B. Aruna, Hyd, Hyderabad V. ITO, Ward-4(2), Hyderabad, Hyderabad

ITA 299/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6232 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Keywords: Reopening of assessment; Unexplained investment; Gift; Business income; Salary income; Source of fund
• Section: 143(3); 147; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS. 299, 300, 301 & 302/HYD/2016 ASSESSMENT YEARS: 2007-08, 2008-09, 2009-10 AND 201 0-11 B. ARUNA, HYDERABAD. PAN AHKP 0053D VS. INCOME TAX OFFICER, WARD 4(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 30-01-2017 DATE OF PRONOUNCEMENT 31-01-2017 O R D E R THESE FOUR APPEALS ARE BY ASSESSEE AGAINST A COMMO N ORDER DATED 19/11/2015 OF CIT(A) 1, HYDERABAD CONSEQUEN T TO THE ORDERS OF AO U/S 143(3) READ WITH SECTION 147 OF THE IT AC T, FOR THE AYS 2007-08 TO 2010-11. 2. IN THESE FOUR APPEALS, COMMON ISSUE IS DISALLOWA NCE OF 50% OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AND TR EATING IT AS INCOME FROM OTHER SOURCES. 3. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND HA D DECLARED INCOME FROM HOUSE PROPERTY, SALARY INCOME, BUSINESS INCOME AND ALSO AGRICULTURAL INCOME. THE AGRICULTURAL INCOME D ECLARED BY THE ASSESSEE WAS RS. 7,75,000/- IN AY 2007-08, RS. 11,5 0,000/- IN AY 2008-09, RS. 13,00,000/- IN AY 2009-10 AND RS. 14,0 0,000/- IN AY 2010-11. ASSESSEE OWNS 2.15 ACRES OF LAND AT KHASAR ABAD VILLAGE AND GROWING SWEET ORANGE AND ACID LIME TREES, ON WH ICH STATED TO HAVE RECEIVED RS. 2 LAKHS LEASE RENT IN AY 2007-08 AND 2008-09 FROM ONE K. KRISHNA.. ASSESSEE ALSO PURCHASED 15.21 ACRE S OF LAND DURING 2 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA THE YEAR AND STARTED GROWING SWEET ORANGE AND ACID LIME TREES IN THE SAID LAND. DUE TO INCUBATION OF THE PLANTATIONS, A SSESSEE STATED TO HAVE GIVEN THE LAND ON LEASE FOR INTERCROP TO ONE M R. GOLI ANJAIAH, WHO STATED TO HAVE PAID RS. 5.75 LAKHS AND RS. 9.50 LAKHS IN AYS 2007-08 AND 2008-09. SINCE THE PLANTATION HAS START ED YIELDING CROPS, ASSESSEE DECLARED RS. 6 LAKHS OF LEASE RENT IN AY 2 009-10 AND 2010- 11 AND RS. 7 TO 8 LAKHS OF INCOME AS INTERCROP IN T HOSE YEARS. ASSESSEE IS WIFE OF SHRI B. LAXMAIAH, SE, GHMC ON W HOM, ANTI CORRUPTION BUREAU (ACB) HAS TAKEN UP DISPROPORTIONA TE ASSETS CASE. INFORMATION PERTAINING TO THE SAID ASSESSEE SHRI B. LAXMAIAH AND THE PRESENT ASSESSEE, BEING HIS WIFE WERE INFORMED TO T HE DEPARTMENT AND THE AO INITIATED PROCEEDINGS U/S 147 TO EXAMINE THE SOURCES OF INCOME AND ASSETS. IN THE PROCEEDINGS, AO ASKED NEC ESSARY EVIDENCE IN SUPPORT OF THE VARIOUS AGRICULTURAL INCOMES SHOW N. ASSESSEE FURNISHED LEASE AGREEMENT WITH MR. KATARI KRISHNA F OR AN AMOUNT OF RS. 2 LAKHS TOWARDS 2.15 GUNTAS OF LAND AND HAS PRO DUCED CONFIRMATION LETTER FROM HIS WIFE ON THE DEATH OF S AID K. KRISHNA ALONG WITH DEATH CERTIFICATE. WITH REFERENCE TO LEASE OF 15 ACRES OF LAND TO SHRI GOLI ANJAIAH, THE CONFIRMATIONS WERE FURNISHED AND A STATEMENT U/S 131 WAS ALSO RECORDED FROM THE SAID PERSON. HOW EVER, AO CONSIDERING THE NATURE OF INFORMATION ON CROPS CULT IVATED WAS OF THE VIEW THAT ASSESSEE COULD NOT HAVE EARNED THAT MUCH AGRICULTURAL INCOME. AS FAR AS THE LEASE RENTAL IS CONCERNED, TH E SAME WAS REDUCED TO RS. 1 LAKH PER YEAR AND AS FAR AS INCOME FROM INTERCROP IS CONCERNED, IT WAS REDUCED TO 50% OF THE AMOUNTS DEC LARED. THUS, VARIOUS ADDITIONS HAVE BEEN MADE IN RESPECT OF THE ASSESSMENT YEARS UNDER CONSIDERATION. 4. BEFORE THE CIT(A), ASSESSEE FURNISHED DETAILED S UBMISSIONS SUPPORTED BY THE REPORT OF HORTICULTURAL OFFICERS, DROPPING OF THE PROCEEDINGS IN THE HUSBANDS CASE AND FURTHER RELIE D ON THE ASSESSMENTS IN THE CASE OF HUSBANDS AS WELL. LD. C IT(A), HOWEVER, DID NOT AGREE WITH THE ASSESSEE STATING THAT ASSESS EE HAS NOT FURNISHED ANY EVIDENCE FOR GROWING INTER-CROPS OR E VIDENCE FOR 3 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA SUBSEQUENT SALE OF SUCH CROPS. IT WAS FURTHER STATE D THAT ASSESSEE HAS NOT MAINTAINED ANY RECORDS LIKE SALE RECEIPTS A ND IN GENERAL ENTIRE TRANSACTIONS WERE MADE IN CASH ONLY. CIT(A) AGREED WITH THE AO, HENCE, THE PRESENT APPEALS. 5. ON PERUSAL OF RECORD, I FIND THAT THE APPEALS WE RE FILED WITH A DELAY OF 31 DAYS AND ASSESSEE HAS FILED AN AFFIDAVI T STATING THAT SHE HERSELF HAS MISPLACED THE ORDERS RECEIVED FROM CIT( A) AND COULD NOT HANDOVER TO THE HUSBAND, WHO GENERALLY ATTENDS THE MATTERS. SHE REQUESTED FOR CONDONATION OF DELAY. CONSIDERING THE AFFIDAVIT AND THE OBJECTIONS FROM THE LD. DR, I AM OF THE VIEW THAT T HERE IS SUFFICIENT REASON FOR FILING THE APPEALS BELATEDLY. HENCE THE DELAY IS CONDONED AND THE APPEALS WERE ADMITTED FOR HEARING AND ADJUD ICATION. 6. ASSESSEE HAS RAISED GROUNDS 3 & 4 ON THE ISSUE O F REOPENING OF ASSESSMENT, WHICH WERE NOT AGITATED BEFORE THE AO/C IT(A). THESE GROUNDS ARE FILED AS ADDITIONAL GROUNDS AND A PRAYE R WAS MADE FOR ADMITTING THE SAME. LD. COUNSEL SUBMITTED THAT THE RE IS NO SATISFACTION RECORDED BY THE AO AND AS CAN BE SEEN FROM THE ASSESSMENT ORDER, ONLY INFORMATION RECEIVED FROM OT HER ITO IS THE BASIS FOR REOPENING THE ASSESSMENT. LD. COUNSEL REL IED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES COMPANY PVT. LTD., VS. ITO, 329 ITR 110 (DEL.) FOR THE PROPOSITION THAT FORMATION OF BELIEF WAS A CONDITIO N PRECEDENT AS REGARDS THE ESCAPEMENT OF TAX PERTAINING TO AN ASSE SSMENT YEAR. 6.1 IN ORDER TO EXAMINE THE ABOVE CONTENTION OF THE ASSESSEE, THE PRIMARY INFORMATION REGARDING SATISFACTION RECORDED BY THE AO IS REQUIRED TO BE EXAMINED. SINCE THE ASSESSEE HAS NEI THER TAKEN OBJECTION BEFORE THE AO FOR INITIATION OF PROCEEDIN GS NOR BEFORE THE CIT(A), SUCH INFORMATION WAS NOT AVAILABLE ON RECOR D. SINCE THE FACTS ARE REQUIRED TO BE EXAMINED TO CONSIDER THIS LEGAL ISSUE, THE ADDITIONAL GROUNDS CANNOT BE ADMITTED, FOLLOWING TH E PRINCIPLES LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF SA BUI LDERS LTD. 289 4 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA ITR 26 (SC). IN VIEW OF THAT, ADDITIONAL GROUNDS RA ISED BY THE ASSESSEE ARE REJECTED AS NOT ADMITTED. 7. COMING TO THE MERITS OF THE ADDITIONS MADE BY TH E AO AND CONFIRMED BY THE CIT(A), LD. COUNSEL REFERRED TO TH E PAPER BOOK FILED TO SUBMIT THAT AO (ITO, WARD 13(2) ) IN THE CASE OF ASSESSEES HUSBAND, BY HIS LETTER DATED 11/03/2011 HAS INFORME D THAT ASSETS ACQUIRED AND HELD IN THE NAME OF ASSESSEE AND HIS F AMILY MEMBERS ARE SATISFACTORILY EXPLAINED, AS MET FROM HIS/THEIR KNOWN SOURCES OF INCOME. AS SUCH THERE ARE NO DISPROPORTIONATE ASSET S HELD BY THE ASSESSEE, EITHER IN HIS NAME OR IN THE NAME OF HIS FAMILY MEMBERS. THEREFORE, NO FURTHER ACTION IS FOUND NECESSARY IN HIS CASE. IN ADDITION TO THE ABOVE, LD. COUNSEL ALSO REFERRED TO THE DETAILED REPORT OF THE HORTICULTURAL OFFICERS REGARDING THE AGRICUL TURAL CROPS UNDERTAKEN IN THE LANDS OWNED BY THE ASSESSEE AND H ER HUSBAND, WHO IS A STATE GOVT. EMPLOYEE AND FURTHER REFERRED TO THE FINDINGS GIVEN THAT DURING THE VERIFICATION PERIOD AN AMOUNT TO AN EXTENT OF RS. 83 LAKHS WAS EARNED BY THE ASSESSEE, SO AS TO SUPPO RT THE INVESTMENTS. HE FURTHER REFERRED TO THE ORDER OF TH E SMC BENCH OF HYDERABAD IN THE CASE OF ITO VS. SHRI B. LAXMAIAH I N ITA NO. 1647/HYD/2014, DATED 30/06/2016 WHEREIN THE ORDER O F CIT(A) WAS UPHELD. IT WAS SUBMITTED THAT THERE IS NO REASON FO R DISBELIEVING AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WHEN T HE OTHER AUTHORITIES HAVE VERIFIED AND CONFIRMED THE EXTENT OF INCOME. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS DISCHARGED THE ONUS OF FURNISHING THE LESSEE FROM WHOM THE AO HAS RECORDED THE STATEM ENT. IT IS FURTHER SUBMITTED THAT CIT(A) ERRED IN REJECTING ASSESSEES CONTENTIONS THAT NO EVIDENCE WAS FURNISHED WHEN ASSESSEE WAS CONTEND ING THAT SHE HAS LEASED THE LANDS TO SOME THIRD PARTY AND HE WAS PRODUCED BEFORE THE AO. 8. LD. DR, HOWEVER, CONTENDED THAT AS HELD BY THE A O, ASSESSEE WAS OFFERING INCOME OF RS.45,000 IN EARLIER YEARS, THEREFORE, LEASE INCOME OF RS. 2 LAKHS ON 2 ACRES OF LAND IS NOT BEL IEVABLE. FURTHER, 5 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA INTERCROPPING IN HORTICULTURAL FIELD IS NOT POSSIBL E AND SO THE EXTENT OF INCOME DECLARED CANNOT BE BELIEVED. HE SUPPORTED TH E ORDERS OF REVENUE AUTHORITIES. 9. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE DOCUMENTS ON RECORD. EVEN BEFORE THE ASSESSMENTS HA VE BEEN REOPENED IN ASSESSEES CASE, WHILE ASSESSING THE AS SESSEES HUSBAND CASE, THE AO HAS GIVEN CERTIFICATE THAT THE RE ARE KNOWN SOURCES OF INCOME. AS SEEN FROM THE REPORT OF HORTI CULTURAL OFFICERS, ASSESSEE AS WELL AS HER HUSBAND, WHO IS A GOVT. EMP LOYEE OWNED AGRICULTURAL LANDS AND EXTENT OF INCOMES DECLARED T HEREIN HAVE BEEN CERTIFIED BY THE HORTICULTURAL OFFICERS WHICH CANNO T BE DISBELIEVED AS SUCH. IT IS ALSO ON RECORD THAT ACB AUTHORITIES HAV E VERIFIED THE EXTENT OF INCOMES DECLARED BY THE SAID SHRI B. LAXMAIAH AN D THE ASSESSEE SMT. B. ARUNA AND WERE SATISFIED ABOUT THE SOURCES AND INVESTMENTS IN PROPERTIES AND ACCORDINGLY DROPPED THE PROCEEDIN GS IN THE DISPROPORTIONATE OF ASSETS CASE. THE COORDINATE BEN CH IN AY 2006-07 IN CASE OF ASSESSEES HUSBAND (SUPRA) HAD EXTRACTED THE ORDER IN THE CASE OF SHRI B. DANAIAH, FATHER-IN-LAW OF ASSESSEE, WHICH IS AS UNDER: 3.2. ON APPEAL BY SRI B. DANAIAH, THE ADDITION WAS DELETED BY THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, HYDERABAD, VIDE HIS ORDER IN ITA NO. 0112/ITO-4(2)/CIT(A)- V/2013-14 ORDER DATED 08.07.2014. IN THIS ORDER CIT (A)-V, HYDERABAD HAS EXAMINED THE ISSUE IN DETAIL AND DELETED THE ADDITION MADE BY TH E ASSESSING OFFICER. IT IS ALSO KNOWN FROM THIS APPELLATE ORDER THAT THE PRINCIPAL SECRET ARY TO THE GOVERNMENT OF ANDHRA PRADESH VIDE G.O. RT. NO.742 DATED 20.07.2011 HAD P ASSED AN ORDER INFORMING THE ENGINEER-IN-CHIEF (R&B) THAT GOVERNMENT AFTER CAREF UL EXAMINATION OF THE MATTER HAS DECIDED TO DROP FURTHER ACTION ON SRI V. LAXMAIAH, IN RESPECT OF POSSESSION OF DISPROPORTIONATE ASSETS. IT WAS FURTHER HELD THAT T HE HORTICULTURE OFFICER, SURYAPET, AT THE INSTANCE OF ACB MADE DETAILED VERIFICATION AND HAD CONCLUDED THAT SRI B. LAXMAIAH WAS CAPABLE OF EARNING AGRICULTURE INCOME OF RS.83.28 L ACS FROM 30 ACRES. AFTER EXAMINING ALL THE DETAILS, THE PATTEDAR PASSBOOK, CERTIFICATE GIV EN BY HORTICULTURE OFFICER, SURYAPET, COPY OF LEASE DEEDS ETC.ETC. THE CIT(A)-V, HYDERABA D HAD GIVEN RELIEF IN THE HANDS OF SRI B. DANAIAH, THE APPELLANT'S FATHER AND HELD THAT SO URCES TO THE TUNE OF RS.45 LACS STANDS EXPLAINED IN MR.DANAIAH'S HANDS. AS THE SOURCES IN THE HANDS OF DONOR SRI B. DANAIAH, THE FATHER OF THE APPELLANT, ARE EXPLAINED, THEN TH E GIFTS MADE BY SRI B. DANAIAH TO HIS SON SRI B. LAXMAIAH, THE APPELLANT, TO THE TUNE OF RS.39,00,000/- STANDS EXPLAINED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE ADDIT ION MADE BY THE ASSESSING OFFICER OF RS.39,00,000/- AS UNEXPLAINED INVESTMENT IS DELETED . 6 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA ON THE BASIS OF THE SAID ORDER OF CIT(A), THE ORDER IN THE CASE OF SHRI B. LAXMAIAH DELETING THE ADDITION WAS ALSO CONFIRME D. AS CAN BE SEEN FROM THE FACTS OF THE CASE, ASSESSEE, HER HUSBAND A ND HER FATHER-IN- LAW WERE HAVING AGRICULTURAL INCOMES WHICH HAVE BEE N DISCLOSED REGULARLY. CONSIDERING THAT ASSESSEE WAS LEASING TH E LANDS AND LESSEE HAS BEEN PRODUCED BEFORE THE AO WHO CONFIRME D THE PAYMENT OF LEASE RENT AS DECLARED BY THE ASSESSEE FROM THE SAID AGRICULTURAL LAND, I AM OF THE OPINION THAT DISBELIEVING 50% OF THE AMOUNT IS NOT PROPER. MOREOVER, CIT(A) DID NOT UNDERSTAND THAT AS SESSEE HAS DECLARED ONLY LEASE RENTALS AND NOT SALE OF AGRICUL TURAL PRODUCE, SO AS TO FURNISH ANY EVIDENCE REGARDING CROPS/ SALES. ASS ESSEE DISCHARGED ONUS OF FURNISHING THE PERSON TOOK LANDS ON LEASE. HE ALSO CONFIRMED IN HIS STATEMENT RECORDED U/S 131 BEFORE THE AO. I N VIEW OF THE ABOVE, I AM OF THE CONSIDERED VIEW THAT THERE IS NO SCOPE FOR DISBELIEVING THE SAID AGRICULTURAL INCOME DECLARED, IN THE ABSENCE OF ANY INFORMATION TO THE CONTRARY. AO IS DIRECTED TO DELETE THE SAID ADDITION IN ALL THE YEARS UNDER CONSIDERATION UNDER THE HEAD OTHER SOURCES. ACCORDINGLY, GROUNDS RAISED ON THIS ISSUE IN ALL THE YEARS UNDER CONSIDERATION ARE ALLOWED. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2017. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED: 31 ST JANUARY, 2017 KV 7 ITA NOS.299, 300, 301 & 302 /H/16 B. ARUNA COPY TO:- 1) SHRI B. ARUNA, H.NO. 5-4-143, PLOT NO. 23, KAMAL ANAGAR COLONY, VANASTHALIPURAM, HYDERABAD 500 070. 2) ITO, WARD 4(2), HYDERABAD 3) CIT(A) - 1, HYDERABAD 4 PR. CIT 1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE