DCIT, CHENNAI V. Shri A.M.Rafiq, CHENNAI

ITA 2050/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1079 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: SAROJ KUMAR; V VIKRAM
• Section: 234B; 143(2); 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH, CHENNAI. BEFORE SHRI.U.B.S. BEDI J.M. & SHRI. ABRAHAM P. GEORGE, A.M. I.T.A. NO.2050/MDS/2010 ASSESSMENT YEAR: 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(3), FOURTH FLOOR, MAIN BUILDING, 121, N.H. ROAD, NUNGAMBAKKAM, CHENNAI 34. VS. SHRI A.M. RAFIQ, 86A, 4 TH STREET, ABHIRAMAPURAM, CHENNAI 600 018. [PAN:AEMPR3082D] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI B. SRINIVAS ASSESSEE BY : S/SHRI V. VIKRAM AND SAROJ KUMAR ORDER PER U.B.S. BEDI, J.M . THIS APPEAL OF THE DEPARTM ENT IS DIRECTED AGAINST T HE ORDER PASSED BY THE LD. CIT(A) V, CHENNAI DATED 14.09.2010 RELEVANT TO THE ASSESSMENT YEAR 2007-08, WHEREBY DELETION OF ADDITION IN AGRIC ULTURAL INCOME TO THE EXTENT OF ` .3 LAKHS AND CASH DEPOSIT TREATED AS INCO ME FROM OTHER SOURCES UNDER SECTION 68 OF THE ACT TO THE EXTENT OF ` .5.75 LAKHS HAS BEEN CHALLENGED. 2. BRIEF FACTS INDICATE THAT THE ASSE SSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31 .07.2007 BEFORE THE INCOME TAX OFFICER, SALARY WARD V(4), CHENNAI. THE CASE WAS SELE CTED FOR SCRUTINY UNDER CASS. NOTICE U/S 143(2) OF THE ACT ISSUED TO THE ASSESSEE ON 18-09-2008. THE FILE OF THE ASSESSEE WAS TRANSFERRED FROM THE ITO, SALARY WARD V(4), CHENNAI AND THE CASE WAS POSTED FOR HEARING. THE AR APPEARED FROM TIME TO TIME AND FILED THE DETAILS REQUIRED. BASED ON THE LETTERS SUBMITTED AND MATERIAL AVAILA BLE ON RECORD, THE ASSESSMENT ORDER WAS ISSUED ON 18.12.2009 ON A TOTAL INCOME OF ` .13,49,380 AS A RESULT OF WHICH A NET I.T.A. NO.2050/MDS/10 2 DEMAND OF ` .2,79,925 WAS RAISED AGAINST THE ASSE SSEE INCLUDING INTEREST LEVIED U/S 234B AND 234C OF THE ACT AMOUNTING TO ` .70,533. IN THE ASSESS MENT ORDER THE AO MADE THE FOLLOWING ADDITIONS: (A) AGRICULTURAL INCOME TREATED AS INCOME FROM OTHER SOURCES `. 3,00,000/-. (B) CASH DEPOSIT TREATED AS INCOME FROM OTHER SOURCES U/S68 ` .5.75 LAKHS. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND AGITATED BOTH THE ADDITIONS AND THE LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE WITH RESPECT TO BOTH THE ADDITIONS HAS DELETED SUCH ADDITIONS AGAINST WHICH THE DEPARTMENT HAS COME UP IN APPEAL CHAL LENGING SUCH DELETION OF ADDITIONS. 4. AS REGARDS FIRST ADDITION RELATING TO AGRICULTURAL INCOME TO THE EXTENT OF ` .3.00 LAKHS, THE ASSESSEE FILED LETTER DATED 07. 12.2009 WITH THE ASSESSING OFFICER IN WHICH HE INFORMED THAT AGRICULTURAL INCOME IS EARNED FROM A TOTAL AREA OF 40 ACRES AT ` .50,000 PER ACRE AND AFTER EXPENSES ` .25,000 IS EARNED APPROXIM ATELY. HE ALSO MENTIONED THAT INVOICES ON BUY ERS ARE NOT RAISED AS THE SA LES ARE ON CASH AND CARRY BASIS AND ON SPOT PAYMENT. THE ASSESSEE AL SO FILED ANOTHER LETTER ON 16.12.2009 IN WHICH IT WAS STATED THAT THE AGRICULTURAL INCOME HAS BEEN DERIVED FROM 80-100 ACRES UNDER HIS CONTROL. THE ASSESSEE ALSO F ILED ONE MORE LETTER ON 17.12.2009 STATING THAT HIS MOTHER AND FATHER OWNED ABOUT 40 ACRES OF LAND. HE ALSO STATED THAT HIS FATHER EXPIRED 5 YEARS BACK AND THE LANDS HELD IN THE NAME OF HIS FATHER IS LOOKED AFTER BY HIM AND INCOME FROM THE SAME IS ENJOYED BY THE ASSESSEE. THE ASSESSING OFFICER CONSIDERING THE REASONABLENESS OF THE CONTENTION OF THE ASSESSEE AND BASED ON THE VAOS DEPOSITION, ESTIMAT ED THE NET AGRICULTURAL INCOME AT ` .8 LAKHS I.E. ` .20,000 PER ACRE ON 40 ACRE S IN THE HANDS OF THE A SSESSEE AND THE BALANCE OF I.T.A. NO.2050/MDS/10 3 ` .3 LAKHS HAS STATED TO HAVE BEEN TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES. 5. THE LD. CIT(A), WHILE CONSIDERING T HE EXPLANATION OF THE ASSESSEE AND OTHER RELEVANT MATERIAL, HAS CAME TO THE CONCLUSI ON THAT THE ADDITION IN THIS REGARD IS NOT CALLED FOR AND HENCE DELETED. 6. BEFORE US, WHILE FILING COPY OF THE RE TURN OF INCOME FILED BEFORE THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2004-05, 05 -06 AND 06-07, WHEREIN NET AGRICULTURAL INCOME IS STATED TO HAVE BEEN DECLARED AT ` .10 LAKHS OF EACH OF THESE YEARS, WHICH HAS BEEN ACCEPTED BY THE INCOME TAX D EPARTMENT, SO THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINC E THERE IS INCREASE IN THE COST OF FOOD GRAINS ETC. THEREFORE, IN THE YEAR UNDER REFERENCE, HE EARNED ` .11 LAKHS, WHICH HAS DULY BEEN DECLARED IN THE RETURN OF INCOME AND TH E ASSESSING OFFICER WA S NOT JUSTIFIED IN MAKING ADDITION WHEN FOR LAST THREE YEAR S, THE AGRICULTURAL INCOME DECLARED AT ` .10 LAKHS FOR EACH YEAR WAS BEING ACCEPTED, THER EFORE, IT WAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER AND THE LD. DR HAS STATED THAT THE ASSESSING OFFICER ESTIMATED THE NET AGRICULTURAL INCOME AT ` .20,000 PER ACRE, WHEREAS, THE ASSESSEE HAS ESTIMATED IT AT ` .25,000, SO IT IS A MATTER OF ESTIMATE AND THE ASSESSING OFFICER HAS MADE PROPER ESTIMATE BECAUSE NO DE TAILS, MATERIALS OR EVIDENCE HAS BEEN FURNISHED BEFORE THE ASSESSING OFFICER OR BEFO RE THE LD. CIT(A) OR EVEN BEFORE THIS BENCH. THEREFORE, THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD BE RESTORED AND T HE LD. COUNSEL FOR THE ASSESSEE TO COUNTER LD. DRS SUBMISSIONS HAS PLEADED THAT SINCE IT IS A MATTER OF ESTIMATION AND EVEN INCOME UPTO 2006-07 HAS BEEN DECLARED AT ` .10 LAKHS PER YEAR AND THERE IS I.T.A. NO.2050/MDS/10 4 INCREASE IN THE COST OF LIVING AS WELL AS FO OD GRAINS, THEREFORE, THE ESTIMATE OF THE ASSESSEE IN RETURNING THE AGRICULTURAL INCOME TO THE EXTENT OF ` .11 LAKHS IS JUSTIFIED AND THAT IS WHAT THE LD . CIT(A) WAS HELD, WHOSE ACTION SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSEE HAS FILED RETURN TAKING BASIS FROM EARLIER YEAR PLUS ` . 1.00 LAKH, WHEREAS, THE ASSESSING OFFICER HAS ES TIMATED THE SAME BY ADOPTING ANOTHER ESTIMATE OF ` .20,000 PER ACRE FOR 40 ACRES, WHEREAS, THE LD. CIT(A) HAS DELETED THE SAME. SINCE IT IS A MATTER OF ESTIMATION AND GUESS WORK IN ESTIMATION CANNOT BE RULED OUT IN THE ABSENCE OF PROPER BOOKS AND DETAILS HAVING BEEN MAINTAINED AND PRODUCED. THEREFORE, KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCUMSTANCES, WE DIRECT TO ADOPT ` .22,500/- PER ACRE FOR 40 ACRES OF LAND AS AGRICULTURAL INCOME FOR THE YEAR UNDER CONSIDERATION, THER EBY SUSTAINING ADDITION OF ` .2 LAKHS OUT OF ` . 3 LAKHS MADE BY THE ASSESSING OFFICER AND RESTRICTI NG THE RELIEF GIVEN BY THE LD. CIT(A) TO ` .1 LAKHS. 8. AS REGARDS SECOND GROUND, THE A SSESSING OFFICER DURING THE CORUSE OF ASSESSMENT, ON VERIFICATION OF AIR INFORMA TION NOTED THAT THE ASSESSEE HAS CASH DEPOSITS AMOUNTING TO ` . 10 LAKHS DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08 IN THE ASSESSEE S SAVING BANK ACCOUNT WITH ORIENTAL BANK OF COMMERCE. THE LD. AR OF THE A SSESSEE WAS ASKED TO EXPLAIN THE SOURCES FOR THE CASH CREDITS IN THE ASSESSEES SB ACCOUNT. IT WAS EXPLAINED BY THE ASSESSEE VIDE LETTER DATED 12.11.2009 THAT THE CASH WITHDRAWN FROM IDBI BANK WAS DEPOSITED ON 20.06.2006 AND 21.06.2006 FOR A TOTAL AMOUNT OF ` .4,25,000. THE ASSESSING I.T.A. NO.2050/MDS/10 5 OFFICER HAS ADDED THE BALANCE CASH DEPOSITS OF ` .5,75,000/- AS INCOME FROM OTHER SOURCES UNDER SECTION 68 OF THE ACT AS THE ASSESSEE WAS UNABLE TO EXPLAIN. 9. IN APPEAL, THE LD. AR OF THE ASSESSEE EXPLAINED THAT THE AGRICULTURAL INCOME OF THE ASSESSEE HAS BEEN REAL IZED ONLY IN THE FORM OF CA SH FROM THE LOCAL TRADERS, WHO APPROACHED THE ASSESSEE ON A DAY TODA Y BASIS DURING THE SEASON PERIOD. THE REALIZATION FROM THE AGRICU LTURAL INCOME HAS BEEN IN THE FORM OF CASH WHICH WAS DEPOSITED IN THE BANK ACCOUNT. AS THE AGR ICULTURAL INCOME HAS BEEN DECLARED AND ACCEPTED, THE ASSESSEE HAS PL EADED NOT TO TREAT THE CASH DEPOSITS AS UNDISCLOSED INCOME FROM OTHER SOURCES. 10. THE LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE ADDITION VIDE PARA 5.1.3, WHICH IS REPRODUCED AS UNDER: 5.1.3 BASED ON THE DETAILS AND EXPLAN ATIONS FURNISHED BY THE A.R., THE CASH DEPOSITS IN SB A/C WITH ORIENT AL BANK OF COMMERCE AMOUNTING TO ` .5,75,000/- CAN BE GENUINELY FROM CASH RECEIPTS OF AGRICULTURAL INCOME. HENCE THE TREATMENT OF ` .5,75,000/- AS INCOME FROM OTHER SOURCES CANNOT BE SUSTAINED AND SO DELETED. 11. AGGRIEVED BY THIS OR DER OF THE LD. CIT(A), THE DEPARTMENT HAS CAME UP IN APPEAL AND WHILE RELYING UPON TH E BASIS AND REASONING AS TAKEN IN THE GROUNDS OF APPEAL, HAS PLEADED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) A ND RESTORING THAT OF THE ASSESSING OFFICER, WHEREAS, THE LD. COUN SEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF SUCH A HUGE AGRICULTURAL INCOME, TH ERE WAS NO JUSTIFICAT ION FOR TREATING ANY CASH DEPOSIT MADE BY THE ASSESSEE IN THE BANK ACCOUNT. THEREFOR E, THE LD. CIT(A) HAS APPROPRIATELY CONSIDERED THE ISSUE AND DELETED THE ADDITION, WHOSE ACTION IS JUSTIFIED AND REQUIRES TO BE CONFIRMED. IT WAS, URGED FOR CONFIRMATION OF THE IMPUGNED ORDER IN THIS REGARD. I.T.A. NO.2050/MDS/10 6 12. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE BASIS AND REASONING AS GIVEN BY THE LD. CIT(A) IN DELETING THE IMPUGNED ADDITION ARE SOUND AND CONVINCING AND NEITHER ANY INFIRMITY OR FLAW IN THE CONCLUSION AS DRAWN BY THE LD. CIT(A) HAS BEEN POINTED OUT BY T HE LD. DR NOR HAS IT BEEN NOTICED BY THIS BENCH. CONS IDERING THE ENTIRETY OF FACT S, CIRCUMSTANCES, WE UPHOLD THE ACTION OF THE LD. CIT(A) AND DISMISS TH IS GROUND OF APPEAL OF THE DEPARTMENT. 13. IN THE RESULT, APPEAL OF T HE DEPARTMENT IS PARTLY ALLOWED. ORDER PRONOUNCED SOON AFTER THE C ONCLUSION OF HEARING ON 23.02.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI, DATED, THE 23.02.2011 VM/- TO:THE ASSESSEE//A.O./CIT(A)/CIT/D.R.