M Narayana Chalamayya., Nidadavole V. The ITO, Ward-2, Visakhapatnam

ITA 343/VIZ/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2820 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 16-07-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SINDER SINGHDR

Judgement Text

ITA NO.343 OF 07 MADDIPALLI NARAYANA CHALAMAYYA, NI DADAVOLE PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 343/VIZAG/2007 ASSESSMENT YEAR: 2003-04 M. NARAYANA CHALAMAYYA, NIDADAVOLE VS. ITO WARD-2, TANUKU (APPELLANT) GIR NO: N-710 (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI D.S.SINDER SINGH,(DR) ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19-4-2007 PASSED BY LEARNED CIT (A), RAJAHMUNDRY AND IT RELAT ES TO THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE RELATED T O THE FOLLOWING TWO ISSUES: A) ESTIMATE OF AGRICULTURAL INCOME B) ADDITION ON ACCOUNT OF LOW DRAWINGS TOWARDS PERS ONAL EXPENSES. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE FAMILY MEMBERS OF THE ASSESSEE OWNED 41.605 ACRES OF LAND AS DETAILED BELOW: S.NO PATTA NO. NAME OF THE LAND HOLDER EXTENT OF LAND HELD 1 416 M .T.V. RATNAKAR 11.00 ACRES 2 603 M.V.A. SRIRAMJEE 11.94 ACRES 3 650 M. SITAMAHALAKSHMI 4.69 ACRES 4 681 M.N. CHALAMAIAH 4.39 ACRES 5 604 M. SESHARATNAM KARUNA W/O RATNAKAR 3.465 ACRES 6 682 M.T.V.M. RATNAKAR 6.12 ACRES TOTAL 41.605 ACRES IT WAS STATED THAT THE ASSESSEE, HIS FATHER AND HIS BROTHER ARE JOINTLY CULTIVATING THE ABOVE SAID AGRICULTURAL LANDS AND THE INCOME DE RIVED WAS SHARED BETWEEN THE THREE PERSONS ON ESTIMATED BASIS. IT WAS FURTHER ST ATED THAT THEY DO NOT MAINTAIN ANY BOOKS OF ACCOUNT FOR AGRICULTURAL OPERATION. TH E ASSESSEE HAD DISCLOSED AN AGRICULTURAL INCOME OF RS.2,88,000/- IN HIS RETURN OF INCOME. IN THE ABSENCE OF ANY ITA NO.343 OF 07 MADDIPALLI NARAYANA CHALAMAYYA, NI DADAVOLE PAGE 2 OF 4 OTHER DETAILS, THE ASSESSING OFFICER ESTIMATED THE AGRICULTURAL INCOME AT RS.15,000/- PER ACRE. THE LAND HELD BY THE ASSESSEE WAS DETERMINED AT 5.39 ACRES AND ACCORDINGLY THE AGRICULTURAL INCOME WAS RESTRIC TED TO RS.80,850/-. THE DIFFERENCE AMOUNT OF RS.2,07,150/- WAS TREATED AS T HE INCOME FROM OTHER SOURCES. IN THE APPEAL PROCEEDINGS, THE LEARNED CIT (A) CALL ED FOR REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT THE ASSESSI NG OFFICER SUGGESTED TO RESTRICT THE AGRICULTURAL INCOME AT RS.10,000/- PER ACRE FOR 4.39 ACRES. ACCORDINGLY THE LEARNED CIT (A) DETERMINED THE AGRICULTURAL INCOME AT RS.43,900/- AND THE BALANCE AMOUNT OF RS.2,44,100/- WAS TREATED AS INCOME FROM OTHER SOURCES. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ENTIRE LAND HOLDINGS OF 41.60 ACRES ARE CULTIVATED JOINTLY AND THE INCOME THEREFROM IS DISTRIBUTED BETWEEN THE ASSESSEE, HIS FATHER AND HI S BROTHER. THE SAID CLAIM WAS REJECTED BY THE TAX AUTHORITIES WITHOUT MAKING ANY VERIFICATION OR WITHOUT HAVING ANY MATERIAL TO DISPROVE THE SAID CLAIM. HE FURTHER SUBMITTED THAT THE AGRICULTURAL INCOME OF RS.15,000/- INITIALLY ESTIMATED IN THE AS SESSMENT ORDER WAS REDUCED TO RS.10,000/- IN THE REMAND REPORT, WITHOUT HAVING AN Y EVIDENCE IN THIS REGARD. 5. ON THE OTHER HAND THE LEARNED DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED INCOME IN RESPECT OF AGRICULTURAL LAND HELD IN THE NAME OF FEMALE MEMBERS OF THE FAMILY AN D THE SAME IS NOT ACCEPTABLE BECAUSE THE BALANCE SHEET OF THE ASSESSEE DOES NOT REFLECT THE NAMES OF FAMILY MEMBERS AS CREDITORS. ACCORDINGLY HE CONTENDED THA T THE LEARNED CIT (A) IS CORRECT IN RESTRICTING THE AGRICULTURAL INCOME ONLY TO THE EXTENT OF THE LAND STANDING IN THE NAME OF THE ASSESSEE. FURTHER THE LEARNED D. R SUBMITTED THAT THE FATHER OF THE ASSESSEE HAS ADMITTED AGRICULTURAL INCOME OF RS .10,000/- PER ACRE IN THE ASSESSMENT YEAR 2004-05 AND HENCE THE ESTIMATED BY THE LEARNED CIT (A) SHOULD BE TREATED AS REASONABLE AND THE SAME SHOULD BE SUS TAINED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSU E AND PERUSED THE RECORD. THE FACT REMAINS THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT FOR HIS AGRICULTURAL OPERATIONS. THE ASSESSEE DID NOT ALSO PRODUCE ANY EVIDENCES TO SUPPORT THE INCOME DECLARED BY HIM. IN THESE CIRCU MSTANCES, THE ASSESSING OFFICER DOES NOT HAVE ANY OTHER OPTION, BUT TO ESTIMATE THE INCOME. THE CLAIM OF THE ITA NO.343 OF 07 MADDIPALLI NARAYANA CHALAMAYYA, NI DADAVOLE PAGE 3 OF 4 ASSESSEE IS THAT THE ENTIRE AGRICULTURAL LAND HELD IN THE NAME OF VARIOUS FAMILY MEMBERS ARE LOCATED IN A SINGLE BIT AND ARE BEING C ULTIVATED JOINTLY. THOUGH THE TAX AUTHORITIES HAS REJECTED THE SAID CLAIM, IT IS A FACT THAT NO MATERIAL WAS BROUGHT ON RECORD TO REJECT THE SAID CLAIM. IN VIEW OF THE ABOVE WE ARE INCLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT THE ENTIRE AGRICULTU RAL HOLDINGS OF THE FAMILY MEMBERS ARE BEING CULTIVATED BY THE ASSESSEE, HIS F ATHER AND HIS BROTHER. NOW LET US TURN TO THE ESTIMATE OF AGRICULTURAL INCOME MADE BY THE TAX AUTHORITIES. THE AGRICULTURAL INCOME WHICH WAS INITIALLY ESTIMATED A T RS.15,000/- WAS REDUCED TO RS.10,000/- PER ACRE BY LEARNED CIT(A) BASED ON TH E REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. AT THAT TIME, THE A.O HAS RE FERRED TO THE RETURN OF INCOME FILED FOR THE SUCCEEDING YEAR, WHICH IS NOT CALLED FOR AT THAT STAGE. HOWEVER, WE NOTICE THAT THE ASSESSEE HAS PRODUCED A PERSON NAME D SHRI K. MUSALAYYA WHO HAS ADMITTED THAT HE WAS GIVING 43 BAGS OF PADDY PER AC RE TO THE FAMILY OF THE ASSESSEE AND ACCORDING TO THE ASSESSEE THE SAID STA TEMENT CORROBORATES THE INCOME DISCLOSED BY THE ASSESSEE, HIS FATHER AND HI S BROTHER. HOWEVER THE FACT REMAINS THAT THE A.O HAS NOT ACCEPTED THE INCOME DI SCLOSED BY THE ASSESSEE AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE HAS ESTIMATED THE INCOME AT RS.15,000/- PER ACRE. HENCE, WE ARE OF THE VIEW THA T IT WOULD BE REASONABLE TO SUSTAIN THE ESTIMATE OF RS.15,000/- PER ACRE MADE D URING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDINGLY WE DIRECT THE A SSESSING OFFICER TO ARRIVE AT THE AGRICULTURAL INCOME ON 41.605 ACRES AND DISTRIB UTE THE SAME EQUALLY AMONG THE ASSESSEE HEREIN, HIS FATHER SHRI M.V.A SREERAMJI AN D HIS BROTHER SHRI M.T.V.M. RATNAKAR. CONSEQUENTLY THE INCOME FROM OTHER SOURC ES WILL ALSO STAND MODIFIED. ACCORDINGLY THE ORDER OF LEARNED CIT(A) STANDS MODI FIED. 7. THE NEXT ISSUE RELATES TO THE ESTIMATE OF PE RSONAL EXPENSES. THE ASSESSEE HAD DECLARED A DRAWINGS OF RS.29,000/-. THE ASSESSI NG OFFICER ESTIMATED THE PERSONAL EXPENSES AT RS.1,00,000/- AND ACCORDINGLY ADDED THE DIFFERENCE OF RS.71,000/-. THE ASSESSEE CLAIMED BEFORE LEARNED CI T (A) THAT HE WAS AN NRI DURING THE YEAR UNDER CONSIDERATION AND HENCE HE DI D NOT HAVE ANY HOUSEHOLD EXPENSES TO BE MET IN INDIA. THOUGH THE ASSESSING O FFICER ACCEPTED THE SAID CLAIM OF THE ASSESSEE, YET THE ADDITIONAL COMMISSIONER OF INCOME TAX HAS POINTED OUT IN HIS FORWARDING NOTE TO THE LEARNED CIT (A) THAT THE ASSESSEE HAD CLAIMED HIS STATUS AS RESIDENT IN THE RETURN OF INCOME. IN VIEW OF THE ABOVE, THE LEARNED CIT (A) CONFIRMED THE ADDITION OF RS.71,000/- MADE BY THE A SSESSING OFFICER. ITA NO.343 OF 07 MADDIPALLI NARAYANA CHALAMAYYA, NI DADAVOLE PAGE 4 OF 4 8. DURING THE COURSE OF HEARING BEFORE US BOTH THE PARTIES AGREED THAT THIS ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE THAT HE WAS RESIDING ABROAD D URING THE YEAR UNDER CONSIDERATION. ACCORDINGLY WE SET ASIDE THE ORDER O F THE LEARNED CIT (A) ON THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER ASCERTAINING THE C LAIM OF THE ASSESSEE STATED ABOVE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 24-09- 2010 COPY TO 1 SHRI MADDIPALLI NARAYANA CHALAMA YYA, S/O M.V.SREERAMJI, D.NO.11 - 4 - 133, NIDADAVOLE, WEST GODAVARI DISTT. 2 THE ITO WARD - II, TANUKU 3 4. THE CIT RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM