M/s. Media 360 Degree Services India Private Limited, Bangalore V. The Income Tax Officer, Ward- 4(1)(2), Bangalore

ITA 2240/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2694 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-11-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 23-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: MALLAH A RAO K
• Keywords: Additional evidence; Ignorance of law
• Section: 68

Judgement Text

ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.2240/BANG/2019 ASSESSMENTYEAR:2014-15 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD. # 16, 1 ST FLOOR, ABOVE BAJAJ SHOWROOM OPP. ALLIED BLENDERS, NEAR NAGASANDRA METRO STATION BANGALORE-560 070 PAN NO :AAGCM3019E VS. ITO WARD-4(1)(2) BANGALORE APPELLANT RESPONDENT A PPELLANT BY : SHRI MALLAHA RAO K., A.R. RESPONDENT BY : SMT. R. PREMI, D.R. DATE OF HEARING : 25.11.2020 DATE OF PRONOUNCEMENT : 25.11.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 3.9.2019 PASSED BY LD. CIT(A)-9, BENGALURU AN D IT RELATES TO THE ASSESSMENT YEAR 2014-15. THE ASSESSEE IS AGGRI EVED BY THE DECISION OF LD. CIT(A) IN PARTIALLY CONFIRMING THE ADDITION MADE BY THE A.O. U/S 68 OF THE INCOME-TAX ACT,1961 ['THE AC T' FOR SHORT]. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS ENGAGED IN ADVERTISEMENT AGENCY BUSINES S. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 2 OF 8 ASSESSEE HAS SHOWN UNSECURED LOANS TO THE TUNE OF R S.49.32 LAKHS. OUT OF THE ABOVE SAID LOANS, THE ASSESSEE HAS RECEI VED A SUM OF RS.19.50 LAKHS FROM A PERSON NAMED SHRI PRABHULINGA PPA, WHO IS THE FATHER OF MANAGING DIRECTOR OF THE COMPANY. IT WAS NOTICED THAT THE LOANS WERE RECEIVED IN CASH. THE ASSESSEE FURN ISHED CONFIRMATION LETTER OBTAINED FROM SHRI PRABHULINGAP PA, WHEREIN HE HAD CONFIRMED THAT HE HAS GIVEN A SUM OF RS.19 LAKH S TO THE ASSESSEE, EVEN THOUGH THE AMOUNT RECEIVED FROM SHRI PRABHULINGAPPA WAS RS.19.50 LAKHS. THE A.O. ALSO N OTICED THAT THE SIGNATURE AVAILABLE IN THE CONFIRMATION LETTER DID NOT TALLY WITH THE SIGNATURE FOUND IN PAN CARD. ACCORDINGLY, HE REJEC TED THE CONFIRMATION LETTER. SINCE THE ASSESSEE HAS FAILED TO PROVE THE CASH CREDIT LOAN OF RS.19.50 LAKHS, THE A.O. ASSESSED TH E SAME AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 3. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE SUBMI TTED BEFORE LD. CIT(A) THAT SHRI PRABHULINGAPPA IS HOLDING AGRI CULTURAL LAND AND EARNED AGRICULTURAL INCOME. HE SUBMITTED THAT THE IMPUGNED LOAN WAS GIVEN OUT OF HIS AGRICULTURAL INCOME. TH E ASSESSEE ALSO FURNISHED THE DETAILS OF LAND HOLDINGS. THE LD. CI T(A) NOTICED THAT THE LANDS WERE HELD BY SHRI PRABHULINGAPPA, HIS WIF E AND HIS BROTHER. IT WAS SUBMITTED THAT THE BROTHER OF SHRI PRABHULINGAPPA HAS GIVEN GPA TO THE ASSESSEE. THE LD. CIT(A) EXAMI NED THE DETAILS, THE NATURE OF CROPS GROWN AND ACCORDINGLY ESTIMATED THE AGRICULTURAL INCOME FROM THE LAND HOLD BY THE ABOV E SAID 3 PERSONS. THE LD CIT(A) ALLOCATED THE SAME BETWEEN THESE 3 PERSONS IN THE RATIO OF THEIR LAND HOLDING. AFTER CONSIDER ING THE PROBABLE EXPENSES OF THE ASSESSEE, THE LD. CIT(A) TOOK THE V IEW THAT THE SOURCES HAVE BEEN EXPLAINED ONLY TO THE EXTENT OF R S.6.52 LAKHS. ACCORDINGLY, HE SUSTAINED THE ADDITION TO THE EXTEN T OF RS.12.98 LAKHS. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 3 OF 8 4. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS REP AID THE LOAN TAKEN FROM SHRI PRABHULINGAPPA BY WAY OF CHEQUE IN THE SUBSEQUENT YEARS WHICH GOES TO SHOW THAT THE AMOUNT OF RS.19.50 LAKHS REPRESENT GENUINE LOAN TAKEN BY THE ASSESSEE. HE FURTHER SUBMITTED THAT SHRI PRABHULINGAPPA IS BASICALLY AN AGRICULTURIST AND HENCE, DID NOT FILE RETURN OF INCOME. SUBSEQUE NT TO THE ASSESSMENT ORDER, SHRI PRABHULINGAPPA HAS FILED HIS RETURN OF INCOME, WHEREIN AGRICULTURAL INCOME EARNED BY HIM W AS DULY DECLARED. HE SUBMITTED THAT SHRI PRABHULINGAPPA IS AN AGRICULTURALIST FOR THE PAST 40 YEARS AND THE IMPUG NED LOAN AMOUNT OF RS.19.50 LAKHS WAS GIVEN TO THE ASSESSEE COMPANY OUT OF HIS ACCUMULATED SAVINGS. ACCORDINGLY, HE SUBMITTED THA T THE TAX AUTHORITIES ARE NOT JUSTIFIED IN DISBELIEVING THE L OAN TRANSACTIONS. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS FURNIS HED COPIES OF RETURNS OF INCOME OF SHRI PRABHULINGAPPA IN THE PAP ER BOOK, WHICH ARE IN THE NATURE OF ADDITIONAL EVIDENCES. ACCORDI NGLY, HE PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE A.O. FOR EXAMINING IT AFRESH. 5. THE LD. D.R., ON THE CONTRARY, SUBMITTED THAT TH E FACTUM OF FILING OF RETURN OF INCOME BY SHRI PRABHULINGAPPA H AS BEEN HELD TO BE AN AFTERTHOUGHT BY LD. CIT(A). SHE FURTHER SUBM ITTED THAT THE LD. CIT(A) HAS ANALYSED THE FACTS RELATING TO THE I SSUE AND HAS ACCORDINGLY ESTIMATED THE PROBABLE SAVINGS THAT WOU LD BE AVAILABLE WITH SHRI PRABHULINGAPPA. SHE SUBMITTED THAT EVEN THOUGH THE BROTHER OF SHRI PRABHULINGAPPA HAS GIVEN POWER OF A TTORNEY TO HIM, IT CANNOT BE PRESUMED THAT THE AGRICULTURAL INCOME BELONGING TO SHRI UMESH, BROTHER OF SHRI PRABHULINGAPPA WAS NOT GIVEN TO SHRI UMESH. ACCORDINGLY, SHE SUBMITTED THAT THE LD CIT( A) HAS RIGHTLY ALLOCATED THE AGRICULTURAL INCOME BETWEEN THE OWNER S OF THE LAND. ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 4 OF 8 THERE IS NO PROOF THAT SHRI PRABHULINGAPPA HAS ENJO YED ENTIRE AGRICULTURAL INCOME. ACCORDINGLY THE LD DR SUBMITT ED THAT THE ORDER PASSED BY LD. CIT(A) SHOULD NOT BE INTERFERED WITH. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICE THAT THE ARGUMENTS ADVANCED BEFORE US BY THE ASSESSEE WERE ALSO ADVANCED BEFORE LD. CIT(A). WE NOTICE THAT TH E LD. CIT(A) HAS CONSIDERED ALL THE ARGUMENTS OF THE ASSESSEE AND AC CORDINGLY RENDERED HIS DECISION. FOR THE SAKE OF CONVENIENCE , WE EXTRACT BELOW THE DECISION RENDERED BY LD. CIT(A).: 7 WHEN ENQUIRED ABOUT WHY THE MONEY WAS RECEIVED I N CASH, THE APPELLANT SOUGHT THAT THERE WAS BUSINESS EXPEDIENCY . ON FURTHER ENQUIRY ABOUT THE SOURCES OF THE MONEY, THE APPELLA NT SUBMITTED THAT MR. PRABHULINGAPPA HAS AGRICULTURAL INCOME FRO M CULTIVATION OF LAND WHICH BELONGS TO HIM, HIS WIFE AND HIS TWO BROTHERS. LATER HE CLAIMED THAT HE HAS RIGHTS TO CULTIVATION AND KE EP INCOME ARISING OUT OF IT WITH HIM FOR LANDS BELONGING TO H IM, HIS WIFE AND HIS YOUNGER BROTHER SHRI. UMESH K N. SHRI. PRABHULINGAPPA HAS SUBMITTED A COPY OF GPA EXECUTED BY SHRI. UMESH K.N UPON HIM GIVING HIM THE RIGHT TO CULTIVATE THE SAID LAND. IT IS ALSO CLAIMED THAT SHRI. PRABHULINGAPPA'S BROTHERS AND HIS WIFE H AVE GIVEN RIGHT TO KEEP EARNINGS WITH HIM. 8. THE TOTAL AREA OF LAND IS 16.88 ACRES. THE PRIME PRODUCE FROM THE LANDS IS ARECA NUTS. SHRI. PRABHULINGAPPA HAS CLAIMED A GROSS TOTAL RECEIPT OF 30-5O LAKHS PER ANNUM FROM T HE CULTIVATION OF ARECA NUT OVER THE LAND. HE HAS FURTHER CLAIMED THAT IN THE FINANCIAL YEAR 2013-14 HE HAD OBTAINED RS. 25,71,44 8 1 - FROM SALE OF ARECA NUTS AND AROUND 9 LAKHS FROM SALE OF OTHER PRODUCE LIKE BANANA, MANGO, CHIKKU, BETEL LEAF, COCONUT ETC. THE REFORE, THE TOTAL INCOME FROM AGRICULTURE IN THE FINANCIAL YEAR 2013-14 IS CLAIMED TO BE RS. 34,71,4481- FROM 16.88 ACRES. 9. THE CLAIM OF THE APPELLANT IS VERIFIED FROM VAR IOUS SOURCES ON INTERNET. IT IS FOUND THAT THE AVERAGE YIELD OF ARECA NUT PER ACRE IN KARNATAKA IS AROUND 8 QUINTALS. THE AVERAGE SALE PRICE FOR ARECA NUTS DURING FINANCIAL YEAR 2013-14 IS AROUND RS. 25,00O PER QUINTAL. THEREFORE, THE GROSS RECEIPT FROM A TOTAL LAND OF 16.88 ACRES COMES TO AROUND 33.76 LAKHS. THEREFORE, THE G ROSS RECEIPT CLAIMED BY SHRI. PRABHULINGAPPA IS FOUND TO BE ACCE PTABLE. ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 5 OF 8 10. HOWEVER, THE NET AGRICULTURAL INCOME IS NOT WOR KED OUT BY THE APPELLANT. I FIND THAT ATLEAST 50% WILL BE THE EXPENDITURE 11. HOWEVER AS CLAIMED BY SHRI. PRABHULINGAPPA, THE INC OME IS FROM TOTAL AREA OF 16.88 ACRES OF LAND. ALTHOUGH SHRI. UMESH K. N (BROTHER OF SHRI. PRABHULINGAPPA) HAS EXECUTED GPA IN FAVOUR OF SHRI. PRABHULINGAPPA, IT IS NOT MENTIONED ANYWHERE IN THE GPA THAT SHRI. UMESH K N IS TRANSFERRING RIGHTS OVER INCOME FROM THE SAME LAND TO SHRI. PRABHULING.PPA. IN VIEW OF THIS, I FIND THAT IN ABSENCE OF DISTINCT DEALING OF MONETARY TER MS, IT CANNOT BE INFERRED THAT THE INCOME ACCRUING FROM THE SHARE OF LAND OF SHRI. UMESH K.N IS TO BE CONSIDERED IN THE HANDS OF SHRI. PRABHULINGAPPA. 12. IN VIEW OF THE ABOVE THE SHARE OF LAND OF SHRI. PRA BHULINGAPPA AND OTHERS AND THEIR SHARE OF INCOME ARE TO BE CONS IDERED SEPARATELY. INCOMES FROM THE PRODUCE ARE ACCRUING IN THE HANDS OF RELATED PARTIES ARE AS BELOW: NAME OF HOLDER AND RELATION WITH PRABHULINGAPPA KN AREA OF LAND PROPORTIONATE INCOME FROM SALE OF ARECA NUT PROPORTIONATE INCOME FROM SALE OF OTHER PRODUCES PRABHULINGAPPA KN 6.72 ACRES RS. 10,23,704 RS. 3,58,294 SMT. PRATHIMA(WIFE) 4.06 ACRES RS. 6,18,488 . RS. 2,16,469 UMESH KN (BROTHER) 6.10 ACRES RS.9,29,256 RS.3,25,237 TOTAL 16.88 ACRES RS.25,71,448 RS.9,00,000 13. HOWEVER, IT IS OBSERVED THAT DESPITE HAVING SUCH HI GH RECEIPTS FROM AGRICULTURAL ACTIVITIES, HE HAD NOT F ILED HIS RETURN OF INCOME WITHIN THE TIME PRESCRIBED. 14. HE FILED HIS RETURN OF INCOME ONLY DURING THE ASSES SMENT PROCEEDINGS IN THE CASE OF M/S. MEDIA 36O DEGREE SE RVICES INDIA PRIVATE LIMITED WERE STARTED. ON BEING ENQUIRED ABO UT WHY HE DID NOT FILE HIS RETURN EARLIER, HE EXPLAINED THAT SINCE HE WAS EARNING AGRICULTURAL INCOME ONLY, WHICH IS EXEMPT I N NATURE, HE WAS UNDER IMPRESSION THAT THERE WAS NO LIABILITY TO FILE RETURN UPON HIM. ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 6 OF 8 15. THE ARGUMENT PRESENTED BY SHRI. PRABHULINGAPPA SEEM S TO BE AN AFTERTHOUGHT AS HE HAS BEEN IN AGRICULTURA L BUSINESS FOR LONG TIME. FURTHER HIS SON SHRI. MALLIKARJUNA P.G. IS A BUSINESSMAN HAVING GOOD TURNOVER FROM BUSINESS. IN SUCH SITUATION BEING UNAWARE OF THE VERY BASICS OF THE L AWS OF THE LAND AND NOT KNOWING THAT THERE IS A REQUIREMENT TO FILE RETURN EVEN IF THE INCOME IS EARNED FROM AGRICULTURAL ACTIVITIES I S NEITHER JUSTIFIED NOR A SATISFACTORY EXPLANATION. FURTHER, IGNORANCE OF LAW IS NOT AN EXCUSE. FURTHER THE APPELLANT HAS FAI LED TO EXPLAIN THAT UNDER WHAT BUSINESS EXPEDIENCY HE HAD TO TAKE SUCH HUGE CASH FROM HIS FATHER ON DIFFERENT OCCASIONS. THE SAME TRANSAC TIONS COULD HAVE BEEN TAKEN PLACE BY BANKING CHANNELS. 16. IN VIEW OF THE ABOVE, I FIND THAT FIRSTLY THE LOAN SHOULD HAVE BEEN GIVEN VIA BANKING CHANNELS WHICH HAS NOT HAPPENED IN THIS CASE. FURTHER, OUT OF THE GIVEN INCOME FROM AG RICULTURE OF ARECA NUTS AND OTHERS, THE APPELLANTS SHARE IS ONLY RS. 13,81,998/-. REST OF THE INCOME OF RS. 20,89,450/- IS ACCRUED IN THE HANDS OF SHRI. PRABHULINGAPPA'S WIFE AND HIS BR OTHERS. IT IS ALSO SEEN THAT AGRICULTURAL INCOME IS THE ONLY SOUR CE OF INCOME FOR SHRI. PRABHULINGAPPA. 17. THE NET AGRICULTURAL INCOME WORKED OUT WILL BE 50% RS. 13,81,998[APPROX. 6.92 LACS]. FURTHER, THE ENTIRE A MOUNT OF RS. 13,81,998/- CANNOT BE SAVED BY HIM. ASSUMING TH AT A MINIMUM OF RS. 20,000 PER MONTH IS REQUIRED FOR HIS BASIC SUSTENANCE, HENCE, AN AMOUNT OF RS. 2,40,000(20,000 *12) IS DEDUCTED AS THE MINIMUM AMOUNT THAT WOULD HAVE BEEN SPENT BY HIM ON HIS SUSTENANCE. THEREFORE, THE SAVINGS LE FT WITH HIM IS THE SPARE MONEY LEFT AFTER DEDUCTING HIS EXPENSE S WHICH AMOUNTS TO RS. 4,52,000 (RS. 692000 RS. 2,40,000). SIMILARLY, SOME SAVING FROM EARLIER YEAR MAY BE AVA ILABLE. IN VIEW OF ABOVE, THIS IS ESTIMATED TO BE RS. 2,00,000 . 18. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CONCLUDED THAT SHRI. PRABHULINGAPPA IS LEFT WITH ON LY RS. 6,52,000 SAVINGS WHICH HE COULD LEND TO HIS SON. TH E ORE, OUT OF THE TOTAL UNSECURED LOANS OF RS. 19,50,000 CLAIM ED TO BE GIVEN TO SHRI MALLIKARJUNA P.G. BY SHRI PRABHULINGA PPA, RS.6,52,000 IS ALLOWED AND THE ADDITION MADE BY THE AO IS SUSTAINED TO THE EXTENT OF RS.12,98,000. 7. WE NOTICE THAT THE LD. CIT(A) HAS ANALYSED ENTIR E FACTS RELATING TO THE CASE, CONSIDERED THE ARGUMENTS OF T HE ASSESSEE AND ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 7 OF 8 HAS ESTIMATED THE AGRICULTURAL INCOME IN A METICULO US WAY. WE NOTICE THAT NO MATERIAL WAS PLACED BEFORE US TO SHO W THAT THE ESTIMATE MADE BY LD CIT(A) IS NOT CORRECT. INSTEAD , THE ASSESSEE IS PLACING RELIANCE ON THE RETURNS OF INCOME FILED BY SHRI PRABHULINGAPPA SUBSEQUENT TO PASSING OF ASSESSMENT ORDER, WHICH HAS BEEN HELD TO BE AN AFTERTHOUGHT BY LD CTI(A). WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN TAKING THE ABOVE SAID VIEW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS R EPAID THE LOAN TAKEN FROM SHRI PRABHULINGAPPA SUBSEQUENTLY. IT IS WELL SETTLED PRINCIPLE THAT THE REPAYMENT OF CASH CREDIT WOULD N OT PROVE THE GENUINENESS OF CASH CREDIT. IT IS THE RESPONSIBILI TY OF THE ASSESSEE TO PROVE THREE MAIN INGREDIENTS, VIZ., IDENTITY OF THE CREDITOR, CREDIT WORTHINESS OF CREDITOR AND GENUINENESS OF THE TRANS ACTION. IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WORTHINESS FULLY AND ALSO THE GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE LD CIT(A) HAS TAKEN A REASONABLE VIEW OF THE MATTER . HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION RENDERED BY LD. CIT(A) AND ACCORDINGLY UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH NOV, 2020. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 25 TH NOV, 2020. VG/SPS ITA NO.2240/BANG/2019 M/S. MEDIA 360 DEGREE SERVICES INDIA PVT. LTD., BAN GALORE PAGE 8 OF 8 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.