K Krishana Rao, Nabrangpur V. ITO, Jeypore

ITA 146/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4366 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 03-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: B S CH K VERMA
• Keywords: Reopening of assessment; Source of fund; Reason to believe
• Section: 147; 148

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, (SMC) BENCH, CUTTACK BEFORE : HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO S . 146 AND 148/CT K /2011 (ASSESSMENT YEAR S 2005 - 06 AND 2007 - 08) SRI K.KRISHNA RAO, PROP. M/S.SRI VENKATESWAR RICE & FLOUR MILL, AT /P.O. TENTULIKHUNTI, DIST.NOABARANGPUR PAN: AAUPR 1491 A VERSUS INCOME - TAX OFFICER, WARD 1, JEYPORE. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI B.S.CH.K.VERMA, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR ORDER SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER : THESE TWO APPEALS ARE FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2005 - 06 AND 2007 - 08 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES I N THE APPEALS AS FOLLOWS: ASSESSMENT YEAR 2005 - 06 : 1 . THE ORDER OF THE TWO LOWER FORUMS ARE ARBITRARY AND AGAINST THE LAW WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE REOPENING AND REASSES SMENT IS NOT ILLEGAL AND ON WRONG FOOTING. THERE WAS NO ANY VALID MATERIAL ON RECORD FOR REOPENING THE ASSESSMENT. 3. THE CLAIM OF AGRICULTURAL INCOME FROM OWN LANDS ALLOWED FOR THE ASSESSMENT YEAR 2007 - 08 4. THE GROUNDS ON WHICH THE ASSESSMENT HAS BEEN R EOPENED IN NOT DEALT OR DISCUSSED IN THE ORDER OF ASSESSMENT. 5. POINT OF CONTEST HAS NOT BEEN PROPERLY DEALT AT THE 1ST APPELLATE STAGE. THE POINT HAS BEEN MISLEADED. 6. THE ORDER OF THE TWO LOWER FORUMS ARE OTHERWISE BAD IN LAW. 7. FOR THESE AND OTHER RE ASONS THAT WILL BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT, THE ORDER OF THE TWO LOWER FORUMS MAY BE QUASHED AND JUSTICE BE ACCORDED. ITA NOS.146 AND 148/CT /2011 2 ASSESSMENT YEAR 2007 - 08 : 1. THE ORDER OF THE TWO LOWER FORUMS ARE AGAINST LAW WEIGHT OF EVIDENCE AND PROBABILI TIES OF THE CASE. 2. ON THE FACTS OF AND IN THE CIRCUMSTANCES OF THE CASE. UPHOLD ING THE ADDITION OF 48,000 AS UNEXPLAINED INCOME CLAIMED AS AGRICULTURAL INCOME AND ALLOWING THE APPEAL IN PART IS NOT JUSTIFIED AND AGAINST LAW. 3. THE APPELLANT HAD THE EVIDENCE OF FERTILE AGRICULTURAL LANDS AND THE SOURCES OF INCOME IS WELL EXPLAINED AT BOTH STAGES, WHIC H IS NOT PROPERLY CONSIDERED. 4. ADDITION OF OPENING BALANCE & BONUS RECEIVED A/C. IS NOT PROPER AND ILLEGAL. 5. FOR THESE AND ABOVE REASONS THAT WILL BE URGED AT THE TIME OF HEARING IT IS PRAYED THAT, THE ORDER OF THE TWO LOWER FORUMS BE QUASHED AND JUSTI CE BE ACCORDED . 3. SINCE ASSESSEE IS COMMON, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 4. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE RESPECTIVE APPEALS AND THEIR LEGAL I MPLICATIONS. 5. NOW CONSIDERING GROUNDS RAISED IN ITA NO.146/CTK/2011 FOR THE ASSESSMENT YEAR 2005 - 06, AFTER ANALYZING THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS SEEN THAT WHILE REOPENING TH E ASSESSMENT FOR THE ASSESSMENT YEAR 2005 - 06, THE REASON GIVEN BY THE ASSESSING OFFICER IS STATED TO HAVE BEEN MENTIONED AS VERIFICATION REGARDING THE GUNNY BAGS ACCOUNT BUT WHILE DOING THE ASSESSMENT, THE ASSESSING OFFICER HAS MADE ADDITION OF 20,876 ON THE GROUND THAT THE EXCESS INCOME FROM DIFFERENT SOURCES HAS BEEN CAPITALIZED BY THE ASSESSEE BY CREDITING TO THE CAPITAL ACCOUNT THAT WERE NOT DISCLOSED IN THE RETURN. ITA NOS.146 AND 148/CT /2011 3 THE ASSESSEE CONTENDS THAT SUCH ADDITION CANNOT BE MADE IN REOPENING THE A SSESSMENT AS THE LAW ENVISAGES THAT THE GROUND TAKEN BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT MUST NECESSARILY BE FOUND TO HAVE BEEN CORRECT AND ADDITION MUST BE ON THAT GROUND AND APART FROM THAT IF HE FINDS ANY OTHER MISTAKES OR OMISSION THAT COMES ACROSS CAN BE ADDED BUT THE ASSESSING OFFICER IS NOT ENTITLED TO ADD ANY AMOUNT OTHER THAN THEY MADE ON THE GROUND OF REOPENING OF THE ASSESSMENT. THE LEARNED CIT(A) HAS RELIED ON TWO DECISIONS IN THE CASE OF CIT V.SHIV SHAKTI FLOUR MILLS P. LTD (32 7 ITR 430 (GAUHATI) AND ACIT V. RAJESH JHAVERI STOCK BROKERS PVT. LTD (219 ITR 500). THE LEARNED CIT(A) RELIED ON THE AMENDED PROVISIONS OF SECTION 147 AND AS PER THE AMENDED PROVISION THE ASSESSING OFFICER IS AUTHORISED TO TAKE ACTION IF HE HAS REASON TO BELIEF THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR AND PROCEED TO ASSESS OR REASSESS SUCH INCOME SUBJECT TO THE PROVISIONS OF SECTIONO148 TO153 OF THE ACT. THE ASSESSING OFFICER IS ALSO AUTHORISED TO ASSESSEE OR REASS ESS ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN COURSE OF SUCH PROCEEDINGS. BUT IN THE PRESENT CASE ON HAND UNDISPUTEDLY THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE GROUND THAT THE GUNNY BAGS AMOUNT HAS TO BE VERIFIED AS THAT IS OMISSION OF MENTIONING OF THE GUNNY BAGS FOUND IN THE FINAL ACCOUNT OF THE ASSESSEE. AFTER REOPENING THE ASSESSMENT, HE MADE THE ADDITION OF 20,876 FOUND TO HAVE BEEN CAPITALIZED IN EXCESS FROM DIFFERENT SOURCES DISCLOSED BY THE ASSESSEE. PROVISIONS CONTAINED IN SECTION147 ENVISAGES THAT THE ASSESSING OFFICER CAN MAKE ADDITIONS ON THE GROUND ON WHICH THE ASSESSMENT WAS REOPENED AND ALONG WIT H THAT HE MAY ITA NOS.146 AND 148/CT /2011 4 MAKE ADDITION WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN COURSE OF SUCH PROCEEDINGS. BUT HE CANNOT ENTIRELY DISCARD THE GROUND TAKEN FOR WHICH HE REOPENED THE PROCEEDINGS BUT MAKING OTHER ADDITIONS AS THE WORDINGS USED IN THE PROVISIONS OF SEC TION 147, WHICH CLEARLY SAYS THAT , IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME CHARGEABLE FOR ANY ASSESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTION 148 TO 153 ASSESS OR REASSESS SUCH INCOME ALSO ANY OTHER INCOME CHARGEABLE INCOME W HICH WAS ESCAPED. SO, HE CANNOT ENTIRELY DISCARD THE GROUND TAKEN FOR REOPENING THE ASSESSMENT BASING ON ONE GROUND AND MAKING ASSESSMENT ON OTHER GROUND IS NOT JUSTIFIED UNDER LAW AND HENCE, IT IS FOUND THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND UPHOLDING SUCH ORDER BY THE LEARNED CIT(A) IS NOT PROPER. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED BY SETTING ASIDE THE IMPUGNED ASSESSMENT. 6. NOW COMING TO ITA NO.148/CTK/2011 FOR THE ASSESSMENT YEAR 20 07 - 08, THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS RELATING TO THE ADDITION OF 48,000 AS UNEXPLAINED INCOME AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A). 7. ON ANALYZING THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHO RITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS FOUND THAT THE LEARNED CIT(A) HAS UPHELD THE ADDITION OFRS.48,000 AS AGRICULTURAL INCOME FROM INHERITED LAND OF HUF CONSISTING OF THE ASSESSEE AND OTHER COPARCENERS . THE ASSESSEES CLA IM IS THAT SIMILAR SUCH INCOME WAS CREDITED TO HIS CAPITAL WHICH WAS ACCEPTED BY THE DEPARTMENT BUT HOWEVER, THE DEPARTMENTAL AUTHORITIES WITHOUT VERIFYING SUCH THING HAS PASSED THE IMPUGNED ORDERS HOLDING THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE RE GARDING OWNERSHIP OF ITA NOS.146 AND 148/CT /2011 5 AGRICULTURAL LAND BY THE HUF AND CULTIVATION OF LAND BY THE HUF FOR THE PERIOD UNDER CONSIDERATION. 8. ON CAREFUL ANALYSIS OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS FOUND THAT THE ASSESSEES CLAIM OF HAVING ANCESTRAL PROPERTY OF AGRICULTURAL LAND AND INCOME DERIVED THERE FROM SHOWN IN THE CAPITAL ACCOUNT WAS NOT PROPERLY VERIFIED BY THE DEPARTMENTAL AUTHORITIES AS TO THE FACT OF OWNERSHIP OF THE LAND AND CULTIVATION MAINTAINED BY THE REVENUE DEPARTMENT. IT IS FOUND THAT IT IS A FIT CASE FOR RESTO R ING TO THE ASSESSING OFFICER FOR DE NOVO EXAMINATION OF THIS ISSUE AND THEREAFTER TO PASS CONSEQUENTLY ORDER AS PER LAW OF COURSE BY STRICTLY FOLLOWING THE PRINCIPLES OF NAT URAL JUSTICE. 9. IN THE RESULT, ITA NO.146/CTK/2011 FOR THE ASSESSMENT YEAR 2005 - 06 IS ALLOWED AND ITA NO.148/CTK/2011 FOR THE AY 2007 - 08 IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON DT. 30 TH JUNE, 2011 S D/ - DATE: 30 TH JUNE, 2011 (K.S.S.PRASAD RAO) JUDICIAL MEMBER H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SRI K.KRISHNA RAO, PROP. M/S.SRI VENKATESWAR RICE & FLOUR MIL L, AT/P.O. TENTULIKHUNTI, DIST.NOABARANGPUR 2. THE RESPONDENT: INCOME - TAX OFFICER, WARD 1, JEYPORE. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.