Maya Venkatesan, CHENNAI V. DCIT, CHENNAI

ITA 2595/CHNY/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5597 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 13-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS S VIJAYA PRABHA
• Keywords: Income from undisclosed sources
• Section: 132; 153A

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.1346, 1347 AND 2595/CHNY/2014 / ASSESSMENT YEARS: 2002-03, 2003-04 & 2005-06 SHRI MAYA VENKATESAN, CHAIRMAN, NELLAI CEMENTS LIMITED, NO. F3, GROUND FLOOR, VASANTH APARTMENTS, NO. 2, SENTHIL ANDAVAR KOIL STREET, VADAPALANI, CHENNAI. [PAN:AGOPM3371L] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(3), CHENNAI - 34. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : NONE / RESPONDENT BY : MRS. S. VIJAYAPRABHA, JCIT / DATE OF HEARING : 28.01.2019 /DATE OF PRONOUNCEMENT : 31.01.2019 / O R D E R PER BENCH: THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I, CHENNAI, DATED 27.02.2014 RELEVANT TO THE ASSESSMENT YEARS 2002-03 AND 2003-04 AND THE OTHER ORDER DATED 24.06.2014 RELEVANT TO THE ASSESSMENT YEAR 2005-06. THE COMMON GROUND RAISED IN ALL THE ASSESSMENT YEARS IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF AGRICULTURAL INCOME RETURNED BY THE ASSESSEE. IN THE I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 2 ASSESSMENT YEAR 2005-06, THE ASSESSEE ALSO CHALLENGED AGAINST CONFIRMATION OF ADDITION OF . 5,17,713/- AS WELL AS ADDITION OF .20.00 LAKHS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD BEEN ASSESSED TO TAX BEFORE THE SEARCH. HE HAD RETURNED AGRICULTURAL INCOME AS HIS MAIN SOURCE OF INCOME. CONSEQUENT TO THE SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT], THE ASSESSEE FILED RETURNS IN RESPONSE TO THE NOTICE UNDER SECTION 153A OF THE ACT. IN THESE RETURNS ALSO THE ASSESSEE HAD DISCLOSED AGRICULTURAL INCOME AS MAJOR SOURCE OF INCOME. DURING THE COURSE OF HEARING, THE ASSESSEE FILED A CASH-FLOW STATEMENT COVERING THE PERIOD FROM 01.04.2001 TO 31.03.2007 EXPLAINING THE SOURCE AND APPLICATION OF FUNDS. FOLLOWING ARE THE AGRICULTURAL INCOME RETURNED IN THE RETURNS PRIOR TO THE SEARCH AND AFTER THE SEARCH: ASST. YEAR AGRICULTURAL INCOME RETURNED PRIOR TO SEARCH AGRICULTURAL INCOME RETURNED AFTER SEARCH 2001-02 NIL 2,50,000/- 2002 - 03 30,47,110/ - 30,47,110/ - 2003-04 32,75,000/- 32,25,000/- 2004-05 38,55,000/- 37,55,000/- 2005-06 44,42,000/- 43,42,000/- 2006-07 5,32,000/- 6,05,000/- 2007 - 08 - 1,50,000/ - TOTAL 1,51,51,110/- 1,53,74,110/- THE ASSESSEE HAD CLAIMED THAT HE HAD TAKEN AGRICULTURAL LAND ON LEASE, CARRIED OUT AGRICULTURAL ACTIVITIES AND DERIVED AGRICULTURAL INCOME. AFTER I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 3 MAKING EXTENSIVE ENQUIRIES AT TANJORE AREA, KUMBAKONAM AND NEARBY PLACES, REGARDING THE GENUINENESS OF CLAIM OF TAKING LANDS ON LEASE, EXTENT OF LANDS TAKEN ON LEASE, NATURE OF THE LAND INCLUDING ITS FITNESS FOR CULTIVATION, NATURE OF CULTIVATION UNDERTAKEN IN THE LANDS AND THE INCOME DERIVED FROM SUCH LANDS AS WELL AS PERSONAL EXAMINATION, THE ASSESSING OFFICER ALLOWED .2,00,000/- AND .2,50,000/- OUT OF THE CLAIM OF .30,47,110/- AND .32,25,000/- AS AGRICULTURAL INCOME AND THE BALANCE AS NON-AGRICULTURAL INCOME FOR THE ASSESSMENT YEARS 2002-03 AND 2003- 04. HOWEVER, FOR THE ASSESSMENT YEAR 2005-06, THE ENTIRE CLAIM OF AGRICULTURAL INCOME AT .43,42,000/- WAS TREATED AS NON-AGRICULTURAL INCOME AND BROUGHT TO TAX. 3. THE ASSESSEE CARRIED THE MATTERS IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) ALLOWED 50% OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE BALANCE WAS CONFIRMED FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. FOR THE ASSESSMENT YEAR 2005- 06, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR ALL THE ASSESSMENT YEARS. ALL THE APPEALS FILED BY THE ASSESSEE IN THE I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 4 YEAR 2014 WERE TAKEN UP FOR HEARING IN 2014/15 AND AT THE REQUEST OF THE LD. COUNSEL, THE HEARING WAS ADJOURNED ON MANY OCCASION. WHEN THE APPEAL WAS POSTED FOR HEARING ON 28.01.2019, N ONE APPEARED ON BEHALF OF THE ASSESSEE OR FILED ANY ADJOURNMENT PETITION. HENCE WE PROCEED TO DECIDE THE APPEALS ON MERITS AFTER HEARING THE LD. DR. 5. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSING OFFICER HIMSELF PERSONALLY VISITED TANJOR, KUMBAKONAM AND NEARBY PLACES, WHERE, THE ASSESSEE CLAIMS TO HAVE LEASED AND CARRIED OUT THE AGRICULTURAL ACTIVITIES. ELABORATE ENQUIRES WERE ALSO MADE WITH REGARD TO THE GENUINENESS OF CLAIM OF TAKING LANDS ON LEASE, EXTENT OF LANDS TAKEN ON LEASE, NATURE OF THE LAND INCLUDING ITS FITNESS FOR CULTIVATION, NATURE OF CULTIVATION UNDERTAKEN IN THE LANDS AND THE AMOUNT OF INCOME DERIVED FROM SUCH LANDS. FURTHER, THE RAINFALL PATTERNS DURING THE YEARS 2001 TO 2006, THE TSUNAMI EFFECT AND FLOOD FACTORS WERE ALSO STUDIED CAREFULLY. THE COST OF INPUTS TO THE AGRICULTURAL OPERATIONS OF SENSITIVE CROP LIKE PADDY WAS ALSO EXAMINED FROM VARIOUS WEB SIDES. CONSIDERING ALL THE ABOVE FACTORS, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE NET INCOME RECEIVED FROM THE AGRICULTURAL ACTIVITIES CANNOT BE AS HIGH AS THE ASSESSEE HAS CLAIMED. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 5 AGRICULTURAL INCOME OF .2,00,000/-, .2,50,000/- AND . NIL FOR THE ASSESSMENT YEARS 2002-03, 2003-04 AND 2005-06 RESPECTIVELY. 5.1 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) WAS OF THE OPINION THAT THE DISALLOWANCE MADE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04 ARE NOT BASED ON PROPER APPRECIATION OF FACTS. HE FURTHER OPINED THAT THE DETERMINATION OF YIELD ON THE BASIS OF THE RAINFALL WAS NOT CORRECT AND AS EVERYBODY IS AWARE THAT THE PRICE OF AGRICULTURAL GOODS IS NOT JUST BASED ON YIELD ALONE AND FURTHER THE CULTIVATION ACTIVITY IS CARRIED OUT THROUGH WELLS/BORE-WELLS. THEREFORE, CONSIDERING THE SIZE OF THE LAND HOLDINGS TAKEN ON LEASE, AND THE NATURE OF THE CROPS GROWN, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS EARNED TO THE EXTENT OF 50% OF THE AGRICULTURAL INCOME RETURNED. THUS, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW 50% OF THE AGRICULTURAL INCOME RETURNED BY THE ASSESSEE AND THE BALANCE DISALLOWANCE WAS CONFIRMED FOR BOTH THE ASSESSMENT YEARS. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED FOR BOTH THE ASSESSMENT YEARS. 6. SINCE THE ASSESSEE COULD NOT PRODUCE ANY COGENT EVIDENCE FOR THE AGRICULTURAL INCOME CLAIMED TO HAVE RETURNED BY THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF .43,42,000/- FOR THE ASSESSMENT I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 6 YEAR 2005-06. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT PRODUCE ANY EVIDENCE FOR THE ABOVE CLAIM OF AGRICULTURAL INCOME. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 STANDS DISMISSED. 7. ADDITION OF .5,17,713/-: AS PER THE SEIZED MATERIALS, THE ASSESSING OFFICER NOTICED FROM THE SALE DEEDS VIDE DOCUMENT NO. 183/2004 DATED 16.08.2004 THAT THE ASSESSEE HAS PURCHASED AGRICULTURAL LANDS FOR .1,72,113/- AS WELL AS VIDE DOCUMENT NO. 152/2005 DATED 21.02.2005 AT .3,45,000/-. HOWEVER, THESE PROPERTIES WERE NOT ACCOUNTED FOR BY THE ASSESSEE IN THE CASH FLOW STATEMENT. THE ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY. THUS, THE INVESTMENT WAS TREATED AS INVESTMENT MADE OUT OF UNDISCLOSED INCOME AND BROUGHT TO TAX, WHICH WAS CONFIRMED BY THE LD. CIT(A). SINCE THE ASSESSEE HAS NOT ACCOUNTED FOR THE ABOVE PURCHASE OF PROPERTIES IN THE CASH FLOW STATEMENT AND COULD NOT EXPLAIN THE DISCREPANCY, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW AND ACCORDINGLY DISMISS THE GROUND RAISED BY THE ASSESSEE. 8. ADDITION OF .20,00,000/-: FROM THE SEIZED MATERIAL, THE ASSESSEE HAD ENTERED INTO A SALE AGREEMENT WITH SHRI KANNAN ON 16.03.2005 ALONG WITH EMPIRE CONSULTANTS PVT. LTD. FOR PURCHASE OF PROPERTY AT KHALEEL I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 7 CENTRE, NO. 4, MONTIETH ROAD, EGMORE FOR A CONSIDERATION OF .2.2 CRORES. THE ADVANCE PAID WAS .40 LAKHS. WHEN THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DETAILS OF THE TRANSACTION AND THE SOURCES FOR THE PAYMENT, HE EXPLAINED THAT THE ASSESSEE HAD NEITHER ENTERED INTO ANY TRANSACTION/AGREEMENT WITH EMPIRE CONSULTANCY PVT. LTD. FOR THE PURCHASE OF PROPERTY NOR PAID ANY ADVANCES TOWARDS ANY KIND OF PROPERTY AT EGMORE. THE SEIZED MATERIAL WAS IN THE CUSTODY OF THE DCIT, CENTRAL CIRCLE, COIMBATORE. DURING THE COURSE OF RECORDING STATEMENT FROM THE ASSESSEE AT CHENNAI, A FAX COPY OF THE DOCUMENT WAS OBTAINED. THE DOCUMENT SOWED THAT THE AGREEMENT WAS SIGNED BY BOTH SHRI MAYA VENKATESAN (ASSESSEE) AND HIS BROTHER SHRI M. KANNAN. WHEN THE DOCUMENT WAS SHOWN TO THE ASSESSEE, AGAIN HE REITERATED THAT HE DID NOT ENTER INTO SUCH AN AGREEMENT ALONG WITH HIS BROTHER. AN ADVANCE OF .40 LAKHS HAD BEEN PAID BY BOTH AND THE PAYMENT STOOD UNEXPLAINED, THE ASSESSEES SHARE OF HALF OF THE ADVANCE PAYMENT OF .20 LAKHS WAS TREATED AS UNACCOUNTED INCOME AND ADDED. SINCE THE ASSESSEE HAS NOT REBUTTED THE FINDINGS OF THE ASSESSING OFFICER DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(A) CONFIRMED THE ADDITION. EVEN BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT FILED ANY MATERIAL REBUTTING THE FINDINGS OF THE ASSESSING OFFICER. THUS, WE FIND NO REASON TO INTERFERE WITH THE I.T.A. NOS. 1346, 1347 & 2595/CHNY/14 8 ORDER PASSED BY THE LD. CIT(A). THUS, THE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 6. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 31 ST JANUARY, 2019 IN CHENNAI. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 31.01.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.