Satish Kumar Botcha, Hyderabad V. Income Tax Officer, Ward-6(3), Hyderabad

ITA 197/HYD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98425 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Opportunity of being heard; Corroborative evidences; Reason to believe

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 197/HYD/2013 ASSESSMENT YEAR: 2009-10 SATISH KUMAR BOTCHA, HYDERABAD. PAN ANQPB 13692 VS. INCOME-TAX OFFICER, WARD 6(3), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHURAM REVENUE BY : SHRI RAMAKRISHNA BANDI DATE OF HEARING 25-08-2015 DATE OF PRONOUNCEMENT 31-08-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 12/12/2012 OF LD. CIT(A)-IV, HYDERABAD FOR TH E AY 2009-10. 2. THOUGH ASSESSEE HAS RAISED AS MANY AS SEVEN GROU NDS, BUT, THE SOLE GRIEVANCE OF ASSESSEE IS WITH REGARD TO TH E DECISION OF THE DEPARTMENTAL AUTHORITIES IN TREATING THE AGRICULTUR AL INCOME OF RS. 62,35,000 AS INCOME FROM OTHER SOURCES. 3. BRIEFLY THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL . FOR THE AY UNDER CONSIDERATION ASSESSEE FILED HIS RETURN OF IN COME ON 22/03/2010 DECLARING TOTAL INCOME OF RS. 1,74,570. IN COURSE OF ASSESSMENT PROCEEDING, AO WHILE EXAMINING COMPUTATI ON OF INCOME FILED BY ASSESSEE ALONG WITH RETURN OF INCOME NOTIC ED THAT ASSESSEE HAS SHOWN NET AGRICULTURAL INCOME OF RS. 62,35,000. HE, THEREFORE, 2 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA CALLED UPON ASSESSEE TO FURNISH THE DETAILS OF AGRI CULTURAL ACTIVITIES CARRIED OUT. AS NOTED BY AO, IN RESPONSE TO THE QUE RY MADE BY HIM, ASSESSEE PRODUCED DETAILS OF SALE OF AGRICULTURAL P RODUCTS, AGRICULTURAL LAND HOLDING ETC. ON EXAMINING THE DET AILS, AO FOUND THAT THE ENTIRE SALE PROCEEDS FROM SALE OF AGRICULTURAL PRODUCE HAS BEEN RECEIVED IN CASH. A MAJOR PORTION OF THE AGRICULTUR AL PRODUCE WERE SOLD TO A COMPANY WHICH HAS ALSO NOT MADE PAYMENT T O ASSESSEE BY WAY OF CHEQUE, BUT, THE COMPANY HAS PASSED JOURNAL ENTRIES TOWARDS PAYMENT BY DEBITING DEBTORS ACCOUNT THEREBY INDICAT ING THAT PAYMENTS WERE RECEIVED BY ASSESSEE FROM DEBTORS DIRECTLY. HE OBSERVED THAT ASSESSEE DID NOT FURNISH ANY EVIDENCE TO SHOW RECEI PT OF SALE PROCEEDS FROM THE DEBTORS, BUT, ONLY STATED THAT AM OUNTS WERE RECEIVED FROM THE DEBTORS DIRECTLY IN CASH. AO OBSE RVED, ASSESSEE EVEN FAILED TO FURNISH NAMES AND ADDRESSES OF THE P ERSONS FROM WHOM SALE PROCEEDS WERE RECEIVED. AO OPINED THAT WH EN BOTH ASSESSEE AND THE COMPANY WERE HAVING BANK ACCOUNTS, THERE WAS NO NECESSITY OF MAKING PAYMENT THROUGH CASH. HE OBSERV ED, EVEN THE EXPENDITURE INCURRED BY ASSESSEE WERE ALSO IN CASH . IN VIEW OF THE ABOVE, AO PROPOSED TO REJECT ASSESSEES CLAIM OF AG RICULTURAL INCOME. THOUGH, ASSESSEE OBJECTED TO THE PROPOSED ACTION OF AO BY STATING THAT THE TRANSACTIONS WERE ENTERED IN REMOTE PLACES AND PAYMENTS WERE MADE TO FARMERS WHO DO NOT HAVE BANK ACCOUNTS , BUT, AO DID NOT FIND MERIT IN THE SUBMISSIONS OF ASSESSEE. HE W AS OF THE VIEW THAT ASSESSEE HAS BUILT UP THE STORY OF AGRICULTURAL INC OME TO EXPLAIN THE INVESTMENTS MADE IN TWO COMPANIES, NAMELY, VAINAVI INDUSTRIES LTD. AND CONVERGE COMMUNICATIONS (P) LTD. THUS, ULTIMATE LY, AO COMPLETED THE ASSESSMENT BY TREATING AGRICULTURAL I NCOME OF RS. 62,35,000 AS INCOME FROM OTHER SOURCES, WHICH RES ULTED IN DETERMINATION OF TOTAL INCOME OF ASSESSEE FOR THE Y EAR UNDER CONSIDERATION AT RS. 64,09,570. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE L D. CIT(A). 3 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA 4. IN COURSE OF HEARING OF APPEAL BEFORE LD. CIT(A) , ASSESSEE SUPPORTED HIS CLAIM OF AGRICULTURAL INCOME BY PRODU CING VARIOUS DOCUMENTARY EVIDENCE. LD. CIT(A) ON VERIFYING THE D OCUMENTARY EVIDENCES INCLUDING THE REPORT OF INCOME-TAX INSPEC TOR, WHO CONDUCTED AN ENQUIRY, THOUGH, ACCEPTED THAT ASSESSE E WAS CARRYING ON AGRICULTURAL OPERATIONS, HOWEVER, SHE WAS OF THE VIEW, THAT ALONE WOULD NOT PROVE THE FACT THAT ASSESSEE HAS RECEIVED THE QUANTUM OF AGRICULTURAL INCOME SHOWN BY HIM. LD. CIT(A) OBSERV ED, THOUGH, ASSESSEE HAS ENTERED INTO LEASE AGREEMENTS WITH 17 PERSONS, BUT, TOTAL LEASE RENT PAID AMOUNTED TO RS. 2,88,260, WHI CH IS MEAGER CONSIDERING THE INCOME EARNED BY ASSESSEE FROM AGRI CULTURAL ACTIVITIES. FURTHER, SHE OBSERVED THAT THE ACTUAL L EASE RENT CLAIMED TO HAVE BEEN PAID BY ASSESSEE AS PER THE DETAILS SUBMI TTED WAS NOT IN TERMS WITH THE AMOUNT PAYABLE AS PER LEASE DEED. LD . CIT(A) OBSERVED, MERE FURNISHING OF MRO/TAHSILDAR CERTIFIC ATE DOES NOT ESTABLISH EARNING OF AGRICULTURAL INCOME TO THE EXT ENT SHOWN BY ASSESSEE. LD. CIT(A) OBSERVED THAT WHEN THE ENTIRE EXPENDITURE IS IN CASH, WHICH WERE NOT SUPPORTED BY AUTHENTIC EVIDENC E, ASSESSEES CLAIM OF AGRICULTURAL INCOME CANNOT BE ACCEPTED. FU RTHER, SHE OBSERVED THAT, THOUGH, ASSESSEE CLAIMED TO HAVE MAD E SALES OF AGRICULTURAL PRODUCT TO THE TONE OF RS. 1,08,71,135 TO A COMPANY, I.E. ANNADATA SEED COMPANY PVT. LTD. (ASCPL), BUT, THE E VIDENCE PRODUCED BY ASSESSEE INDICATE THAT THE ENTIRE AMOUN T WAS PAID TO ASSESSEE BY DEBTORS OF ASCPL AND THAT TOO IN CASH. LD. CIT(A) OBSERVED, DEBTORS FROM WHOM PAYMENTS WERE CLAIMED TO HAVE BEEN RECEIVED ARE LOCATED IN VARIOUS PARTS OF THE COUNTR Y AND ASSESSEE WAS NOT ABLE TO FURNISH THE ADDRESSES OF THOSE PERSONS. SHE, THEREFORE, FINALLY CONCLUDED THAT AS ASSESSEE HAS FAILED TO SU BSTANTIATE HIS CLAIM OF AGRICULTURAL INCOME WITH PROPER EVIDENCE, THE DE CISION OF AO IN TREATING IT AS INCOME FROM OTHER SOURCES DESERVES TO BE UPHELD. 4 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA 5. LD. AR MORE OR LESS REITERATING THE SUBMISSIONS MADE BEFORE THE DEPARTMENTAL AUTHORITIES AS WELL AS REFERRING T O THE DOCUMENTARY EVIDENCES, WHICH FORMS PART OF THE RECORD BEFORE TH E DEPARTMENTAL AUTHORITIES, SUBMITTED, NEITHER AO NOR LD. CIT(A) H AS DISPUTED THE FACT THAT ASSESSEE IS HAVING AGRICULTURAL LAND HOLDING O F ABUT 48 ACRES IN EAST GODVARI DISTRICT OF AP, WHICH IS CONSIDERED TO BE VERY FERTILE LAND. HE SUBMITTED, EVEN THE INSPECTOR OF INCOME-T AX, WHO CONDUCTED ENQUIRY REPORTED THAT VARIOUS PERSONS HAVE STATED B EFORE HIM THAT ASSESSEE HAS TAKEN ON LEASE AGRICULTURAL LAND BELON GING TO THEM AND WAS CARRYING ON AGRICULTURAL ACTIVITY. THEREFORE, W HEN ASSESSEE IS HAVING SUBSTANTIAL AGRICULTURAL LAND HOLDING AND IS CARRYING ON AGRICULTURAL ACTIVITY, THERE IS NO REASON TO DISBEL IEVE AGRICULTURAL INCOME SHOWN BY ASSESSEE. IT WAS SUBMITTED, IN SUPP ORT OF HIS CLAIM, ASSESSEE HAS NOT ONLY PRODUCED THE DETAILS OF LAND HOLDING WITH SUPPORTING EVIDENCE LIKE PATTADAR PASSBOOK, LEASE A GREEMENTS ETC., HENCE, THERE IS NO REASON TO BELIEVE THAT ASSESSEE HAS NOT EARNED AGRICULTURAL INCOME. MORE SO, WHEN ASSESSEE HAS PRO DUCED CERTIFICATE FROM MRO/TAHSILDAR. LD. AR SUBMITTED, O NLY BECAUSE THE RECEIPTS AND PAYMENTS ARE MADE IN CASH, IT CANNOT B E SAID THAT ASSESSEE HAS NOT EARNED ANY INCOME FROM AGRICULTURA L ACTIVITY. AS FAR AS TRANSACTION WITH ASCPL IS CONCERNED, LD. AR SUBM ITTED, THE ENTIRE TRANSACTION HAS BEEN REFLECTED IN BOOKS OF THE SAID COMPANY AND HE REFERRED TO ASSESSEES LEDGER ACCOUNT IN THE BOOKS OF THE COMPANY. AS FAR AS THE ALLEGATION OF LD. CIT(A) WITH REGARD TO THE VARIANCE IN LEASE RENT CLAIMED TO HAVE BEEN PAID AND AS MENTION ED IN THE LEASE DEED, LD. AR SUBMITTED, AT THE TIME OF ENTERING INT O LEASE DEED AMOUNT PER ACRE WAS MENTIONED AT RS. 5,000. IF 10% INCREASE IN THE LEASE RENTAL FOR EACH YEAR IS TAKEN INTO ACCOUNT, T HE AMOUNT CLAIMED TO HAVE BEEN PAID BY ASSESSEE WOULD BE THE SAME. TH US, IT WAS SUBMITTED BY LD. AR, AGRICULTURAL INCOME SHOWN BY A SSESSEE IS TO BE ACCEPTED. 5 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA 6. LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTING T HE REASONING OF AO AS WELL AS LD. CIT(A) SUBMITTED, MERELY BECAUSE ASSESSEE WAS HAVING SOME AGRICULTURAL LAND HOLDING AND HAS PRODU CED A CERTIFICATE FROM MRO/TAHASILDAR, IT WILL NOT CONCLUSIVELY ESTAB LISH THE EXTENT OF AGRICULTURAL INCOME SHOWN BY ASSESSEE. LD. DR SUBMI TTED, THOUGH, MAJOR PORTION OF THE AGRICULTURAL PRODUCE WAS CLAIM ED TO HAVE BEEN SOLD TO A COMPANY, BUT, NO PAYMENT WAS DIRECTLY REC EIVED FROM THE COMPANY TOWARDS SALE OF THE AGRICULTURAL PRODUCE, B UT, ASSESSEE CLAIMED TO HAVE RECEIVED THE SALE PROCEEDS FROM THE DEBTORS OF THE SAID COMPANY IN CASH. LD. DR SUBMITTED, WHEN ASSESS EE FAILED TO FURNISH ADEQUATE EVIDENCE TO PROVE SUCH FACT BY FUR NISHING THE DETAILED ADDRESSES OF THE CONCERNED DEBTORS FROM WH OM HE CLAIMED TO HAVE RECEIVED THE AMOUNT, HIS STATEMENTS CANNOT BE ACCEPTED. HE FURTHER SUBMITTED, LEASE RENTAL PAID BY ASSESSEE TO THE LAND OWNERS IS VERY MEAGER CONSIDERING THE AMOUNT OF AGRICULTURAL INCOME CLAIMED TO HAVE BEEN EARNED BY ASSESSEE, WHICH FURTHER PROVES THE FALSITY OF CLAIM OF AGRICULTURAL INCOME. HE, THEREFORE, SUBMIT TED, ASSESSEES CLAIM OF AGRICULTURAL INCOME CANNOT BE ACCEPTED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. AS COULD BE SEEN, IN COURSE OF PROCEEDING BEFORE AO AS WELL AS LD. CIT(A), ASSESSEE HAS FURNISHED DETAILS OF AGRICULTU RAL LAND HOLDING WITH SUPPORTING EVIDENCE. FURTHER, ASSESSEE HAS ALS O SUBMITTED DETAILS OF AGRICULTURAL INCOME EARNED, EXPENDITURE INCURRED IN UNDERTAKING AGRICULTURAL ACTIVITY LIKE PURCHASE OF RAW MATERIALS, ETC. AS WELL AS A CERTIFICATE FROM MRO/TAHSILDAR, SHOWIN G THE YIELD OF AGRICULTURAL PRODUCE. IT IS ALSO NOT DISPUTED THAT ASSESSEE WAS HAVING BY WAY OF LEASE, SUBSTANTIAL AGRICULTURAL LAND HOLD ING TO THE EXTENT OF ABOUT 48 ACRES IN EAST GODAVARI DISTRICT, WHICH IS CONSIDERED TO BE A VERY FERTILE AREA. IT IS ALSO A FACT ON RECORD THAT IN COURSE OF ASSESSMENT PROCEEDING, AO CONDUCTED AN ENQUIRY THRO UGH THE 6 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA INSPECTOR OF INCOME-TAX AND AS SEEN FROM THE OBSER VATIONS MADE BY LD. CIT(A), THE SAID INSPECTOR OF INCOME-TAX IN HIS REPORT DID STATE THAT IN COURSE OF ENQUIRY, HE EXAMINED CERTAIN PERSONS, WHO ADMITTED OF HAVING LEASED THEIR AGRICULTURAL LAND TO ASSESSEE A ND ASSESSEE WAS CARRYING ON AGRICULTURAL OPERATIONS ON THOSE LEASED LANDS. AS AGAINST THE AFORESAID FACTS AND EVIDENCES BROUGHT ON RECORD , AO AS WELL AS LD. CIT(A) HAVE REJECTED ASSESSEES CLAIM OF AGRICU LTURAL INCOME PRIMARILY FOR THE REASON THAT ENTIRE RECEIPTS FROM AGRICULTURAL ACTIVITIES IS IN CASH AND THE EXPENDITURE INCURRED BY ASSESSEE IS ALSO IN CASH. IT HAS FURTHER BEEN OBSERVED BY THE DEPARTMENTAL AUTHO RITIES THAT THE LEASE RENTAL PAID BY ASSESSEE TO THE LAND OWNERS IS VERY VERY LESS COMPARED TO THE AGRICULTURAL INCOME CLAIMED TO HAVE BEEN EARNED BY ASSESSEE. FURTHER, IT HAS BEEN OBSERVED BY DEPARTME NTAL AUTHORITIES THAT, THOUGH, ASSESSEE CLAIMED TO HAVE RECEIVED SAL E PROCEEDS FROM THE DEBTORS OF ASCPL, BUT, HE FAILED TO PRODUCE THE DETAILED ADDRESSES OF THE DEBTORS. IN OUR VIEW, THOUGH, THE AFORESAID FACTS MAY RAISE SOME DOUBT AND SUSPICION WITH REGARD TO THE QUANTUM OF AGRICULTURAL INCOME EARNED BY ASSESSEE, BUT, THEY C ANNOT CONCLUSIVELY PROVE THAT ASSESSEE HAS NOT AT ALL EARNED ANY AGRIC ULTURAL INCOME. WHEN IT IS A FACT ON RECORD THAT ASSESSEE WAS CULTI VATED AGRICULTURAL LAND HOLDING OF ABOUT 48 ACRES AND THE ENQUIRY CO NDUCTED BY DEPARTMENT ITSELF SHOWS THAT ASSESSEE IS ENGAGED IN AGRICULTURAL ACTIVITY, THERE IS NO JUSTIFIABLE REASON TO DISBELI EVE ASSESSEES CLAIM OF AGRICULTURAL INCOME, THOUGH, MAY NOT BE TO THE E XTENT DECLARED BY ASSESSEE. MOREOVER, WHEN ASSESSEE HAS SUBMITTED A C ERTIFICATE FROM MRO/TAHSILDAR INDICATING THE AGRICULTURAL PRODUCE GROWN BY ASSESSEE, THE SAID EVIDENCE BROUGHT FROM A GOVT. A UTHORITY CANNOT BE BRUSHED ASIDE LIGHTLY UNLESS POSITIVE EVIDENCE IS B ROUGHT ON RECORD TO DISPROVE THE CLAIM OF ASSESSEE. AS FAR AS ALLEGATIO N OF THE DEPARTMENT THAT LEASE RENTAL PAID BY ASSESSEE IS MEAGER COMPAR ED TO AGRICULTURAL INCOME EARNED BY ASSESSEE, WE ARE OF THE VIEW THAT IF THE DEPARTMENT WAS HAVING ANY DOUBT OR WAS NOT CONVINCED WITH THE CLAIM OF ASSESSEE, IT COULD HAVE CONDUCTED DETAILED ENQUIRY AND BROUGHT 7 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA MATERIAL ON RECORD TO PROVE THE FACT THAT THE AGRIC ULTURAL INCOME CLAIMED TO HAVE BEEN EARNED BY ASSESSEE IS NOT THE REAL AGRICULTURAL INCOME, WHICH COULD HAVE BEEN EARNED FROM THE LAND CLAIMED TO BE OWNED BY HIM, CONSIDERING THE YIELD PER ACRE, PROBA BLE SALE PROCEEDS FROM SUCH YIELD AND THE EXPENDITURE TO BE INCURRED FOR EARNING SUCH INCOME. WITHOUT CONDUCTING ANY SUCH ENQUIRY DEPARTM ENT CANNOT INFER THAT ASSESSEE HAS NOT AT ALL EARNED ANY AGRICULTURA L INCOME MERELY ON PRESUMPTIONS AND SURMISES. THOUGH, IT MAY BE A FACT THAT EXACT QUANTUM OF AGRICULTURAL INCOME WHICH COULD REASONAB LY BE EARNED FROM THE AGRICULTURAL LAND HOLDING IS A MATTER OF DEBATE OR FURTHER ENQUIRY, BUT, THE FACT THAT ASSESSEE IS HAVING AGRI CULTURAL INCOME CANNOT BE DISPUTED OR DOUBTED CONSIDERING THE EVIDE NCES BROUGHT ON RECORD BY ASSESSEE. HOWEVER, CONSIDERING THE FACT T HAT THE ENTIRE RECEIPTS FROM AGRICULTURAL OPERATIONS IS IN CASH AN D THE EXPENDITURE INCURRED IS ALSO IN CASH AND AS ALLEGED BY THE DEPA RTMENT THEY ARE NOT SUPPORTED BY PROPER VOUCHERS, WE ARE OF THE VIEW TH AT THE MATTER REQUIRES EXAMINATION BY AO AS FAR AS QUANTUM OF AGR ICULTURAL INCOME EARNED BY ASSESSEE. MOREOVER, CERTIFICATE DATED 29/ 08/2011 OBTAINED FROM TAHSILDAR, KADIAM ONLY INDICATES THE PRODUCE G ROWN BY ASSESSEE WITHOUT MENTIONING THE YIELD PER ACRE OR INCOME WHI CH ONE CAN REASONABLY EXPECTED TO EARN ANNUALLY FROM SUCH LAND HOLDING AND SELL OF AGRICULTURAL PRODUCE. IF ASSESSEE IS ABLE TO SUB STANTIATE THE NET AGRICULTURAL INCOME SHOWN BY HIM WITH SUPPORTING EV IDENCE, THE SAME HAS TO BE ACCEPTED, OTHER WISE, AO CAN ESTIMATE THE AGRICULTURAL INCOME ON A REASONABLE BASIS AFTER GIVING AN OPPORT UNITY TO ASSESSEE TO ESTABLISH HIS CLAIM. WITH THE AFORESAID OBSERVAT IONS, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND REMIT THE MATT ER BACK TO THE FILE OF AO FOR CONSIDERING AFRESH AFTER DUE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 8 ITA NO. 197 /HYD/2013 SATISH KUMAR BOTCHA 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN ON 31 ST AUGUST, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 31 ST AUGUST, 2015 KV COPY TO:- 1) SHRI SATISH KUMAR BOTCHA, C/O CH. PUSHYAM KIRA N, ADVOCATE, FLAT NO. D, 1 ST FLOOR, UMA ENCLAVE, RD. NO. 9, BANJARA HILLS, HYDERABAD. 2) ITO, WARD 6(3), HYDERABAD. 3) CIT(A)-IV, HYDERABAD 4) CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.