ITO, Kolar V. Shri. G.H. Nagaraj, Kolar

ITA 231/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9525 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 19-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVARAJ SMT V S SREELEKHA
• Keywords: Opportunity of being heard; Additional evidence; Onus to prove
• Section: 143(3); 131

Judgement Text

PAGE 1 OF 9 ITA NO.174 & 231/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N L KALRA, A.M. AND SHRI GEORGE GEORGE K, J.M. ITA NO.174/BANG/2009 [ASSESSMENT YEAR 2005-06] SHRI G H NAGARAJ, NO.51, MATHRU MANDIRA, PRASHANTNAGAR, CHIKABALLAPUR (KOLAR DISTRICT). - APPELLAN T VS THE INCOME TAX OFFICER, WARD-2, KOLAR. - RESPONDENT ITA NO.231/BANG/2009 (ASST. YEAR 2005-06) (BY REVENUE) ASSESSEE BY : SHRI DEVARAJ REVENUE BY : SMT. V S SREELEKHA O R D E R PER N L KALRA : THE ASSESSEE AS WELL AS THE REVENUE HAS FILED APPEALS AGAINST THE ORDER OF LEARNED CIT(A)-V, BANG ALORE DATED 2ND JANUARY, 2009. 2. FIRST WE SHALL TAKE UP THE APPEAL FILED BY THE ASSESSEE. THE ONLY GRIEVANCE OF THE APPELLANT IS TH AT THE LEARNED PAGE 2 OF 9 ITA NO.174 & 231/BANG/2009 2 CIT(A) HAS ERRED IN TREATING THE CREDIT BALANCE OF RS.10LAKHS IN THE NAME OF MR. JOY AS INCOME OF THE ASSESSEE. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED LIABILITY IN RESPECT OF SRI JOY OF A SUM OF RS.10 LAKHS. SUM MONS U/S 131 WAS ISSUED TO SHRI JOY BUT SHRI JOY DID NOT APPEAR BE FORE THE AO TO CONFIRM THE LOAN GIVEN TO THE ASSESSEE. THE ASSESSING OFFICER HELD THAT THE TRANSACTION WITH SHRI JOY CANN OT BE TREATED AS GENUINE INSPITE OF THE FACT THAT THE ASS ESSEE HAS PRODUCED A CONFIRMATION LETTER, AS SHRI JOY HAS NOT ATTENDED THE OFFICE IN RESPONSE TO SUMMONS U/S 131. 2.2 BEFORE THE LEARNED CIT(A), THE LEARNED AR OF T HE ASSESSEE DREW ATTENTION OF THE LEARNED CIT(A) TOWAR DS THE CONFIRMATION FILED BY THE ASSESSEE. AS PER THE CONF IRMATION, THE LOAN WAS RECEIVED BY CHEQUE NO.992878 ISSUED FROM SA VING BANK A/C NO.10781 OF ING VYSYA BANK. THE CREDITOR HAS GIV EN HIS PERMANENT ACCOUNT NUMBER AS AAAPT71261. IT WAS SUB MITTED THAT SHRI JOY IS A CONTRACTOR. THE ASSESSING OFFICE R, INSTEAD OF VERIFYING THE PAN, INCOME-TAX RETURN, HAS SIMPLY ADDE D BACK WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD. TH E LEARNED CIT(A) OBSERVED THAT SUMMONS U/S 131 WAS DULY SERVED TO SHRI JOY. THE ONUS TO PROVE THAT THE LOAN WAS GIVEN TO T HE ASSESSEE IS ON THE ASSESSEE. THE ASSESSEE HAS NOT DISCHARGED T HE ONUS. THE ASSESSEE OR SHRI JOY NEVER ASKED FOR THE TIME TO SAT ISFY THE PAGE 3 OF 9 ITA NO.174 & 231/BANG/2009 3 GENUINENESS OF THE LOAN. THE LEARNED CIT(A) THEREA FTER CONFIRMED THE ADDITION. 2.3 BEFORE US, THE LEARNED AR SUBMITTED THAT THE ASSESSEE WAS NOT AWARE OF THE FACT THAT SUMMONS U/S 131 HAS BEEN ISSUED TO SHRI JOY. NO OPPORTUNITY WAS ALLOWED BY THE AO TO PROVE THE GENUINENESS OF THE TRANSACTIONS WITH S HRI JOY. THE ASSESSEE WAS NOT INFORMED THAT SHRI JOY HAS NOT ATT ENDED THE OFFICE OF THE AO INSPITE OF SERVICE OF SUMMONS U/S 131. COPY OF SUCH SUMMONS WAS NOT ENDORSED TO THE ASSESSEE. THE LEARNED AR HAS FILED A PAPER BOOK CONTAINING 5 PAGES. THE FIR ST PAGE OF THE PAPER BOOK IS THE CONFIRMATION ISSUED BY MR. JOY. IT CONTAINS THE PERMANENT ACCOUNT NUMBER OF THE CREDITOR. IT A LSO REFERS TO THE CHEQUE NUMBER AND THE BANK ACCOUNT THROUGH W HICH SUCH CHEQUE WAS ISSUED. THE LEARNED AR HAS ALSO FILED C OPY OF ACCOUNT OF THULUVANTH CONSTRUCTIONS AS AVAILABLE IN THE COR PORATION BANK, KOLAR. ACCOUNT STATEMENT ISSUED BY THE CORPORATION BANK SHOW THAT A DD FAVOURING G H NAGARAJ WAS ISSUED ON 4TH S EPTEMBER, 2004. PAGE 4 IS THE COPY OF SUCH DD. THE LEARNED A R FAIRLY CONCEDED THAT THE EVIDENCE AVAILABLE AT PAGE 3 OF T HE PAPER BOOK WAS NOT FILED BEFORE THE LOWER AUTHORITIES. 2.4 ON THE OTHER HAND, THE LEARNED DR SUBMITTED TH AT THE ONUS OF PROVING THE CASH CREDIT IS ON THE ASSES SEE. CONFIRMATION FILED IS NOT SUFFICIENT FOR ACCEPTING THE CASH CREDIT BECAUSE ONE HAS TO CONSIDER THAT THE THREE CONDITIO NS ARE PAGE 4 OF 9 ITA NO.174 & 231/BANG/2009 4 SATISFIED IN CASE CASH CREDIT IS TO BE ACCEPTED. S UCH PRE- CONDITIONS ARE NAMELY, (1) IDENTITY OF THE CREDITOR; (2) CREDITWORTHINESS OF THE CREDITOR; (3) GENUINENESS O F THE TRANSACTIONS. THE LEARNED DR FURTHER SUBMITTED THA T THE ADDITIONAL EVIDENCE FILED NOW BEFORE THE TRIBUNAL S HOULD BE IGNORED, AS THE APPELLANT HAS NOT BEEN ABLE TO SUBM IT AS TO WHY THE ADDITIONAL EVIDENCE WAS NOT FILED. 2.5 WE HAVE HEARD BOTH THE PARTIES. IT IS TRUE TH AT ADDITIONAL EVIDENCE HAS BEEN MADE AVAILABLE TO US A ND SUCH ADDITIONAL EVIDENCE WAS NOT CONSIDERED BY THE LOWER AUTHORITIES. BUT IT IS ALSO A FACT THAT THE ASSESSING OFFICER DI D NOT INTIMATE THE ASSESSEE ABOUT THE ISSUING OF SUMMONS AND THE F ACT THAT THE CREDITOR HAS NOT ATTENDED THE PROCEEDINGS IN RESPON SE TO SUMMONS. HENCE WE FEEL THAT THE ISSUE IS TO BE RES TORED BACK ON THE FILE OF THE ASSESSING OFFICER TO VERIFY THAT THE AMOUNT CREDITED HAS BEEN RECEIVED THROUGH DD ISSUED FROM C ORPORATION BANK. COPY OF THE BANK ACCOUNT ALSO SHOW THAT THE A MOUNT CREDITED IN THE CORPORATION BANK IS THROUGH CHEQUES . IT IS NOT THE CASE WHERE CASH WAS DEPOSITED A FEW DAYS PRIOR T O THE ISSUE OF CHEQUES IN FAVOUR OF THE ASSESSEE. HENCE, THE A SSESSING OFFICER WILL VERIFY AS TO WHETHER THE AMOUNT CREDITE D IS FROM THE BANK ACCOUNT OF M/S THULUANTH CONSTRUCTIONS AS APPEARING IN THE CORPORATION BANK. PAGE 5 OF 9 ITA NO.174 & 231/BANG/2009 5 3. NOW WE SHALL TAKE UP THE APPEAL FILED BY THE REVENUE. THE REVENUE IS AGGRIEVED AGAINST THE FIND ING OF THE LEARNED CIT(A) IN ACCEPTING THE AGRICULTURAL INCOME AT RS.29,34,468/- AS AGAINST RS.1,11,660/- DETERMINED BY THE ASSESSING OFFICER. 3.1 BEFORE THE AO IT WAS SUBMITTED THAT THE ASSESS EE IS HAVING 45 ACRES OF AGRICULTURAL LAND. GROSS AGR ICULTURAL INCOME WAS SHOWN AT RS.29,34,468/- AND EXPENSES RELATING T O AGRICULTURAL OPERATIONS WERE SHOWN AT RS.4,95,270/- . THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE TH E SOURCES OF AGRICULTURAL INCOME. THE ASSESSEE FILED COPIES OF P AHANIS, I.E. REVENUE CERTIFICATES IN PROOF OF THE AGRICULTURAL L AND USED BY HIM FOR CULTIVATION. SUCH LANDS TOTALED TO 10 ACRES 16 GUNTAS. THE ASSESSEE WAS ASKED TO PRODUCE COPIES OF TITLE DEEDS IN RESPECT OF AGRICULTURAL LANDS OWNED BY HIM. ON VERIFICATION OF THE DOCUMENTS, THE AO FOUND THAT AGRICULTURAL LANDS IN THE NAME OF THE ASSESSEE TOTALED UP TO 4 ACRES AND 3 1/4 GUNTAS . IN RESPECT OF OTHER PAHANIS, IT WAS SEEN THAT THE CULTIVATION IS NOT BY THE ASSESSEE BUT BY SOME OTHER PERSON. BEFORE THE AO TH E ASSESSEE HAS STATED THAT HE HAS ENTERED INTO ORAL LEASE WITH THESE PERSONS. AS PER THE ARRANGEMENTS, 25% OF THE CROPS GROWN WERE TAKEN AWAY BY THE LANDLORDS; HENCE, NO LEASE RENT HAS BEEN PAID AND NO OTHER EXPENDITURE HAS BEEN INCURRED. THE AS SESSING OFFICER, HOWEVER, NOTICED THAT THE BILLS PRODUCED F OR SALE OF CROPS HAVE BEEN RAISED BY THE ASSESSEE HIMSELF ON 2 SMALL BOOKS PAGE 6 OF 9 ITA NO.174 & 231/BANG/2009 6 BEARING THE RUBBER STAMP OF HIS FARM NAMELY NAGAJOTH I FARM. BUYERS IDENTITY CANNOT BE FOUND FROM SUCH BILLS BECAU SE ONLY SIGNATURES OF BUYERS ARE AVAILABLE. NO TRANSPORTATI ON CHARGES HAVE BEEN INCURRED BY THE ASSESSEE. POTATOES HAVE B EEN SOLD THROUGH ONE TRADER M/S NAGAJOTHI TRADERS, CHIKKABAL LAPUR. THE AO MADE ENQUIRIES FROM M/S NAGAJOTHI TRADERS AND IT WAS FOUND FROM LOCAL ENQUIRY THAT M/S NAGAJOTHI TRADERS HAVE N OT ISSUED THE BILLS. THE ASSESSING OFFICER THEREFORE ESTIMAT ED THE AGRICULTURAL INCOME BY HOLDING THE OWNERSHIP OF AGRI CULTURAL LAND TO THE EXTENT OF 3.35 ACRES. IN RESPECT OF AGRICUL TURAL LAND TO THE EXTENT OF 6.4 ACRES, THE ASSESSEE HAS NOT GIVEN ANY BENEFIT OF AGRICULTURAL INCOME AS ACCORDING TO THE AO, NO B ILLS WERE AVAILABLE FOR SALE OF AGRICULTURAL PRODUCE OF THE I TEMS TO HAVE BEEN CULTIVATED ON SUCH LAND. 3.2 THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. BEFORE THE LEARNED CIT(A) I T WAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT VERIFI ED THE PREVIOUS YEAR RECORDS. ASSESSMENT FOR THE ASST. YEAR 2002-03 WAS COMPLETED U/S 143(3) AND THE AGRICULTURAL INCOM E AMOUNTING TO RS.27,22,320/- WAS ACCEPTED. FOR THE ASST. YEAR 2003-04, AGRICULTURAL INCOME OFFERED AT RS. 29,56,091/- WAS ACCEPTED. FOR THE ASST. YEAR 2004-05 AGRICULTURAL INCOME OF RS .23,53,082 WAS ACCEPTED WHILE COMPLETING ASSESSMENT U/S 143(3) . BEFORE THE LEARNED CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT HE OWNS 45 ACRES OF LAND. THE ASSESSING OFFICER IN HI S REMAND PAGE 7 OF 9 ITA NO.174 & 231/BANG/2009 7 REPORT STATED THAT OUT OF 45 ACRES OF LAND, AS PER RECORDS, THE ASSESSEE OWNS ONLY 10.16 ACRES OF LAND. BALANCE AGR ICULTURAL LANDS ARE OWNED BY OTHERS. THE LEARNED CIT(A) ACCEPTED TH E PLEA OF THE ADDL. CIT THAT AGRICULTURAL INCOME CANNOT BE AC CEPTED ON THE BASIS OF ACCEPTANCE OF AGRICULTURAL INCOME IN EARLI ER YEARS. HOWEVER, THE LEARNED CIT(A) WAS OF THE OPINION THAT IF THE AO WANTED THE AGRICULTURAL INCOME AS NON AGRICULTURAL INCOME THEN THE AO SHOULD HAVE COLLECTED EVIDENCE AND SHOULD HA VE CONFRONTED THE ASSESSEE WITH SUCH EVIDENCE FOR REBU TTAL. ENQUIRIES CONDUCTED FROM M/S NAGAJOTHI TRADERS WERE NOT CONFRONTED TO THE ASSESSEE FOR REBUTTAL. HENCE, SU CH EVIDENCE CANNOT BE USED. THE LEARNED CIT(A) THEREFORE DIREC TED THE AO TO ACCEPT THE AGRICULTURAL INCOME AS DECLARED BY THE ASSESSEE. 3.3 DURING THE COURSE OF PROCEEDINGS BEFORE US, TH E LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFF ICER. HE SUBMITTED THAT ONUS WAS ON THE ASSESSEE TO HAVE PRO DUCED THE EVIDENCE IN SUPPORT OF THE AGRICULTURAL INCOME DECL ARED. THE AO COLLECTED EVIDENCE TO SHOW THAT THE SALE BILLS ISSU ED BY M/S NAGAJOTHI TRADERS WERE NOT GENUINE. THE LEARNED CI T(A) SHOULD HAVE CONSIDERED THESE FACTS. 3.4 ON THE OTHER HAND, THE LEARNED AR HAS FILED A PAPER BOOK. THE LEARNED AR DREW OUR ATTENTION TO A1 OF T HE PAPER BOOK IN WHICH THE ASSESSEE HAS SHOWN THE AGRICULTUR AL INCOME FOR PAGE 8 OF 9 ITA NO.174 & 231/BANG/2009 8 VARIOUS YEARS. IT WAS SUBMITTED THAT ASSESSMENTS FO R THE ASST. YEAR 2002-03 TO 2004-05 WERE COMPLETED AFTER SCRUTIN Y. THE AO WHILE PASSING ASSESSMENT ORDER FOR THE ASST.YEAR 2003-04 HAS ACCEPTED THAT ASSESSEE OWNS AGRICULTURAL LAND T O THE EXTENT OF 45 ACRES. THE LEARNED AR THEREAFTER DREW OUR AT TENTION TO ANNEXURE B1. B1 IS THE CHART CONTAINING THE DETAIL S OF AGRICULTURAL LAND OWNED BY THE ASSESSEE. 42 ACRES A ND 12 GUNTAS OF AGRICULTURAL LAND IS IN THE NAME OF THE ASSESSEE . 2 ACRES AND 30 GUNTAS AGRICULTURAL LAND IS OWNED BY THE RELATIVE S OF THE ASSESSEE AND IT WAS STATED THAT SUCH LAND WAS TAKEN ON LEASE. IN SUPPORT OF SUCH OWNERSHIP OF AGRICULTURAL LAND, THE LEARNED AR HAS ENCLOSED THE COPIES OF THE REVENUE CERTIFICATES . 3.5 WE HAVE HEARD BOTH THE PARTIES. IT IS SEEN TH AT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR THE EARLIER ASST. YEARS HAVE BEEN ACCEPTED BY THE REVENUE. THE LEARNED CIT(A) HAS ACCEPTED THAT THE APPELLANT HAS CULTIVATED AGRI CULTURAL LAND TO THE EXTENT OF 45 ACRES. IT IS TRUE THAT THE REC EIPTS FROM SALE OF AGRICULTURAL PRODUCE IS NOT TOTALLY VERIFIABLE, BUT THEN QUANTUM PAGE 9 OF 9 ITA NO.174 & 231/BANG/2009 9 OF AGRICULTURAL INCOME SHOWN IS COMPARABLE TO THE A GRICULTURAL INCOME ACCEPTED BY THE REVENUE WHILE COMPLETING SCR UTINY ASSESSMENT OF EARLIER YEARS. LOOKING TO THESE FACTS , WE FEEL THAT THE LEARNED CIT(A) WAS JUSTIFIED IN ACCEPTING THE A GRICULTURAL INCOME AS SHOWN BY THE ASSESSEE. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE WHILE TH E APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28TH AUGUST, 2009 . SD/- SD/- (GEORGE GEORGE K) (N L KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED:28/8/2009 COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR 6. GF 7. GF, ITAT, DELHI BENCH BY ORDER MSP/25/8/ ASSISTANT REGISTRAR, ITAT, BANGALORE.