A.S.Leasing & Finance Limited, Hyderabad V. ACIT, Central Circle-1, Hyderabad

ITA 1544/HYD/2014

• Counselvise Citation: 154422514 RSA 2014
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 10-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1538, 1539, 1540, 1541, 1542, 1543 & 1544/ HYD/2014 ASSESSMENT YEARS: 2003-04, 2004-05, 2005-06, 2006-0 7, 2007-08, 2008-09 & 2009-10 A.S. LEASING & FINANCE LIMITED, BANJARA HILLS, HYDERABAD [PAN: AACCA2305H] VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAM A RAO, AR FOR REVENUE : SHRI RAMA KRISHNA, BANDI DATE OF HEARING : 10 - 0 3 - 201 5 DATE OF PRONOUNCEMENT : 13 - 03 - 2015 O R D E R PER BENCH : THESE SEVEN APPEALS ARE BY ASSESSEE AGAINST THE CO MMON ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, HYDERABA D DATED 28-07-2014. 2. THE ONLY ISSUE AGITATED BY ASSESSEE IN THESE APP EALS IS WITH REFERENCE TO THE TREATMENT OF AGRICULTURAL INCOME A S 'INCOME FROM OTHER ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 2 -: SOURCES'. ASSESSEE HAS FILED RETURNS OF INCOME AND DECLARED INCOMES AS UNDER: A.Y. DATE OF FILING INCOME (IN RS.) AGRICULTURAL INCOME (IN RS.) 2003 - 04 20 - 11 - 2003 22,450 3,03,744 2004 - 05 30 - 12 - 2004 30,100 3,03,744 2005 - 06 30 - 04 - 2006 91,800 3,29,077 2006 - 07 10 - 12 - 2006 95,730 3,43,954 2007 - 08 27 - 08 - 2008 4,51,9 00 4,95,373 2008 - 09 30 - 11 - 2009 ( - ) 33,742 5,58,018 3. CONSEQUENT TO SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE INCOME TAX ACT (ACT) CONDUCTED ON 17-09-2008 ON ASS ESSEE, NOTICES U/S.153A OF THE ACT WERE ISSUED CALLING FOR RETURNS OF INCOME AND IN RESPONSE, ASSESSEE FILED RETURNS OF INCOME. UP TO AY.2007-08 RETURNS OF INCOMES WERE FILED AGAIN AS WAS ORIGINALLY DECLARED WHERE AS FOR THE LATER TWO YEARS, RETURNS WERE FILED IN RESPONSE TO NOTICE U/S.153A. AS SEEN FROM ASSESSMENT ORDERS, ASSESSING OFFICER CONSIDERE D THE AGRICULTURAL INCOME AS NON-AGRICULTURAL INCOME ON THE REASON THA T THERE IS NO EXPENDITURE BOOKED FOR AGRICULTURAL ACTIVITY AND TH ERE ARE ONLY REGULAR RECEIPTS IN THE BOOKS OF ACCOUNTS. AS THERE IS NO OUT GO AND ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE FOR CARRY ING OUT AGRICULTURAL ACTIVITIES OTHER THAN POSSESSION OF AGRICULTURAL LA ND, THE INCOMES DECLARED BY ASSESSEE WAS TREATED AS 'INCOME FROM OT HER SOURCES' BY AO. 4. BEFORE LD.CIT(A) IT WAS SUBMITTED THAT AUTHORITI ES DID NOT FIND ANY OMISSION OF OTHER INCOMES ADMITTED IN THE COURSE OF SEARCH AND IN AY.2006-07, ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ACCEPTING AGRICULTURAL INCOME AS SUCH. FURTHER, IT WAS STATE D THAT CULTIVATORS WHO CULTIVATED THE LAND PROVIDED FUNDS AS AND WHEN THEY DERIVED INCOME. THE AMOUNT OF INCOME WAS SHARED EQUALLY BETWEEN ASS ESSEE AND ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 3 -: CULTIVATORS AND NO EXPENDITURE WAS INCURRED BY ASSE SSEE. IT WAS FURTHER CONTENDED THAT ASSESSMENT WAS THE RE-ASSESSMENT AND SINCE NO INFORMATION WAS FOUND DURING THE COURSE OF SEARCH, ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE AGRICULTURAL INCO MES ALREADY DECLARED AS 'INCOME FROM OTHER SOURCES'. 5. LD.CIT(A) WHILE ACCEPTING THAT ASSESSEE DID OWN THE LAND HOWEVER, DID NOT AGREE WITH THE CONTENTIONS AND REJECTED THE SAME BY HOLDING AS UNDER: '08.0 THE ASSESSMENT ORDERS AND WRITTEN SUBMISSIONS AND THE SALE DEEDS AND THE COURT DECREES FILED BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. FIRST OF ALL, IT IS NO TICED THAT THE APPELLANT PURCHASED THE IMPUGNED LAND OF 29 ACRE & 4 GUNTAS OF AGRICULTURAL LANDS (2 ACRS & 27 ACRES 4 GUNTS) AND THE SAME HAVE BEEN IN ITS POSSESSION SINCE 1997 THOUGH THE REGIS TRATION DID NOT TAKE PLACE AND THE REGISTRATION TOOK PLACE IN 2012 BY THE OFFICER APPOINTED BY THE PRINCIPAL JUNIOR CIVIL JUDGE, SID DIPET. THOUGH THE APPELLANT CLAIMED THAT IT RECEIVED NET AGRICULTURA L INCOME FROM THE CULTIVATOR, IT COULD NOT FILE ANY DOCUMENTARY EVID ENCE SUCH AS LEASE AGREEMENT OR ANY CONFIRMATION FROM THE ALLEGED CUL TIVATOR OR PROOF OF CULTIVATION OF THE LAND AND AGRICULTURAL PRODUCE O R SALE OF THE AGRICULTURAL PRODUCE. IT IS NOT SUFFICIENT TO EST ABLISH THE POSSESSION OF AGRICULTURAL LANDS TO CLAIM AGRICULTURAL INCOME BUT IT IS ESSENTIAL TO ESTABLISH THAT AGRICULTURAL ACTIVITY WAS CARRIED O UT IN THOSE LANDS AND THE AGRICULTURAL PRODUCE HAS BEEN SOLD AND THE RE FROM AGRICULTURAL INCOME WAS DERIVED. THE APPELLANT FA ILED TO ESTABLISH THAT IT CARRIED OUT AGRICULTURAL ACTIVITY AND DERI VED INCOME THERE FROM. HENCE, THE ASSESSING OFFICER'S ACTION IN TRE ATING THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES I S CONFIRMED'. 6. BEFORE US, LD.COUNSEL FURNISHED THE SALE DEEDS I N SUPPORT OF THE OWNERSHIP OF THE AGRICULTURAL LAND, COPY OF THE AS SESSMENT ORDER DT.24- 12-2008 FOR AY.2006-07 AND WRITTEN SUBMISSIONS BEFO RE THE CIT(A) TO SUBMIT THAT ASSESSEE DID INDEED OWNED THE AGRICULTU RAL LAND WHICH WAS DISPUTED BUT WAS IN POSSESSION OF ASSESSEE. THESE WERE BEING CULTIVATED BY FOUR PERSONS WHO GAVE THE AGRICULTURAL INCOME ON SHARING BASIS TO ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 4 -: ASSESSEE. ASSESSEE WAS DERIVING AGRICULTURAL INCOM E AND BEING DECLARED IN RESPECTIVE YEARS AND THE FACT WAS VERIFIED AND A CCEPTED IN AY.2006-07 BY ITO, WARD-1(1) VIDE ORDER DT.24-12-2008. IT WAS FURTHER SUBMITTED THAT THERE WAS NO INCRIMINATING MATERIAL IN THE COU RSE OF SEARCH AND SO ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE DECLARED INCOME AS 'INCOME FROM OTHER SOURCES'. 7. LD.DR HOWEVER, RELIED ON THE ORDER OF ASSESSING OFFICER AND CIT(A) AND SUBMITTED THAT EVEN THOUGH THE OWNERSHIP WAS WI TH ASSESSEE, THE FACT OF EARNING AGRICULTURAL INCOME HAS NOT BEEN ES TABLISHED. 8. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE ORD ERS OF THE AUTHORITIES. AS SEEN FROM THE ASSESSMENT ORDER, TH ERE SEEMS TO BE NO ENQUIRY BY THE ASSESSING OFFICER IN THE COURSE OF P ROCEEDINGS U/S.153A ABOUT THE ACTIVITIES ON AGRICULTURAL LAND. HIS ORD ER IS VERY CURSORY AND DOES NOT INDICATE THAT ASSESSING OFFICER ASKED ASSE SSEE TO EXPLAIN THE SOURCES OR TO FURNISH THE EVIDENCE IN SUPPORT OF TH E AGRICULTURAL INCOME. PRIMA FACIE ACTION OF AO IN TREATING THE DECLARED A GRICULTURAL INCOME AS 'INCOME FROM OTHER SOURCES' CANNOT BE JUSTIFIED, AS ASSESSEE WAS NOT GIVEN ANY PROPER OPPORTUNITY. BE THAT AS IT MAY, E VEN THE ACCEPTED INCOME IN AY.2006-07 WAS ALSO TREATED AS 'INCOME FR OM OTHER SOURCES' WITHOUT EVEN REFERRING THE ORDER U/S.143(3) PASSED BY THE PREDECESSOR ASSESSING OFFICER. THIS FACT WAS BROUGHT TO THE NO TICE OF THE CIT(A) AND CIT(A) ACKNOWLEDGED THE SAME VIDE PARA 7 OF THE ORD ER. SURPRISINGLY, THERE IS NO FINDING ON THE ABOVE. 9. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT T HAT ASSESSEE OWNED LAND OF 29 ACRES 4 GUNTAS PURCHASED WAY BACK IN 199 7 AND HOLDING THE POSSESSION FROM THEN ONWARDS. EVEN THOUGH ON THE B ASIS OF ORDERS OF THE PRINCIPAL JR. CIVIL JUDGE, SIDDIPET, THE REGIST RATION TOOK PLACE IN ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 5 -: 2012, ASSESSEE HAS BEEN OFFERING AGRICULTURAL INCOM E IN EARLIER YEARS. IN FACT, THE SAME WAS ALSO ACCEPTED IN AY.2006-07. TH EREFORE, IN AY.2006- 07, TREATING THE AGRICULTURAL INCOME WHICH WAS ASSE SSED AS SUCH AS 'INCOME FROM OTHER SOURCES' CANNOT BE UPHELD. CONC LUDED MATTERS CANNOT BE RE-AGITATED IN THE PROCEEDINGS U/S.153A U NLESS THERE IS EVIDENCE TO THE CONTRARY. SINCE THERE IS NO INCRIM INATING MATERIAL DURING THE SEARCH, THE TREATMENT OF THE SAID INCOME AS INC OME FROM OTHER SOURCES IN AY.2006-07 IS SET ASIDE. AS FAR AS AY.2 006-07 IS CONCERNED, ASSESSEE'S GROUNDS ARE ALLOWED. 10. WITH REFERENCE TO OTHER ASSESSMENT YEARS, ASS ESSEE'S CONTENTIONS THAT THE LANDS WERE BEING CULTIVATED BY CULTIVATORS AND ASSESSEE GETS ONLY NET INCOME REQUIRES EXAMINATION. NEITHER THE ASSESSING OFFICER ENQUIRED INTO THIS ASPECT NOR CIT(A) EVEN THOUGH CO NTENDED BEFORE HER, DID NOT ORDER THE ASSESSING OFFICER TO MAKE ENQUIRI ES. BOOKS OF ACCOUNTS AS SEEN FROM THE ASSESSMENT ORDER, ARE STATED TO BE WITH THE DEPARTMENT ONLY. THEREFORE, IN THE INTEREST OF JUSTICE, WE SE T ASIDE THE ORDERS IN AYS.2003-04 TO 2005-06 AND 2007-08 TO 2009-10 TO TH E FILE OF ASSESSING OFFICER TO EXAMINE ASSESSEE'S CONTENTIONS IN CORREC T PERSPECTIVE. ASSESSEE MAY BE GIVEN DUE OPPORTUNITY TO EXPLAIN TH E AGRICULTURAL INCOME EARNED. ASSESSING OFFICER IS FREE TO MAKE N ECESSARY ENQUIRIES IF REQUIRED. WITH THESES DIRECTIONS, THE ORDERS OF AU THORITIES IN SIX ASSESSMENT YEARS I.E., AY.2003-04, 2004-05, 2005-06 , 2007-08, 2008-09 AND 2009-10 ARE SET ASIDE TO THE FILE OF ASSESSING OFFICER TO REDO IT AS PER FACTS AND LAW ON THE ISSUE. 11. LD.DR IN THE COURSE OF ARGUMENTS RELIED ON THE JUDGMENTS IN THE FOLLOWING CASES FOR THE PROPOSITION THAT AO IS FREE TO MAKE ENQUIRIES AND MAKE ADDITIONS U/S 153A: ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 6 -: I. CIT VS. ANIL KUMAR BHATIA [352 ITR 493 (DEL)] II. GOPAL LAL BHADRUKA & ORS VS. DY.CIT OF AP HIGH COURT [346 ITR 106] THERE IS NO DISPUTE WITH REFERENCE TO THE JURISDICT ION OF ASSESSING OFFICER IN EXAMINING THE ISSUES, AS THERE WERE NO SCRUTINY ASSESSMENTS EARLIER IN THE ABOVE SIX ASSESSMENT YEARS. LD.COUNSEL IS A LSO NOT DISPUTING THE JURISDICTION TO MAKE ENQUIRIES. WHAT WAS OBJECTED TO WAS THE TREATMENT GIVEN TO THE AGRICULTURAL INCOME DISCLOSED, AS 'INC OME FROM OTHER SOURCES' BY THE ASSESSING OFFICER WITHOUT ANY INCRI MINATING EVIDENCE. IN CASE AN ASSESSMENT WAS ALREADY CONCLUDED, SETTLED I SSUES CAN NOT BE RE- AGITATED UNLESS THERE IS INCRIMINATING MATERIAL. I N VIEW OF THIS, THERE IS NO NEED TO ADJUDICATE THE LEGAL PRINCIPLES RELIED O N BY DR BASED ON THE ABOVE TWO JUDGMENTS, SINCE ASSESSEE IS NOT QUESTION ING THE JURISDICTION OF AO IN MAKING ASSESSMENTS. 12. IN THE RESULT, APPEAL IN AY.2006-07 IS CONSIDER ED AS ALLOWED AND APPEALS IN AYS.2003-04 TO 2005-06 AND 2007-08 TO 20 09-10 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13 TH MARCH, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 13 TH MARCH, 2015 TNMM ITA NOS.1538, 1539, 1540, 1541, 1542, 1543 & 1544 /HYD/14 A.S. LEASING & FINANCE LTD., :- 7 -: COPY TO : 1. A.S. LEASING & FINANCE LIMITED, 601, KHANCHAND TOWE RS, 6-3-190/1, ROAD NO.1, BANJARA HILLS, HYDERABAD. C/O . SRI S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYA'S ELEGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRA L CIRCLE-I, AAYAKAR BHAVAN, HYDERABAD. 3. CIT(APPEALS)-I, HYDERABAD 4. CIT(CENTRAL), HYDERABAD 5. D.R. ITAT, HYDERABAD