R.Baskar Ravi, CHENNAI V. ITO, CHENNAI

ITA 1993/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7639 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 22-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2016
• Court: TRIBUNAL
• Department Lawyers: N GOPIKRISHNA JT CIT
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Keywords: Business income; Income from undisclosed sources; Capital receipt; Onus to prove
• Section: 143(3)

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C/SMC, CHENNAI , ! BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER ./ ITA NO.1993/MDS/2016 $ % &'% / ASSESSMENT YEAR : 2010-11 R.BASKAR RAVI, F-122/3, SIMCO HOUSE, 6 TH STREET, ANNA NAGAR EAST, CHENNAI 600 102. [PAN: AEYPB 8017N) ()*/ APPELLANT ) VS. INCOME TAX OFFICER, BUSINESS WARD-XIII(1) CHENNAI. (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI K.MEENAKSHI SUNDARAM, ITP +,)* - . /RESPONDENT BY : SHRI N.GOPIKRISHNA, JT. CIT / & - 0 /DATE OF HEARING : 22.02.2017 1' - 0 /DATE OF PRONOUNCEMENT : 02.03.2017 / O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI (CI T(A) FOR SHORT) DATED 29.04.2016, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREIN AFTER) FOR ASSESSMENT YEAR (AY) 2010-11. 2 ITA NO.1993 /MDS/2016 (AY 2010-11) R.BASKAR RAVI V. IT O 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE W AS LEASED 5 HECTARES OF LAND AT THEKKALAPATTI VILLAGE BY THE GOVERNMENT OF TAMIL NADU FOR THE EXPLOITATION OF GRANITE. AS THE LAND CONTAINED SELF GROWN FOREST TREES AND SHRUBS, THE SAME WERE TO BE CLEARED FOR MINING OPERATIONS. THE SAME WERE, AFTER OBTAINING PERMISSION FROM THE FOREST DEPARTMENT, CL EARED AND SOLD BY THE ASSESSEE TO THIRD PARTIES, RECEIVING A SUM OF RS. 6 LACS. IT IS THE TAXABILITY OF THIS SUM UNDER THE ACT WHICH IS SUBJECT MATTER OF DISPUT E BETWEEN THE ASSESSEE AND THE REVENUE. WHILE THE ASSESSEE CLAIMS IT TO BE AGR ICULTURAL INCOME OR, IN THE ALTERNATIVE, CAPITAL RECEIPT, BOTH TAX EXEMPT, THE REVENUE, RELYING ON THE DECISION BY THE APEX COURT IN MAHARAJ DHIRAJ SIR KAMESHWAR SINGH V. CIT [1957] 32 ITR 587 (SC), CLAIMS IT TO BE NOT AN AGRI CULTURAL INCOME. IN FACT, IT EVEN CHALLENGES THE ASSESSEES CASE OF THE SAID INC OME AS BEING ON ACCOUNT OF THE REMOVAL OF SALE OF TREES AND SHRUB GROWTH. THIS IS FOR THE REASON THAT THE LEASE WAS GRANTED FOR A PERIOD, STARTING MAY, 2005, OF 10 YEARS. AS PER THE ASSESSEES OWN ADMISSION, THE UNWANTED GROWTH HAD T O BE CLEARED FIRST BEFORE STARTING ANY MINING OPERATION. ACCORDINGLY, THE SAI D CLEARANCE, IF IT WERE TO BE ACTUALLY SO, WOULD TAKE PLACE IN THE FIRST YEAR OF THE MINING WORK, I.E., AT ITS START, WHILE THE TREES AND SHRUBS WERE ADMITTEDLY REMOVED ONLY IN F.Y. 2009-10. HOW COULD THAT BE ? AGAIN, THIS WOULD BE OF LITTLE CONSEQUENCE IF THE RE HAD BEEN NO MINING ACTIVITY PRIOR TO THIS YEAR. THIS IS NOT THE CASE AS THE ASSESSEES RETURNS FOR THE EARLIER YEARS DISCLOSE INCOME FROM THE MINI NG ACTIVITY OF GRANITE SLABS. IN OTHER WORDS, THE PRIMARY ACTIVITY OF CLEARING THE F IELD FOR MINING ACTIVITY COULD NOT HAPPEN IN THE RELEVANT PREVIOUS YEAR, I.E., F.Y . 2009-10. FURTHER, NO PROOF OF EARNING OF INCOME FROM THE SALE OF TREES WAS FURNIS HED BY THE ASSESSEE. THE RECEIPT, IT WAS ACCORDINGLY INFERRED, REPRESENTS TH E ASSESSEES UNACCOUNTED INCOME FROM UNDISCLOSED SOURCES, WHICH IT SEEKS TO INTRODUCE IN HIS ACCOUNTS BY WAY OF AGRICULTURAL INCOME. THE SAME STANDS CONFIRM ED FOR THE SAME REASON/S. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 3 ITA NO.1993 /MDS/2016 (AY 2010-11) R.BASKAR RAVI V. IT O THE PRIMARY FACTS OF THE CASE, AS FOUND AND RECORDE D BY THE REVENUE AUTHORITIES, HAVE NOT BEEN DISPUTED BEFORE US. THE IMPUGNED ORDER CLEARLY RECORDS OF NO EVIDENCE, CIRCUMSTANTIAL OR OTHERWISE , HAVING BEEN PRODUCED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM/S. HOW, WE WON DER, COULD HE THEN ASSAIL THEIR FINDING/S IN FURTHER APPEAL. THERE IS NO EVID ENCE TO SHOW THAT THE INCOME UNDER REFERENCE ARISES FROM SALE OF TREES AND SHRUB S. THE QUESTION OF IT BEING EXPLAINED AS AGRICULTURAL INCOME, MUCH LESS CAPITAL RECEIPT, WHICH THE ASSESSEES CLAIMS IN THE ALTERNATE, DOES NOT ARISE. IN FACT, EVEN GOING BY THE ASSESSEES VERSION, THE SAME ARISING IN THE COURSE OF CARRYING ON HIS BUSINESS OF QUARRYING, THE INCOME, EVEN IF REGARDED AS BY WAY OF SALE OF S PONTANEOUS GROWTH BY WAY OF TREES AND SHRUBS ON THE LEASED LAND, WOULD ONLY BE THE ASSESSEES BUSINESS INCOME, ASSESSABLE U/S. 28. IT HAS, HOWEVER, BEEN C LARIFIED THAT THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE SAME. ON ALL THIS BEI NG EXPRESSED BY THE BENCH DURING HEARING, THE LD. AR WOULD CONTEND THAT THE S UM OF RS. 1,91,922/-, PAID TO THE FOREST DEPARTMENT FOR THE CLEARANCE OUGHT TO BE ALLOWED IN COMPUTING BUSINESS INCOME. THE ASSESSEES ARGUMENT IS UNEXCEP TIONAL. WHY, THERE WOULD BE EXPENDITURE ON THE CUTTING AND REMOVAL OF THE TR EES, ETC. THIS WOULD, IN MY VIEW, ALSO PROVE IF IT IS ACTUALLY AN INCOME FROM U NDISCLOSED SOURCE/S, OR FROM THE SALE OF TREES, EVEN IF NOT PROPERLY EVIDENCED. THE ALLOWANCE OF THE EXPENDITURE WOULD HOWEVER BE SUBJECT TO IT BEING EV IDENCED AND, FURTHER, OF BEING PAID OR INCURRED DURING THE CURRENT YEAR. THI S IS AS WE FIND SUBSTANCE IN THE REVENUES ARGUMENT OF THE SAID CLEARANCE, SUBJE CT TO WHICH ONLY THE MINING COULD HAVE TAKEN PLACE, WOULD HAVE BEEN ONLY IN THE FIRST OR THE INITIAL YEARS OF THE MINING OPERATIONS. AGAIN, IF NOT REFLECTED IN T HE ASSESSEES ACCOUNTS, OR NOT PROVED AS ITS SOURCE, THE EXPENDITURE MAY ATTRACT THE DEEMING PROVISION OF S. 69C, I.E., WHERE PAID DURING THE CURRENT YEAR. THE BURDEN TO PROVE HIS CLAIMS WOULD, WITHOUT DOUBT, BE ON THE ASSESSEE. 4 ITA NO.1993 /MDS/2016 (AY 2010-11) R.BASKAR RAVI V. IT O THE MATTER IS, ACCORDINGLY, RESTORED TO THE FILE OF THE ASSESSING OFFICER (AO) TO ALLOW A FINAL OPPORTUNITY TO THE ASSESSEE T O PRESENT HIS CASE BEFORE HIM. THE AO SHALL DECIDE ON MERITS, IN ACCORDANCE WITH L AW, ISSUING DEFINITE FINDINGS OF FACT. I DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISPOSED OF IN THE AFORESAID TERMS. ORDER PRONOUNCED ON MARCH 02, 2017 AT CHENNAI . SD/- ( ) ( SANJAY ARORA ) / ACCOUNTANT MEMBER / CHENNAI, 2 / DATED, MARCH 02, 2017 . EDN 3 - +$045 65'0 / COPY TO: 1. )* / APPELLANT 2. +,)* / RESPONDENT 3. / 70 () / CIT(A) 4. / 70 / CIT 5. 5&9: +$0$ / DR 6. :;% < / GF