Patnala Srinivas, Hyderabad V. ITO., Ward-10(1), Hyderabad

ITA 1571/HYD/2014

• Counselvise Citation: 157122514 RSA 2014
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 18-09-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 13-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y SESHA SRINIVAS
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income
• Section: 143(3); 148

Judgement Text

ITA NO.1571 OF 2014 SMC PATNALA SRINIVAS SECUNDERAB AD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1571/HYD/2014 (ASSESSMENT YEAR: 2008-09) SHRI PATNALA SRINIVAS SECUNDERABAD PAN: AHUPS 6077 N VS. INCOME TAX OFFICER WARD 10(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI Y. SESHA SRINIVAS DATE OF HEARING : 1 8 .09 .2015 DATE OF PRONOUNCEMENT : 23 .09. 2015 O R D E R THIS IS ASSESSEES APPEAL AGAINST THE LEVY OF PENA LTY U/S 271(1)(C) OF THE ACT AS CONFIRMED BY THE CIT (A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME ON 20.05.2002 ADMITTING INCOME FROM BUSINESS AT RS.82,450 AND AGRICULTURAL INCOME OF RS .2,25,000. ASSESSEE WAS CARRYING ON BUSINESS IN SUPPLYING BUIL DING CONSTRUCTION MATERIAL. SINCE THE RETURN OF INCOME W AS FILED BELATEDLY, AO HELD THAT THE INCOME OF RS.82,450 CHA RGEABLE TO TAX FOR A.Y 2000-01 HAS ESCAPED ASSESSMENT AND THER EFORE, ON 4.8.2003, NOTICE U/S 148 OF THE ACT WAS ISSUED. IN REPLY TO THE SAME, ASSESSEE FILED HIS RETURN OF INCOME ON 25.06. 2004 ADMITTING THE SAME INCOME. DURING THE ASSESSMENT P ROCEEDINGS U/S 143(3) R.W.S. 147 OF THE I.T. ACT, AO CALLED FO R DETAILS OF THE BUSINESS INCOME RETURNED BY THE ASSESSEE AND ON PER USAL OF THE DETAILS FILED BY THE ASSESSEE, AO ACCEPTED THE BUSI NESS INCOME AS ADMITTED BY THE ASSESSEE. HOWEVER, AS REGARDS THE A GRICULTURAL ITA NO.1571 OF 2014 SMC PATNALA SRINIVAS SECUNDERAB AD PAGE 2 OF 5 INCOME OFFERED BY THE ASSESSEE, THE AO REQUIRED ASS ESSEE TO FURNISH THE RELEVANT DETAILS, IN RESPONSE TO WHICH, ASSESSEE HAS STATED THAT THE SUM OF RS.2,25,000 IS THE AGRICULTU RAL INCOME BEING 50% OF THE NET AGRICULTURAL INCOME RECEIVED F ROM M/S SAPSVEN HOMES FROM 60 ACRES OF LAND SITUATED AT SUR VEY NO.61, PIGILIPURAM VILLAGE, HAYATNAGAR REVENUE MANDAL. ASS ESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF ITS CLAIM OF EARNING OF AGRICULTURAL INCOME. AO OBSERVED FROM THE COPIES OF THE SALE DEED FILED BY THE ASSESSEE THAT THE CORRECT SURVEY NO.IS 51 AND NOT 61 AND THAT THE TOTAL AREA AS PER THIS SALE DEED IS 54 .15 ACRES, BUT NOT 60 ACRES AS MENTIONED IN THE ASSESSEES LETTER. FURTHER, DURING THE COURSE OF HEARING, ASSESSEE FILED A COPY OF THE PARTNERSHIP DEED OF M/S SAPSVEN HOMES AND THE COPIE S OF THE SALE DEED THROUGH WHICH THE SAID FIRM PURCHASED THE LAND. HE OBSERVED THAT THIS FIRM M/S SAPSVEN HOMES IS A PART NERSHIP FIRM THROUGH THE DEED OF PARTNERSHIP EXECUTED ON 18.7.19 92 CONSISTING OF 4 PARTNERS I.E. ASSESSEE, HIS FATHER, HIS MOTHER AND HIS SISTER. HE OBSERVED THAT SUBSEQUENTLY THE MOTHE R AND THE SISTER OF THE ASSESSEE RETIRED FROM THE PARTNERSHIP AS PER THE DEED OF RETIREMENT DATED 31.3.1999 AND THE ASSESSEE AND HIS FATHER WERE CONTINUING PARTNERS WITH 50% SHARE EACH . AS PER THE COPIES OF THE SALE DEEDS FILED BY THE ASSESSEE, AO OBSERVED THAT THE FIRM PURCHASED DRY AGRICULTURAL LAND FOR A TOTA L CONSIDERATION OF RS.2,79,425 AND THE EXTENT OF LAND PURCHASED IS 54.15 ACRES. HE OBSERVED THAT THOUGH ASSESSEE HAS STATED THAT TH E FIRM CARRIED ON AGRICULTURAL OPERATIONS ON THE SAID LAND AND HAS CLAIMED TO HAVE EARNED TOTAL AGRICULTURAL INCOME OF RS.4,17,000, ASSESSEE HAS NOT FURNISHED REQUISITE DETAILS OF THE CROPS GROWN AND THE INCOME THEREFROM. HE, THEREFORE, ADDRESSED A LETTER TO THE DY. COLLECTOR SEEKING INFORMATION AS REGARDS TH E NATURE OF THE LAND, THE NATURE OF THE CROPS GROWN ETC. IN RE SPONSE TO THE SAME, THE EXECUTIVE OFFICER OF HAYANATHNAGAR REVENU E MANDAL, ITA NO.1571 OF 2014 SMC PATNALA SRINIVAS SECUNDERAB AD PAGE 3 OF 5 RR DISTRICT REPLIED THAT AS PER THE REVENUE RECORD, NO CROPS WERE GROWN IN SURVEY NO.51 OF PIGILIPURAM VILLAGE BY THE ASSESSEE OR THE FIRM AND THAT THE LAND WAS CONVERTED INTO PLOTS . IT WAS HOWEVER, STATED THAT THE CORRECT POSITION FOR THE F INANCIAL YEAR 1999-2000 CANNOT BE GIVEN BY HIM AS THE RELEVANT RE CORD WAS SENT TO THE MANDAL OFFICE, HAYANATHNAGAR. AO, THERE AFTER, ADDRESSED A LETTER TO THE MRO, HAYANATHNAGAR TO FIN D OUT WHETHER ANY CROPS WERE GROWN IN THE SAID LAND, AND IF SO TO GET THE DETAILS THEREOF. IN RESPONSE TO THE SAME, DY. C OLLECTOR, VIDE LETTER DATED 28.09.2004 FURNISHED AN EXTRACT OF THE PAHANI AS APPEARING IN THEIR RECORD FOR FINANCIAL YEAR 1999-2 000 ACCORDING TO WHICH CULTIVATION DETAILS WERE LEFT BLANK AND IN COL. 20 OF THE SAID PAHANI, THE RELEVANT LAND WERE SHOWN AS PLOTS. AO, THEREFORE, OBSERVED THAT THE SAID CLAIM OF AGRICULT URAL LAND WAS NOT CORRECT AS NO CROPS WERE GROWN. HE, THEREFORE, DISBELIEVED ASSESSEES CLAIM OF AGRICULTURAL INCOME AND DISALLO WED THE SAME AND BROUGHT IT TO TAX AS UNEXPLAINED INCOME U/S 69A OF THE ACT. AGGRIVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT (A), WHO CONFIRMED THE ORDER OF THE AO AND THE TRIBUNAL ALSO CONFIRMED THE VIEW OF THE AO. THEREAFTER, AO INITIATED PENALT Y PROCEEDINGS U/S 271 (1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEVIED MINIMUM PENALTY OF RS.1,60,271. A GGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE SAME AND THE ASSESSEE IS IN 2 ND APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTIONS OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW, WHILE THE LEARNED DR SUPPORTED THE ORDER OF THE CIT (A). 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE FIRM SAPSVEN HOMES WAS A R EGISTERED FIRM, WITH THE ASSESSEE AND HIS FAMILY MEMBERS AS PARTNER S AND THAT ITA NO.1571 OF 2014 SMC PATNALA SRINIVAS SECUNDERAB AD PAGE 4 OF 5 AFTER RETIREMENT OF HIS MOTHER AND SISTER, THE ASSE SSEE AND HIS FATHER ARE THE CONTINUING PARTNERS WITH 50% SHARE E ACH. IT IS ALSO NOT DISPUTED THAT THE FIRM HAS PURCHASED AGRICULTUR AL LAND AND THE BUSINESS OF THE FIRM IS TO DEVELOP THE LAND INT O PLOTS AND HAS DERIVED INCOME FROM THE SALE OF SUCH PLOTS. IT IS T HE CASE OF THE ASSESSEE THAT THE LAND WAS NOT IMMEDIATELY CONVERTE D INTO PLOTS AND AGRICULTURAL OPERATIONS WERE CARRIED ON TILL TH E SAID LAND WAS DISPOSED OFF AND THAT THE ASSESSEE HAS OFFERED 50% OF SUCH AGRICULTURAL INCOME IN HIS RETURN OF INCOME. THE CA SE OF THE REVENUE IS THAT THE AGRICULTURAL OPERATIONS WERE NE VER CARRIED ON IN THE LAND PURCHASED BY THE FIRM AS THE AGRICULTUR AL LAND WAS CONVERTED INTO PLOTS AND SOLD THEREAFTER. THEREFORE , ACCORDING TO THE REVENUE, ASSESSEE HAS FURNISHED INACCURATE PART ICULARS OF INCOME. ASSESSEE IS STRONGLY RELYING UPON THE LETTE RS OF THE MRO HAYANATHNAGAR TO STATE THAT THE ASSESSEE HAD CARRIE D ON AGRICULTURAL OPERATIONS. HOWEVER, THE SAID CONTENTI ON OF THE ASSESSEE AS WELL AS THE LETTER OF THE MRO HAS NOT B EEN BELIEVED BY THE AO OR THE CIT (A) OR THE ITAT AND THE CONTEN TION OF THE ASSESSEE THAT IT HAS DERIVED AGRICULTURAL INCOME HA S NOT BEEN ACCEPTED. THE DISALLOWANCE OF THE AGRICULTURAL INCO ME HAS RESULTED IN THE INITIATION OF THE PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT. IT IS SETTLED LAW THAT AN ADDITION CONF IRMED BY THE AUTHORITIES, DOES NOT AUTOMATICALLY CALL FOR LEVY O F PENALTY. THE PENALTY PROCEEDINGS U/S 271(1)(C) ARE INDEPENDENT P ROCEEDINGS AND THE AO CAN LEVY PENALTY, IF THE ASSESSEE DOES N OT OFFER ANY EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSES SEE HAS BEEN FOUND TO BE NOT CORRECT OR THE EXPLANATION IS NOT S UBSTANTIATED BY THE ASSESSEE. IN THE CASE BEFORE ME, THE ASSESSEE H AS OFFERED EXPLANATION WHICH HAS BEEN FOUND TO BE NOT CORRECT. ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM OF AGRI CULTURAL OPERATIONS BEING CARRIED OUT BY THE FIRM WITH ANY E VIDENCE EVEN DURING THE PENALTY PROCEEDINGS. THE LETTER OF THE M RO FURNISHED ITA NO.1571 OF 2014 SMC PATNALA SRINIVAS SECUNDERAB AD PAGE 5 OF 5 AT PAGE NO.15 OF THE PAPER BOOK ALSO DOES NOT INFUS E CONFIDENCE AS THE SAID LETTER IS NOT DATED AND DOES NOT MENTIO N THE DETAILS OF THE CROPS RAISED BY THE FIRM. IT ONLY MENTIONS THAT THE ASSESSEES SHARE OF ANNUAL AGRICULTURAL INCOME FOR THE A.Y 200 1-02 IS RS.1,80,000 FOR AN EXTENT OF 30 ACRES OF LAND. IT I S NOT KNOWN AS TO HOW THE MRO IS CERTIFYING THE AGRICULTURAL INCOM E OF THE ASSESSEE WITHOUT SPECIFYING THE CROPS GROWN BY THE ASSESSEE. FURTHER, THE CERTIFICATE IS GIVEN FOR THE YEAR 2001 -02 I.E. A.Y 2002-03, WHEREAS A.Y BEFORE ME IS A.Y 2000-01. THER EFORE, I AGREE WITH THE FINDINGS OF THE AUTHORITIES BELOW TH AT THE ASSESSEE HAS NOT FILED ANY CORROBORATIVE EVIDENCE IN SUPPORT IVE ITS CARRYING ON OF AGRICULTURAL OPERATIONS AND FURTHER THE EXPLA NATION HAS BEEN FOUND TO BE INCORRECT. THEREFORE, I AGREE WITH THE FINDINGS OF THE AUTHORITIES BELOW THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF ITS INCOME AND THE MINIMUM PENALTY L EVIED BY THE AO IS JUSTIFIED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2015. S D/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD SEPTEMBER, 2015. VNODAN/SPS COPY TO: 1. SHRI S. RAMA RAO, ADVOCATE FLAT NO.102, SHRIYAS EL EGANCE, 3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 50002 9 2. INCOME TAX OFFICER WARD 10(1), I.T. TOWERS, AC GUA RDS, HYDERABAD 3. CIT (A)-VI HYDERABAD 4. CIT-V HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER