTIRE A MOUN T IS NOT JUSTIFIED. ACC OR D I NGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION TO THE E XTENT OF R S .50% OF RS.5,2 5,000./0, I.D. RS. 2,62,500. 1 6 . STILL AGGRI E VED, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 1 7 . WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS THE CLAIM OF THE ASSESSEE THAT THE INVESTMENT WAS MADE B Y HIM OUT OF THE SALE PROCEEDS FROM SALE OF GOLD JEWELLERY, AS WELL AS SALARY INCOME. IT IS QUITE EVIDENT F R OM THE O R DER O F TH E CIT(A) , AS EXTRACTED ABOVE, THAT HE DOES NOT DISPUTE THE FACT THAT THE ASSESSEE S EXPLANATION WITH REGARD TO AVAILABILITY OF FU ND FROM SALE OF GOLD JEWELLERY CANNOT BE REJECTED OUTRIGHT. FURTHER, AS CAN BE SEEN,F ROM THE OBSERVATION MADE BY THE CIT(A), SHE HAS COME TO A CONCLUSION THAT EVEN ASSUMING THAT FUNDS WOULD NOT HAVE BEEN AVAILABLE TO THE ASSESSEE FROM THE SALE OF GOLD JEWELLERY, CONSIDERING THE SALARY SAVINGS OF A SENIOR ARMY OFFICER, AVAILABILITY OF SOURCES OF FUNDS FOR AN INVESTMENT OF RS.5,25,000 CANNOT BE DOUBTED. WHEN THE CIT(A) HAS COME TO A CONCLUSION THAT THE SAVINGS FROM SALARY INCOME ITSELF WOULD BE SUFFICI ENT TO INVEST AN AMOUNT OF RS.5,25,000 IN THE PROPERTY AT NOIDA, THERE IS NO REASON WHY SHE SHOULD HAVE DISALLOWED 50% OF THE AMOUNT OF INVESTMENT CLAIMED. IN OUR VIEW, THE DISALLOWANCE MADE3 BY THE CIT(A) CANNOT BE SUSTAINED, WHEN SHE IS SATISFIED THAT T HERE WAS AVAILABILITY OF FUND WITH THE ASSESSEE TO MAKE INVESTMENT OF RS.5,25,000. WE ACCORDINGLY, DELETE THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER, ALLOWING THE GROUND OF THE ASSESSEE IN THIS BEHALF. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 9 1 8 . THE NEXT ISSUE INVOLVED IN THIS APP EAL REL A TES TO ESTIMATION OF AGRICULTURAL INCOME O F THE ASSESSEE. 19 . WE HE A RD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. THE CIT(A) DISPOSED OF THIS GROUND OF THE ASSESSEE VIDE PARA 14 OF THE IMPUGN E D ORDER IN THE FOLLOWING MANNER - 14. ..IT IS NOTICED THAT THE ASSESSING OFFICER DID NO T MAKE ANY ADDITION ON ACCOUNT OF AG R I C ULTURAL INCOME IN TH E ASSESSMENT ORD E R BUT HAS ADOPTED RS.20,000/ - TOW A RDS AG R I C ULTURAL INCOME FOR TAX PURPOSES. IT IS NOTICED FROM THE STATEM E NT OF THE APPE LLANT THAT HE HAS STATE D CATEGORICALLY THAT THE AG R ICULTURAL INCOME PER YEAR WOULD B E AROUND RS.3000 / - PER ACRE AND FOR 5 ACRES THE INCOME WOULD BE RS.15,000 / - PER ANNUM. SIN C E THE ASSESSING OFFICER HAS CONSIDERED THE ADMISSION OF TH E AG R IC U LTURAL INCOME BY TH E APPELLANT IN SUBSEQUENT AND THE EARLIER YEARS AND ADOPTED R S .20,000 AS ESTIM A TE A GRICUL T URAL INCOME, I DO NO T FIND ANY INF IR MITY IN TH E ACTION OF THE ASSESSING OFFICER. 2 0 . AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE ALSO. 2 1 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. AS CAN BE SEEN FROM THE OBSERVATIONS OF THE CIT(A) IN THE IMPUGNED ORDER, RELEVANT PORTION OF WHICH IS EXTRACTED ABOVE, THE ASSESSEE HIMSELF HAS CATEG ORICALLY STATED THAT THE AGRICULTURAL INCOME PER YEAR WOULD BE AROUND RS.3,000 PER ACRE, AND FOR FIVE ACRES IT WOULD BE RS.15,000. CONSIDERING THIS AND THE AGRICULTURAL INCOME DISCLOSED FOR EARLIER AND SUBSEQUENT YEARS, THE SAME FOR THE ASSESSMENT YEAR H AS BEEN ESTIMATED AT RS.20,000. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BROUGHT ON RECORD BY THE ASSESSEE BEFORE US, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE SAME, REJ ECTING THE GROUND OF THE ASSESSEE ON THIS ISSUE. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 10 ITA NO.1290/HYD/2013 : ASSESSMENT YEAR 1996 - 97 2 2 . THE FIRST ISSUE INVOLVED IN THIS APPEAL RELATES TO RESTRICTION OF THE ADDITION TOWARDS UNEXPLAINED INVESTMENT IN PROPERTY TO 50% OF RS.7,56,000. 2 3 . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ADDED AN AMOUNT OF RS.7,56,000 UNDER S.69 OF THE ACT, WHICH THE ASSESSEE IS STATED TO HAVE BROUGHT IN BY WAY OF SALE OF 150 TOLAS OF GOLD ORNAMENTS BELONGING TO HIS WIFE, WHO RECEIVED THESE ORNAMENT S THROUGH GIFT DEED DATED 5.10.1992 OF HER FATHER. IT WAS STATED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS THAT HIS FATHER IN LAW GIFTED 150 - TOLAS OF GOLD JEWELLERY AND 500 TOLAS OF SILVER ARTICLES THROUGH A GIFT DEED DT. 5.10.1992 AS PER THE PROM ISE MADE AT THE TIME OF MARRIAGE IN THE YEAR 1972. THE SAID GIFTED ITEMS WERE SOLD AND UTILISED FOR THE PURPOSE OF MAKING THE INVESTMENT IN QUESTION. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND TREATED THE AMOUNT OF RS .7,56,000. 2 4 . DURING THE APPEAL PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE REITERATED THE STAND BEFO R E THE ASSESSING OFFICER. THE CIT(A) AF T ER CONSIDERING THE SUBMI S SION S O F THE ASSESSEE, HELD AS UNDER - 7.2. THERE APPEARS MERIT IN TH E CON T ENTION OF THE APP E LL A N T THAT HIS WIFE HAD RECEIVED S TRIDHAN IN THE FORM OF 150 TOLAS OF GOLD AT THE TIME OF MARRIAGE AND THE SALE PROC E EDS OF THE SAME W E RE INVESTED IN THE PROPERTY, HOW E VER, THERE ARE DISCREPANCIES IN TH E STATEMENTS MADE BY THE APPELL A N T DURING ASSE SSMENT PROCEEDINGS AS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. BUT THE ENTIRE SOURCE O F THE AMOUN T CANNOT B E TREATED AS UN E XPLAIN E D INVESTMENT AND CONSIDERING TH E EFFLUX OF TIME AND THE INCONSISTENCIES IN EXPLAIN THE SOURCES BEIN G THE SA LE PROC E EDS OF GOLD, THE UNEXPLAINED INVESTMENT IS RESTRICTED TO 50% OF THE ADDIT I ON MADE BY TH E ASSESSING OFFICER I.E. RS.3,78,000/ - IS CONFIRMED. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 11 2 5 . WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A S CAN BE SEEN FROM THE OBSERVATION MADE BY THE CIT(A), SHE HAS NOT DISPUTED THE FACT THAT ASSESSEES WIFE HAD RECEIVED STRIDHAN IN THE FORM OF 150 TOLAS OF GOLD, PROMISED AT THE TIME OF MARRIAGE, AND THE SAME WAS SOLD AND INVESTED IN THE PROPERTY. HOWEVE R, SHE HAS RESTRICTED THE DISALLOWANCE TO RS.3,78,000, I.E. 50% OF THE INVESTMENT CLAIMED, BY MERELY OBSERVING THAT THE ASSESSING OFFICER HAS MENTIONED ABOUT DISCREPANCIES IN THE STATEMENT MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE CIT( A), HAVING ACCEPTED THE FACT THE ASSESSEES WIFE HAS RECEIVED 150 TOLAS OF GOLD JEWELLERY, THERE IS NO REASON WHY SHE SHOULD NOT HAVE ACCEPTED THE CLAIM OF THE ASSESSEE IN RELATION TO THE ENTIRE INVESTMENT OF RS.7,56,000 INSTEAD OF RESTRICTING IT TO 50%. IN THE CIRCUMSTANCES, WE FEEL THAT HAVING ACCEPTED THE SOURCE OF FUNDS, VIZ. SALE OF 150 TOLAS OF GOLD, THE ENTIRE INVESTMENT OF RS.7,56,00 SHOULD BE TREATED AS HAVING BEEN EXPLAINED. WE ACCORDINGLY, MODIFY THE ORDER OF THE CIT(A), AND DELETE THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER, ALLOWING THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 2 6 . THE NEXT ISSUE INVOLVED IN THIS APPEAL RELATES TO ESTIMATION OF AGRICULTURAL INCOME OF THE ASSESSEE AT RS.20,000, AS AGAINST RS.50,000 PER ANNUM CLAIMED BY T HE ASSESSEE. 2 7 . WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. THIS ISSUE IS IDENTICAL TO THE ONE RAISED BY THE ASSESSEE IN HIS APPEAL FOR ASSESSMENT YEAR 1995 - 96. THEREFORE, FOR THE REASONS DISC USSED IN PARA 21 HEREIN ABOVE, IN THE CONTEXT OF THE ASSESSEES APPEAL ON THIS ISSUE FOR THE ASSESSMENT YEAR 1995 - 96, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE SAME, REJECTING T HE GROUND OF THE ASSESSEE ON THIS ISSUE. ITA NO. 1290 & 1291/ HYD/201 3 LT. COL. P.R.S.RAO (RETD), SECUNDERABAD. 12 2 8 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED ORDER PRONOUNCED IN THE COURT ON 21.2.2014 SD/ - SD/ - (CHANDR A POOJARI) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/ - 21 ST F EBRUARY, 2014 COPY FORWARDED TO: 1 LT. COL. P.R.S.RAO (RETD), 53, VIJAYAPURI COLONY, ECIL POST, SECUNDERABAD. 2 INCOME TAX OFFICER WARD 13(3), HYDERABAD 3 COMMISSION ER OF INCOME - TAX(A) I I, HYDERABAD 4 COMMISSIONER OF INCOME - TAX I , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S