Sri G.P.Reddy, Hyderabad V. ITO, Hyderabad

ITA 209/HYD/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5863 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-03-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Reopening of assessment; Unexplained cash credit; Reason to believe
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.209/HYD/2009 ASST. YEAR : 2001-2002 SHRI G.P. REDDY, HYDERABAD (ACGPG 3702K) VS. ITO, WARD NO.1(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY: K.A. SAI PRASAD RESPONDENT BY: SMT. NIVEDITA BISWAS, D.R. O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER PASSED BY THE CIT(A)- II, HYDERABAD DATED 15.12. 2008 AND PERTAINS TO THE ASSESSMENT YEAR 2001-02. 2. THE FIRST GROUND IN THE ASSESSEE'S APPEAL IS WITH RE FERENCE TO REOPENING OF ASSESSMENT. THIS ISSUE WAS NOT AT ALL CONTESTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. AS SUCH THE CIT(A) HEL D THAT REOPENING OF ASSESSMENT IS VALID. MOREOVER, IN THE PRESE NT CASE, THERE WAS NO ASSESSMENT WAS CARRIED OUT ORIGINALLY U/S 143(3) OF THE INCOME TAX ACT. THE RETURN ONLY PROCESSED U/S 143 (1) OF THE I T ACT. THE ASSESSING OFFICER HAS A REASON TO BELIEVE THAT INCOME HAS E SCAPED FROM ASSESSMENT AS THERE WAS A RELEVANT MATERIAL AVAILABLE ON RECORD AND REGARDING AVAILABILITY OF MATERIAL THERE IS NO DISPUT E. ON THE BASIS OF WHICH THE ASSESSING OFFICER FORMED THE BELIEF THAT THE IN COME ESCAPED FROM ASSESSMENT. THE ASSESSING OFFICER IS WITHIN THE REALM O F THE SUBJECTIVE SATISFACTION AND HE IS JUSTIFIED IN REOPENING T HE ASSESSMENT. THE ASSESSEE'S COUNSEL NOT ABLE TO POINT OUT HOW THE REOP ENING IS BAD IN LAW. ACCORDINGLY PLACING RELIANCE ON THE JUDGEMENT OF THE HON'BLE 2 2 SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI S TOCK BROKERS (P) LTD. (291 ITR 500) (SC)., WE DISMISS THIS GROUND TAKE N BY THE ASSESSEE. 3. THE NEXT GROUND IS WITH REFERENCE TO ADDITION ON ACCOUNT OF AGRICULTURAL INCOME IN THIS ASSESSMENT YEAR. THE ASSESSEE CLAI MED THAT AGRICULTURAL INCOME OF RS.75,450/-. HOWEVER, THE AGRI CULTURAL PROPERTY WAS NOT OWNED BY THE ASSESSEE INSTEAD IT IS OWNED BY THE A SSESSEE'S FATHER. THERE IS NO CONFIRMATION FROM THE FATHER GIV ING LAND TO THE ASSESSEE FOR AGRICULTURAL PURPOSE. IN SUCH AN EVENT, THE A GRICULTURAL INCOME TO BE ASSESSED IN THE HANDS OF THE ASSESSEE'S FATHER ON LY. THE ASSESSEE IN THE PRESENT CASE, NOT ABLE TO LEAD ANY EVIDENC E TO SHOW HOW HE CAME INTO THE POSSESSION OF THE SAID AGRICULTURAL PROPE RTY AND IN WHAT AUTHORITY HE HAS CULTIVATED THE AGRICULTURAL LAND TO EARN AGRICULTURAL INCOME. UNDER THESE CIRCUMSTANCES, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. THIS GROUND IN ASSESSE E'S APPEAL IS DISMISSED. 4. THE NEXT GROUND IS WITH REGARD TO ADDITION ON ACCOUNT OF LOW DRAWINGS AT RS.1,80,000/-. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WAS NO DRAWINGS SHOWN IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THE ASSESSEE STATED THAT THE DRAWINGS ARE TAKEN CARE OF HUF INCOME AND FROM THE COMPANY WHERE HE WAS WORKING AND HE HAS ADMITTED THAT BEFORE THE ASSESSING OFFICER THAT THERE WAS NO DRAWINGS IN HIS PERSONAL STATUS. KEEPING IN VIEW OF THE ABOVE, THE ASSESSING OFF ICER ESTIMATED AN AMOUNT OF RS.15,000/- P.M. AS DOMESTIC EXPENDITURE. THE CIT(A) CONFIRMED THE SAME. IN OUR OPINION, THE SOME CREDIT TO BE GIVEN TO THE ARGUMENTS OF THE ASSESSEE AS HIS EXPENDITURE IS TAKEN CARE O F BY HUF AND THE COMPANY WHERE HE WAS WORKING. THE ASSESSEE ALSO FILED CAPITAL ACCOUNT WHEREIN HE SHOWED DRAWING AT RS.1,19,424/-. ACCO RDINGLY WE 3 3 SUSTAIN THE BALANCE OF RS.60,576/- (1,80,000 - 1,19,4 24/-) TOWARDS LOW DRAWINGS. 5. THE NEXT ISSUE IS WITH REGARD TO ADDITION OF RS.8,26,126/-. THE ASSESSING OFFICER OBSERVED IN THE ASSESSMENT ORDER THAT T HE ASSESSEE HAS CARRIED FORWARD RS.8,26,126/- IN THE CAPITAL A CCOUNT TO THE FINANCIAL YEAR 2000-01 RELEVANT FOR THE ASSESSMENT YEA R 2002-03. ON THE BASIS, THE ASSESSING OFFICER PRESUMED THAT THIS BALANCE I S NOTHING BUT INCOME FOR THE FINANCIAL YEAR 2000-01 RELEVANT T O ASSESSMENT YEAR 2001-02. DURING THE APPELLATE PROCEEDINGS THE AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE STATED THAT THIS AMOUNT IS NOTHING BUT ACCUMULATED BALANCE IN THE CAPITAL ACCOUNT OF EARLIER YEA RS CARRIED FORWARD TO THE FINANCIAL YEAR 2001-02 AND HENCE THE A SSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE ENTIRE AMOUNT AS INCOM E FOR THE FINANCIAL YEAR 2000-01 RELEVANT TO ASSESSMENT YEAR 2001-02. THE AR ALSO FILED A COPY OF THE CAPITAL ACCOUNT FROM FINANCIAL YEAR 1994-95 TO 2000-01 TO SHOW HOW THE BALANCE IN THE CAPITAL ACCOUNT WAS ARRIVED AT AND CARRIED FORWARD. THE ASSESSING OFFICER STATED BEFORE THE CIT(A ) THAT THE CAPITAL ACCOUNT FURNISHED BY THE ASSESSEE DURING THE APPELLATE PRO CEEDINGS MAY BE CONSIDERED FOR WORKING OUT THE CAPITAL BALANCE THAT COULD BE CARRIED FORWARD TO THE FINANCIAL YEAR 2001-02. HOWEVER, THE ASSESSING OFFICER STATED THAT THE AGRICULTURAL INCOME SHOWN IN THE CAPITAL ACCOUNT SHOULD NOT BE CONSIDERED FOR THE REASON THAT THE ASSESSEE DID NO T HAVE AGRICULTURAL LAND AS DISCUSSED IN THE ASSESSMENT ORDER FOR TH E ASSESSMENT YEAR 2001-02. HE AGREED THAT THERE COULD BE SOME ACCUMULATION IN THE CAPITAL ACCOUNT WHICH COULD HAVE BEEN CARRIED FORWARD TO THE ACCOUNTING YEAR 2001-02 RELEVANT FOR A SSESSMENT YEAR 2002-03. 6. THE CIT(A) HAS TAKEN THE ENTIRE CLOSING BALANCE FOR THE FINANCIAL YEAR ENDED ON 31.3.2001 AT RS.8,26,126 THE REAFTER HE HAS NOT 4 4 CONSIDERED ACCRUED AGRICULTURAL INCOME FROM THE FINANCIAL YEAR 1994-95 AND 2000-01 AT RS.4,55,450 ARRIVED NET FIGURE AT RS. 3,70,676/- TO BE BROUGHT FORWARD. FROM THIS HE DEDUCTED ADDITION MADE ON THIS YEAR TOWARDS AGRICULTURAL INCOME AT RS.75,450/-. THUS, HE A RRIVED AT FIGURE OF RS.4,46,126/- DEDUCTED THIS AMOUNT FROM THE ADDITI ON OF RS.8,26,126/- AND ARRIVED FIGURE AT RS.3,80,000 AND SUSTAINED THE SAME. . WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. IN THIS CASE, THE ASSESSEE HAS SHOWN AN INCREASE IN THE CAPITAL ACCOUNT YEAR BY YEAR TOTALING AT RS.8,26 ,126/-. THE CONTENTION OF THE ASSESSEE IS THAT THE OPENING CAPITAL CAN NOT BE TREATED AS INCOME OF THE ASSESSEE AND ONLY AMOUNT CREDITED TO THE CAPITAL ACCOUNT IN THE ASSESSMENT YEAR UNDER CONSIDERATION TO BE CON SIDERED AS INCOME OF THE ASSESSEE IF IT IS NOT EXPLAINED. WE FIND FORCE IN THIS ARGUMENTS. THE ASSESSING OFFICER REQUIRED TO EXAMINE THIS ISSUE AFRESH AND HE SHALL MAKE ADDITION ONLY ON ACCOUNT OF UNEXPLA INED INVESTMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR AMOUNT CRED ITED IN THE BOOKS OF ACCOUNT IF ANY WHEN THESE ENTRIES ARE NOT EXPLA INED. IN OTHER WORDS, WE DIRECT THE ASSESSING OFFICER TO CONSIDER ONLY THE INVESTMENT OR UNEXPLAINED CREDIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IF THE SOURCES OF WHICH ARE NOT SATISFACTORILY EXPLAINED. THE A GRICULTURAL INCOME DISCLOSED BY THE ASSESSEE CANNOT BE CONSIDERED AS PART OF SOURCES. WITH THIS DIRECTION, WE SET ASIDE THE ISSUE TO TH E FILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT 31. 3.2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 31ST MARCH , 2010 5 5 COPY FORWARDED TO: C/O PARTHASARATHY & CO., 1-1-298/2/B/3, 1 ST FLOOR SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD-20. ITO, WARD 1 (2), HYDERABAD 3. CIT(A)-II, HYDERABAD 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP