Spartex Ceramics India Ltd, Narasingapuram V. JCIT(Assessments), Guntur

ITA 144/VIZ/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2699 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-11-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 12-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Corroborative evidences

Judgement Text

ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 144 /VIZAG/ 20 09 ASSESSMENT YEAR : 2003 - 04 R. VENKATA RAO RA JAHMUNDRY ACIT CIRCLE - 1 RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) PAN NO.AGFPR 7849P APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS BUT THEY ALL RELATE TO THE ESTIMATION OF THE AGRICULTURAL INCOME OF THE ASSESSEES. 2. BRIEF FACTS RELATING TO THE ISSUE BORNE OUT FROM THE RECORD OF THE LOWER AUTHORITIES ARE THAT THE ASSESSEE HAS CL AIMED THE AGRICULTURAL INCOME FROM ITS AGRICULTURAL LAND AT RS.3,42,128/ - . BEFORE THE A.O., IT WAS EXPLAINED THAT ASSESSEE OWNED AGRICULTURAL LAND TO THE EXTENT OF 20.09 ACRES WHICH INCLUDE 5.55 ACRES IN BURUGUPUDI AND TWO PATCHES OF 6.08 ACRES AND 8.46 A CRES IN MADHURAPUDI. IT WAS FURTHER EXPLAINED THAT ALL SUCH LANDS WERE LEASED OUT TO ONE TENANT NAMELY SHRI B. LEELA KRISHNA FROM WHOM HE HAS RECEIVED AGRICULTURAL INCOME IN THE FORM OF LEASE RENT. A LETTER FROM THE SAID LESSEE CONFIRMING THE PAYMENT OF LEASE RENT WAS FILED WHICH INDICATED THAT LEASE RENT OF RS.1,10,500/ - HAS BEEN PAID IN RESPECT OF THE LAND OF 6.08 ACRES AT MADHURAPUDI ON WHICH COCONUT WAS CULTIVATED, A SUM OF RS.1,25,000 WAS PAID IN RESPECT OF 5.55 ACRES OF LAND AT BURUGUPUDI ON WHICH C OCONUT WAS CUL TIVATED, AND, ANOTHER SUM OF RS.1,06,628 REPRESENTING THE SALE VALUE OF OIL PALM GROWN ON 8.46 ACRES AT MADHUPUDI. ON EXAMINING THE LAND TITLE DOCUMENTS, THE A.O. NOTICED THAT THE TWO PATCHES OF LAND AT MADHURPUDI OF 6.08 ACRES AND 8.46 ACRE S, RESPECTIVELY, HAD BEEN PURCHASED DURING THE ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY 2 RELEVANT ACCOUNT YEAR AND THAT THERE WAS NO MENTION OF EXISTENCE OF COCONUT CROP ON ONE PATCH OF LAND OF 6.08 ACRES. ON SEEKING FURTHER EXPLANATION ALONG WITH SUPPORTING EVIDENCES FROM THE ASSESSEE, A COPY OF THE BANK PASS BOOK INDICATING THE PAYMENTS RECEIVED FROM TWO CONCERNS FOR SALE OF OIL PALM SEEDS WAS PRODUCED FOR VERIFICATION. HOWEVER, NO SIMILAR EVIDENCE WAS FURNISHED IN SUPPORT OF THE CLAIM OF EXISTENCE OF COCONUT CROP ON THE LAND OF 6.08 ACRES AT M ADHURPUDI. WHILE THE A.O. ACCEPTED THE CLAIM OF AGRICULTURAL INCOME OF RS.1,06,628 FROM SALE OF OIL PALM SEEDS IN RESPECT OF 8.46 ACRES OF LAND AT MADHUPUDI, HE, HOWEVER, DECLINED TO ACCEPT THE CLAIM OF EARNING OF AGRICULTURAL INCOME ON SALE OF COCONUTS I N RESPECT OF 6.08 ACRES OF LAND AT MADHURPUDI ON THE REASONING THAT THE LAND DOCUMENT THEREOF DID NOT MENTION ABOUT THE EXISTENCE OF COCONUTS BEARING TREES. AS REGARDS THE CLAIM OF AGRICULTURAL LEASE RENT OF RS.1,25,000 IN RESPECT OF LAND OF 5.55 ACRES AT BURUGUPUDI, THE A.O., PRIMA FACIE, FOUND THAT THE LEASE RENT PER ACRE WORKED OUT TO A HIGHLY UNREALISTIC FIGURE (RS.22,523) AND DECIDED TO CONDUCT INQUIRY ABOUT THE PREVAILING LEASE RENT IN AND AROUND BURUGUPUDI BY DEPUTING THE WARD - INSPECTOR, WHO, REPORT ED THAT THE LEASE RENT PAYABLE WAS ANYWHERE BETWEEN RS.7,000 TO RS.8,000 PER ANNUM FOR COCONUT CROP. ACCORDINGLY, THE A.O. SOUGHT TO RESTRICT THE CLAIM OF LEASE RENT TO RS.7,000 PER ACRE AND WORKED OUT THE PROBABLE LEASE RENT OF RS.38,500 AND PROPOSED TO DISALLOW THE BALANCE OF RS.86,500/ - . AFTER TAKING INTO CONSIDERATION THE OBJECTIONS ON BEHALF OF THE ASSESSEE, THE A.O., HOWEVER, PROCEEDED TO DISALLOW THE CLAIM OF AGRICULTURAL LEASE RENT OF RS.1,10,500 AND RS.86,500 FROM THE LANDS AT MADHURPUDI AND BUR UGUPUDI, RESPECTIVELY, AGGREGATING TO RS.1,97,000 AS INCOME FROM OTHER SOURCES CLAIMED IN THE GARB OF AGRICULTURAL INCOME. 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE AGRICULTURAL LAND S IN QUESTION HAVE BEEN LEAS ED OUT TO ONE SHRI B. LEELA KRISHNA WHO PAID THE LEASE RENT TO THE ASSESSEE . THE DETAILS OF LEASE RENT WAS ALSO FURNISHED BEFORE THE A.O. ALONG WITH THE CONFIRMATION OF THE LESSEE. THEREFORE, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF GENUINENE SS AND CORRECTNESS OF THE LEASE RENT RECEIVED BY THE ASSESSEE. THE A.O. HAS ESTIMATED THE AGRICULTURAL INCOME WITHOUT ANY BASIS, ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY 3 WHEREAS THE ASSESSEE HAS FURNISHED ALL THE RELEVANT EVIDENCE WITH REGARD TO THE AGRICULTURAL INCOME EARNED BY HIM. 4. THE C IT(A) RE - EXAMINED THE ISSUE IN THE LIGHT OF ASSESSEES CONTENTIONS AND HAS RE - ESTIMATED THE AGRICULTURAL INCOME. THE RELEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER: AFTER HEARING THE LEARNED AUTHORIZED REPRESENTATIVE AND ON A CAREFUL CONSID ERATION OF THE FACTS RELATING TO THE ISSUE, THE FOLLOWING OBSERVATIONS MADE AND DECISIONS TAKEN: - (I) DESPITE THE VOCIFEROUS CLAIM ON BEHALF OF THE APPELLANT THAT HE HAS EARNED LEASE RENTAL INCOME OF RS.3,42,128 ON LEASING OUT HIS AGRICULTURAL LANDS AGGR EGATING TO A LITTLE MORE THAN 20.00 ACRES ON THE PLEA THAT THE TENANT SHRI B. LEELA KRISHNA HAS CONFIRMED TO HAVE PAID THE LEASE RENTAL INCOME TO THE APPELLANT AS DECLARED IN THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2003 - 04, THE PER ACRE MAXIM UM YIELD POTENTIAL OF THE CROPS GROWN HAVE NECESSARILY TO BE TAKEN INTO ACCOUNT BEFORE HOLDING WHETHER DECLARED AMOUNT OF AGRICULTURAL INCOME PER ACRE COULD HAVE BEEN EARNED UNDER THE BEST AND IDEAL CONDITIONS. IT HAS BEEN CLAIMED THAT THE BEST OF INFRAST RUCTURAL FACILITIES WERE AVAILABLE - IDEAL CONDITIONS FOR IRRIGATION, CULTIVATION AND MARKETING OF THE CROPS WERE AVAILABLE TO THE TENANT, AND, AS SUCH, THE TENANT WAS CAPABLE OF EARNING SUBSTANTIAL INCOME PER ACRE SO AS TO GIVE A HIGHER LEASE RENT AFTER RET AINING REASONABLE PROFITS FOR HIMSELF. IT COULD BE OBSERVED FROM THE INSTANT CASE THAT THE LEASE RENTAL INCOME IN RESPECT OF 5.55 ACRES OF LAND HAS BEEN CLAIMED TO HAVE BEEN PAID TO THE APPELLANT @ RS.22,523 PER ACRE, WHICH IMPLIES THAT THE TENANT WAS EXP ECTED TO HAVE EARNED RS.30,000 TO RS.35,000 PER ACRE NET OF EXPENSES SO THAT HE COULD RETAIN FOR HIMSELF A REASONABLE PER ACREAGE INCOME OF RS.10,000 TO RS.15,000. OBVIOUSLY, THE TENANT IS NOT EXPECTED TO DO CHARITY TO THE LESSOR, BUT PRIMARILY LOOK FORWA RD TO EARNING REASONABLE INCOME IN PROPORTION TO THE ACREAGE QUANTUM OF THE LEASE RENT CLAIMED TO BE PAID. IT IS PERTINENT TO ASCERTAIN AT THIS JUNCTURE THE MAXIMUM PER ACREAGE YIELD OF COCONUT CROP UNDER THE MOST IDEAL CONDITIONS IN THE WHOLE OF EAST GOD AVARI DISTRICT WITH SPECIFIC REFERENCE TO KONASEEMA AREA (WHICH IS FAMOUS FOR MAXIMUM COCONUT YIELD IN THE ENTIRE STATE OF ANDHRA PRADESH). STATISTICAL DATA INDICATE THAT WITH THE SALE PRICE OF EACH COCONUT AT THE RELEVANT POINT OF TIME AT A MAXIMUM SUM O F RS.4 IN THE WHOLESALE MARKET , EVEN THE MOST COMPETENT COCO NUT FARMERS, ARMED WITH TECHNICAL SKILLS AND EXPERTISE, HAVE NOT BEEN ABLE TO EARN MORE THAN RS.18,000 PER ACRE UNDER THE BEST OF CONDITIONS WITHOUT THE ADVERSE AFFECTS OF CYCLONE. IN VIEW OF SUC H REALISTIC SITUATION AS PREVALENT THEN, AND EVEN DURING THE CURRENT PERIOD, ANY CLAIM OF HAVING EARNED AGRICULTURAL INCOME FROM CULTIVATION AND SALE OF COCONUTS EXCEEDING ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY 4 RS.20,000 PER ACRE IS NOTHING BUT EXAGGERATION NOT COMMENSURATE WITH THE REAL SITUAT ION. ASSUMING AND ALSO GIVING THE APPELLANT THE BENEFIT OF DOUBT THAT HIS TENANT HAD CULTIVATED COCONUT UNDER THE BEST AND IDEAL CONDITIONS FOR THE ENTIRE RELEVANT ACCOUNTING YEAR, THE CREDIT FOR THE MAXIMUM PER ACREAGE YIELD OF COCONUT COULD BE GIVEN TO THE EXTENT OF RS.18,000 PER ACRE, AND REDUCING THEREFROM THE TENANTS SHARE OF PROFIT AT A MINIMUM AMOUNT OF RS.5,000 PER ACRE, THE CREDIT FOR THE MAXIMUM LEASE RENT PER ACRE IN THE APPELLANTS CASE WOULD WORK OUT TO A SUM OF RS.13,000 PER ACRE AND NOT ANY AMOUNT MORE. ACCORDINGLY, THE LEASE RENTAL INCOME IN RESPECT OF 5.55 ACRES OF LAND WORKS OUT TO A SUM OF RS.72,150 LEAVING A BALANCE OF RS.52,850 AS EXAGGERATED AGRICULTURAL INCOME WHICH IS LIABLE TO BE TREATED AS INCOME FROM UNEXPLAINED OR OTHER SOURCES . HENCE, THE DISALLOWANCE IN RESPECT OF THE CLAIM OF PURPORTED AGRICULTURAL INCOME OF RS.1,10,500 IS, HEREBY, RESTRICTED TO RS.52,850 AND, CONSEQUENTLY, THE APPELLANT WOULD GET RELIEF OF RS.33,650. (II) AS REGARDS THE DISALLOWANCE OF PURPORTED AGRICULTUR AL INCOME OF RS.1,10,500 FROM CULTIVATION AND SALE OF COCONUTS IN RESPECT OF 6.08 ACRES OF LAND AT MADHURPUDI, IT NEEDS TO BE STATED THAT THE SALE DEED DOCUMENT THEREOF DOES NOT INDICATE THE EXISTENCE OF ANY STANDING CROP OR NUT BEARING COCONUT TREES AT TH E TIME OF PURCHASE OF SUCH LAND DURING THE ACCOUNTING YEAR. IT HAS BEEN THE NORMAL PRACTICE BY THE LANDS REGISTERING AUTHORITIES AND LAND REVENUE AUTHORITIES TO INDICATE THE EXISTENCE, IF ANY, OF TREES AND STANDING CROPS IN AGRICULTURAL LANDS SOLD OR TRAN SFERRED FROM ONE PERSON TO ANOTHER. SINCE THE DOCUMENT IN THE APPELLANTS CASE DOES NOT INDICATE THE EXISTENCE OF COCONUT TREES, MUCH LESS NUT BEARING COCONUT TREES, IT HAS TO BE HELD THAT THE CLAIM OF HAVING EARNED AGRICULTURAL LEASE RENT IS A FAKE ONE D ESPITE ANY CONFIRMATION GIVEN BY THE ALLEGED TENANT. IT IS POSSIBLE THAT THE APPELLANT OR ANYBODY ON HIS BEHALF MAY HAVE PLANTED COCONUT TREES AFTER PURCHASE OF SUCH PATCH OF LAND DURING THE ACCOUNTING YEAR ENDED 31.3.2003, AND, THEREAFTER, TREES MIGHT HA VE GROWN UP AND YIELDED NUTS AFTER A REASONABLE PERIOD OF GROWTH, BUT CERTAINLY NO COCONUT CROP COULD BE EXPECTED AT THE END OF THE RELEVANT ACCOUNTING YEAR SO AS TO CLAIM EARNING OF AGRICULTURAL INCOME. SURELY, IT IS NOT THE CLAIM OF THE APPELLANT THAT T HE SAID TENANT HAS PAID HIM LEASE RENTAL INCOME WITHOUT EVER EARNING AGRICULTURAL INCOME THEREFROM. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING AND TREATING THE LEASE RENTAL INCOME OF R S.1,10,500 IN RESPECT OF 6.08 ACRES OF LAND AT MADHURPUDI AS UNEXPLAINED INCOME FROM OTHER SOURCES, WARRANTS NO INTERFERENCE. 5 . AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE US. 6 . THE LD. COUNSEL FOR THE ASSESSEES HAS REITERATED ITS SUBMISSI ONS WHICH HAS BEEN RAISED BEFORE THE CIT(A). HE HAS ALSO INVITED OUR ATTENTION TO THE ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY 5 CONFIRMATION MADE BY THE LESSEE WITH REGARD TO THE PAYMENT OF LEASE RENT. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THAT IN THE SALE DEED DOCUMENT THERE WAS NO INDIC ATION ABOUT THE EXISTENCE OF ANY STANDING CROP OR NUT BEARING COCONUT TREES AT THE TIME OF PURCHASE OF SUCH LAND DURING THE ACCOUNTING YEAR. THEREFORE, THE ASSESSEES CLAIM CANNOT BE ACCEPTED W ITH REGARD TO THE COCONUT YIELD FROM THE LAND AT MADHURPUDI OF 6.08 ACRES. WITH REGARD TO THE COCONUT YIELD FROM THE OTHER LAND OF 8.46 ACRES IT WAS CONTENDED THAT THE A.O. HAS MADE A NECESSARY VERIFICATION ABOUT THE COCONUT YIELD PER ACRE. SINCE THE CIT HAS EXAMINED ALL NECESSARY ASPECTS WHILE ADJUDICATING THE ISS UES NO INTERFERENCE IS CALLED THEREIN. 7 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD, WE FIND THAT ASSESSEE HAS CLAIMED THE AGRICULTURAL INCOME ON THE BASIS OF THE CONFIRMATION LETTERS OF THE LESSEE. NO DOCUMENT WAS EXECU TED ABOUT THE LEASE OF THE AGRICULTURAL LAND. MORE SO, THE REVENUE HAS MADE A NECESSARY VERIFICATION BY APPOINTING A WARD INSPECTOR AND ALSO ESTIMATED THE COCONUT YIELD INCOME ON THE BASIS OF THE STATISTICAL DATAS AVAILABLE. WITH REGARD TO THE COCONUT TR EES ON 6.08 ACRES AT LAND MADHURPUDI, NO EVIDENCE WAS PLACED BY THE ASSESSEES. HE HAS NOT FILED ANY COPY OF REVENUES RECORD SHOWING THE CROP CULTIVATED ON A PARTICULAR LAND. IN THE ABSENCE OF THESE DOCUMENTS, IT IS VERY DIFFICULT TO ACCEPT THE CONTENTIO NS OF THE ASSESSEES. WE HOWEVER EXAMINED THE ORDER OF THE CIT(A) AND WE FIND THAT HE HAS EXAMINED THE ISSUE IN DETAIL IN ITS ORDER. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WE CONFIRM THE SAME. 8 . IN THE RESULT, THE APPEAL OF THE AS SESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19.11 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 19 TH NOVEMBER , 20 10 ITA NO.144/VIZAG/2009 R. VENKATA RAO, RAJAHMUNDRY 6 COP Y TO 1 SRI R. VENKATA RAO, PROP: NANDINI TEA TRADERS, D.NO.33 - 1 - 5, TOWN HALL ROAD, RAJAHMUNDRY 2 ACIT, CIRCLE - 1, RAJAHMUNDRY 3 THE CI T, RAJAHMUNDRY 4 THE CIT (A) , RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM