The ITO, Ward-5(1), Visakhapatnam V. Sri T Ch Appa Rao, Visakhapatnam

ITA 130/VIZ/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2815 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 18-02-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Assessee Lawyers: C V S MURTHY
• Keywords: Additional evidence; Reassessment proceedings
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.130/VIZAG/2005 ASSESSMENT YEAR : 2001-02 INCOME TAX OFFICER, WARD-5(1), VISAKHAPATNAM. VS. SRI T CH APPA RAO, VISAKHAPATNAM. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B JAYA KUMAR , DR RESPONDENT BY : SHRI CVS MURTHY, CA. O R D E R PER B..R. BASKARAN, ACCOUNTANT MEMBER : 1. THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 03-12-2004 PASSED BY LD CIT(A)-I, VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2001-02. 2. THE ISSUES AGITATED IN THIS APPEAL ARE (A) WHETHER LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.2,94,400/- PERTAINING TO THE AGRICULTURAL INCOME. (B) WHETHER LD CIT(A) IS JUSTIFIED IN ACCEPTING THE SOURCES TO THE EXTENT OF RS.1,50,000/-. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2001-02 ADMITTING A TOTA L INCOME OF RS.1,57,813/- BESIDES DECLARING AGRICULTURAL INCOME OF RS.3,69,00 0/-. AFTER MAKING ENQUIRIES WITH REGARD TO THE LAND HOLDINGS CLAIMED BY THE ASS ESSEE AND OTHER MATTERS IN THIS REGARD, THE ASSESSING OFFICER ESTIMATED THE AG RICULTURAL INCOME AT RS.74,600/- AND ACCORDINGLY ADDED THE DIFFERENCE OF RS.2,94,400 /- TO THE TOTAL INCOME. IN 2 THE APPEAL PREFERRED BY THE ASSESSEE, LD CIT(A) DEL ETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE APPELL ANT IS IN THE POSSESSION OF SUBSTANTIAL LAND WHERE CASH CROPS LIKE CASHEW AND C ASUARINAS ARE GROWN. THEREFORE, THE NET AGRICULTURAL INCOME OF RS.3,69,0 00/- SHOWN BY THE APPELLANT IN THE RETURN, APPEARS TO BE REASONABLE AND THE SAME S HOULD BE ACCEPTED. CONSEQUENTLY, THE ADDITION OF RS.2,94,400/- REPRESE NTING THE DIFFERENCE BETWEEN AGRICULTURAL INCOME SHOWN BY THE APPELLANT AND AS E STIMATED BY THE ASSESSING OFFICER SHOULD NOT BE TREATED AS INCOME FROM UNDISC LOSED SOURCES AND THE ADDITION IS HEREBY DELETED. AGGRIEVED AGAINST THE ORDER OF LD CIT(A), THE REVEN UE HAS FILED THIS APPEAL. 3.1. WE HAVE HEARD THE PARTIES AND ALSO PERUSED THE RECORD. LD AR HAS FILED COPIES OF THE ASSESSMENT ORDERS, PASSED U/S 143(3) R.W.S.147, IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEARS 1999-2000 AND 2000-01 . THE ORDERS CITED ABOVE HAVE BEEN PASSED ON 28.2.2005, I.E. SUBSEQUENT TO T HE ASSESSMENT ORDER UNDER CONSIDERATION. THE ORDER UNDER CONSIDERATION WAS P ASSED ON 31-3-2004. WE FURTHER NOTICE THAT IN THE REASSESSMENT PROCEEDINGS RELATING TO BOTH THE YEARS, THE ASSESSING OFFICER HAS ACCEPTED THE AGRICULTURAL INC OME TO THE EXTENT OF RS.3,30,000/- AFTER CONSIDERING THE DETAILS FURNISH ED IN THAT REGARD. LD AR HAS SUBMITTED THAT THERE IS NO CHANGE IN THE EXTENT OF LAND HOLDINGS AND NATURE OF AGRICULTURAL ACTIVITIES CARRIED ON DURING THESE THR EE YEARS. HENCE, ON THE SAME SET OF FACTS, THE ASSESSING OFFICER HAS ACCEPTED TH E CLAIM OF AGRICULTURAL INCOME TO THE EXTENT OF RS.3,30,000/- IN THE REASSESSMENT PRO CEEDINGS CITED ABOVE. DURING THE COURSE OF APPELLATE PROCEEDINGS PERTAINING TO T HE YEAR UNDER CONSIDERATION, THE LD CIT(A) HAS CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER ON THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE H IM. AFTER CONSIDERING THE REMAND REPORT AND EVIDENCES FILED BY THE ASSESSEE, LD CIT(A) HAS COME TO THE CONCLUSION THAT THE ASSESSEE COULD HAVE EARNED THE AGRICULTURAL INCOME DECLARED BY HIM. IN VIEW OF THE FOREGOING, WE ARE OF THE O PINION, THAT THE AO HAS ESTIMATED THE AGRICULTURAL INCOME AT A LOWER FIGURE . HOWEVER, BY CONSIDERING THE ESTIMATE OF RS.3,30,000/- MADE BY THE ASSESSING OFF ICER IN THE REASSESSMENT PROCEEDINGS, WE ESTIMATE THE AGRICULTURAL INCOME FO R THE YEAR UNDER CONSIDERATION 3 ALSO AT THE SAME LEVEL, I.E. RS.3,30,000/-. IN OUR OPINION, THE ESTIMATE SO MADE WOULD MEET THE ENDS OF JUSTICE AND WE ORDER ACCORDI NGLY. 4. THE NEXT ISSUE RELATES TO THE ADDITION OF RS .1,50,000/- FOUND IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER CA LLED FOR THE DETAILS OF DEPOSIT AMOUNTING TO RS.3,90,000/- MADE IN LAKSHMI VILAS BA NK ACCOUNT. THE ASSESSEE EXPLAINED THAT THE SAID DEPOSIT WAS MADE OUT OF HIS AGRICULTURAL INCOME AND ALSO FROM OUT OF A SUM OF RS.1,50,000/- RECEIVED BACK FR OM A COMPANY NAMED M/S NIRMITA PROJECTS PVT. LTD. HOWEVER THE SAID COMPAN Y, VIDE ITS LETTER DATED 27.3.2004 ADDRESSED TO THE ASSESSING OFFICER, CONFI RMED THAT THE LOAN AMOUNT OF RS.1,50,000/- TAKEN FROM THE ASSESSEE WAS OUTSTANDI NG AND NOT REPAID TILL 31.3.2001. ACCORDINGLY THE AO DID NOT ACCEPT THE S OURCES OF RS.1,50,000/-. BEFORE LD CIT(A), THE ASSESSEE FILED A LETTER FROM THE MANAGING DIRECTOR OF THE M/S NIRMITA PROJECTS PVT. LTD, NAMED SHRI A.M.R.NAR ENDRA, WHERE IN IT WAS STATED THAT THE FATHER OF THE SAID MANAGING DIRECTO R HAD REPAID THE AMOUNT TO THE ASSESSEE. THE FATHER OF SHRI NARENDRA, VIZ., SRI S URIBABU ALSO FILED A LETTER STATING THAT HE HAS REPAID THE AMOUNT ON BEHALF OF HIS SON OUT OF HIS AGRICULTURAL INCOME. IN THE REMAND REPORT, THE AO DISBELIEVED T HIS NEW VERSION. HOWEVER LD CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE. 4.1 ON A CAREFUL CONSIDERATION OF RIVAL SUBMISS IONS AND PERUSAL OF RECORD, WE NOTICE THAT THE ASSESSEE HAD GIVEN A DEMAND DRAFT O F RS.1,50,000/- TO THE COMPANY NAMED M/S NIMRITA PROJECTS PVT. LTD. THE S AID DEMAND DRAFT WAS ENCASHED THROUGH THE BANK ACCOUNT OF ITS MANAGING D IRECTOR SHRI NARENDRA. WHEN THE AO CAUSED ENQUIRIES, THE SAME MANAGING DIR ECTOR HAS FURNISHED A LETTER DATED 27.3.2004, ON BEHALF OF THE COMPANY, B Y STATING THAT THE SAID LOAN OF RS.1,50,000/- WAS NOT REPAID ON 31.3.2001. BEFORE LD CIT(A), THE SAME MANAGING DIRECTOR HAS FURNISHED ANOTHER LETTER BY S TATING THAT HIS FATHER HAS REPAID THE LOAN OF RS.1,50,000/-. HENCE THE SECOND LETTER, WHICH IS TOTALLY CONTRADICTORY TO THE EARLIER ONE, DOES NOT LEAD US TO BELIEVE THE VERACITY OF IT. IT APPEARS THAT LD CIT(A) WAS UNDER THE IMPRESSION THA T THE IMPUGNED DISALLOWANCE WAS MADE BY THE AO FOR THE REASON THAT THE DEMAND DRAFT GIVEN TO 4 THE COMPANY WAS ENCASHED THROUGH THE BANK ACCOUNT O F THE MANAGING DIRECTOR. THE PERCEPTION OF LD CIT(A) IS FACTUALLY INCORRECT. 4.2 OUT OF THE TOTAL DEPOSIT OF RS.3,90,000/- T HE AO HAS GIVEN CREDIT TO THE EXTENT OF AGRICULTURAL INCOME ACCEPTED BY HIM, I.E. 74,600/- AND ADDED THE BALANCE AMOUNT OF RS.3,15,400/-. IN THE EARLIER PARAGRAPHS , WE HAVE DETERMINED THE AGRICULTURAL INCOME AT RS.3,30,000/-. ACCORDING TO THE METHODOLOGY FOLLOWED THE AO, THE AGRICULTURAL INCOME OF RS.3,30,000/- HAVE T O BE GIVEN CREDIT AND ACCORDINGLY THE AO IS DIRECTED TO ADD THE BALANCE O F RS.60,000/-, IN THE PLACE OF RS.3,15,400/-. ACCORDINGLY, THE ORDER OF LD CIT(A) STANDS MODIFIED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE COURT ON 3.12 .2009. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 3 RD DECEMBER, 2009 PVV/SPS VISAKHAPATNAM A COPY OF THIS ORDER IS FORWARDED TO : 01 THE INCOME TAX OFFICER, WARD-5(1), VISAKHAPATNAM . 02 SHRI T CH APPA RAO, VENKANNAPALEM, PEDAGANTYADA, GAJUWAKA, VISAKHAPATNAM. 03 THE CIT-I, VISAKHAPATNAM 04 THE CIT(A)-I, VISAKHAPATNAM. 05 THE DR, ITAT, VISAKHAPAATNAM BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH