Mr. D.Shri Hari Rao, CHENNAI V. ACIT, CHENNAI

ITA 360/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51698 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T T DURAIRAJ KANDIAR
• Keywords: Unexplained cash credit; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS. 358 & 359/MDS/2011 (ASSESSMENT YEARS : 2003-04 & 2004-05) SHRI D.N. CHOUDHARY, NO.6, RANJITH ROAD, KOTTURPURAM, CHENNAI 600 085. PAN : ACXPC3349K (APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI 600 034. (RESPONDENT) I.T.A. NO. 360/MDS/2011 (ASSESSMENT YEAR : 2004-05) SHRI D. SHRI HARI RAO, NO.6, RANJITH ROAD, KOTTURPURAM, CHENNAI 600 085. PAN : AACPR3014P (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(5), CHENNAI 600 034. (RESPONDENT) APPELLANTS BY : SHRI T.T. DURAIRAJ KANDIAR, CA RESPONDENT BY : SHRI SHA JI P. JACOB DATE OF HEARING : 17.08.2011 DATE OF PRONOUNCEMENT : 19.08.2011 I.T.A. NOS. 358 TO 360/MDS/11 2 O R D E R PER BENCH : THESE ARE APPEALS FILED BY THE ASSESSEES FOR ASSE SSMENT YEARS CONCERNED, AGAINST THE RESPECTIVE ORDERS DATE D 12.11.2010 OF COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI. 2. LEARNED A.R. OF THE ASSESSEES HAS FILED ADJOURNM ENT APPLICATIONS. HOWEVER, NO GOOD REASON HAS BEEN SHO WN FOR SEEKING SUCH ADJOURNMENT. HENCE, SUCH APPLICATIONS ARE REJ ECTED. 3. APPEAL FILED BY SHRI D. SHRI HARI RAO IN I.T.A. NO. 360/MDS/2011 IS TAKEN UP FIRST FOR DISPOSAL. 4. SHRI D. SHRI HARI RAO, THE ASSESSEE HAD FILED HI S RETURN FOR IMPUGNED ASSESSMENT YEAR DECLARING TOTAL INCOME OF ` 1,72,860/- AND AGRICULTURAL INCOME OF ` 16,93,300/-. THE TOTAL INCOME RETURNED WAS ON ACCOUNT OF SUB-LEASE OF A PROPERTY IN MOUNT ROAD . DURING THE COURSE OF ASSESSMENT, ASSESSEE WAS REQUIRED TO SUPP ORT WITH EVIDENCE THE AGRICULTURAL INCOME RETURNED. AS PER THE ASSESSEE, HE WAS OWNING 60 ACRES OF AGRICULTURAL LAND AND IN THI S RESPECT, I.T.A. NOS. 358 TO 360/MDS/11 3 ASSESSEE PRODUCED A CERTIFICATE FROM VAO. A.O. DID NOT ACCEPT THIS AGRICULTURAL INCOME IN FULL. ACCORDING TO HIM, ASS ESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF AGRICULTURAL OPE RATION NOR COULD PRODUCE SEPARATE BOOKS OF ACCOUNTS WITH REGARD TO A GRICULTURAL INCOME AND OUTGOES. A.O. NOTED THAT IN RESPECT OF BLOCK ASSESSMENT DONE ON THE ASSESSEE FOR EARLIER PERIOD, AN AGRICUL TURAL INCOME OF ` 1,59,600/- WAS ACCEPTED. HE ESTIMATED THE AGRICULT URAL INCOME FOR IMPUGNED ASSESSMENT YEAR AT ` 2 LAKHS AND BALANCE AMOUNT OF AGRICULTURAL INCOME RETURNED WAS TAKEN AS UNEXPLAIN ED CREDIT. 5. ASSESSEE MOVED IN APPEAL BEFORE LD. CIT(APPEALS) AND ARGUED THAT HE WAS BASICALLY AN AGRICULTURIST WHO HAD MIGR ATED FROM ANDHRA PRADESH IN 1962 AND HAD PURCHASED 70 ACRES OF FERTI LE LAND IN TAMIL NADU. AS PER THE ASSESSEE, THIS WAS THE ONLY OCCUP ATION WHICH WAS KNOWN TO HIM AND HE HAD PUT UP 4 BORE-WELLS WITH EL ECTRICITY CONNECTION FOR EACH OF THE 4 BORE-WELLS. ASSESSEE SUBMITTED THAT HE WAS CARRYING OUT AGRICULTURAL OPERATION ON THREE-CR OP BASIS ROUND THE YEAR AND LAND SITUATED IN PONNERI TALUK WAS A FERTI LE ONE AND IDEAL FOR THREE CROP CULTIVATION. AS PER THE ASSESSEE, THE D ISTRICT-WISE I.T.A. NOS. 358 TO 360/MDS/11 4 AGRICULTURE YIELD COMPILED BY THE STATE GOVERNMENT STATISTICAL DEPARTMENT CLEARLY SUBSTANTIATED THE AGRICULTURAL I NCOME RETURNED. ASSESSEE ALSO SUBMITTED THAT SUPPORT PRICE GIVEN BY THE GOVERNMENT HAD INCREASED SUBSTANTIALLY AND VAOS ADANGAL CLEAR LY SHOWED THAT AT LEAST TWO CROPS WERE CULTIVATED EVERY YEAR IN TH E AGRICULTURAL LAND. ASSESSEE ALSO POINTED OUT TO LD. CIT(APPEALS) THAT HE HAD PRODUCED ELECTRICITY BILLS, BORE-WELL DETAILS, VAO CERTIFICA TE, ADANGAL, TRACTOR PURCHASE BILLS, BUT, NEVERTHELESS, THESE WERE IGNOR ED BY THE A.O. AS PER THE ASSESSEE, HE WAS AN ILLITERATE PERSON AND W AS NOT AWARE THAT BOOKS OF ACCOUNTS WERE TO BE MAINTAINED FOR AGRICUL TURAL ACTIVITIES. LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSION O F THE ASSESSEE, WAS OF THE OPINION THAT ASSESSEE WAS UNABLE TO PROD UCE ANY EVIDENCE FOR PROVING AGRICULTURAL OPERATION. ACCOR DING TO HIM, THOUGH ASSESSEE COULD PRODUCE EVIDENCE FOR OWNERSHIP OF 60 ACRES OF LAND WITH 4 BORE-WELLS AND NECESSARY ELECTRICITY CONNECT ION, 13 ACRES THEREIN WERE LEASED TO HIS SONS AND ONLY 47 ACRES W ERE CULTIVATED BY HIM. LD. CIT(APPEALS) NOTED THAT UPTO ASSESSMENT Y EAR 2000-01, ASSESSEE WAS SHOWING AGRICULTURAL INCOME OF ` 6,78,000/- AND FROM THAT YEAR ONWARDS, IT JUMPED TO ` 12 LAKHS AND BY IMPUGNED I.T.A. NOS. 358 TO 360/MDS/11 5 ASSESSMENT YEAR, ASSESSEE WAS SHOWING AN AGRICULTUR AL INCOME OF ` 17 LAKHS WHICH WAS UNBELIEVABLE. THERE WAS NO INCR EASE IN THE LAND HOLDINGS AND ASSESSEE COULD NOT SUBSTANTIATE THE ST EEP INCREASED IN AGRICULTURAL INCOME OVER THE YEARS. HE, THEREFORE, HELD THAT ASSESSEE COULD AT THE BEST HAVE EARNED AGRICULTURAL INCOME O F ` 10,000/- PER ACRE ONLY. ACCORDINGLY, HE ESTIMATED AGRICULTURAL INCOME FROM 47 ACRES OF LAND AT 4,70,000/- AND SUSTAINED THE ADDIT ION OF BALANCE. 6. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT ASSES SEE HAD PRODUCED SUFFICIENT EVIDENCE FOR OWNERSHIP OF AGRIC ULTURAL LAND AND CULTIVATION THEREIN. ACCORDING TO HIM, ASSESSEES ONLY KNOWN OCCUPATION WAS AGRICULTURE AND THE AREA FROM WHICH AGRICULTURAL INCOME WAS SHOWN WAS UNDISPUTEDLY VERY FERTILE. AS SESSEE HAD PRODUCED NECESSARY EVIDENCE FOR PROVING AGRICULTURA L OPERATIONS INCLUDING PAYMENT OF ELECTRICITY BILLS. JUST BECAU SE HE COULD NOT PRODUCE BOOKS OF ACCOUNTS, HIS CLAIM WAS NEGATED. 7. PER CONTRA, LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF LD. CIT(APPEALS). ACCORDING TO HIM, NECESSARY RELIEF W AS GIVEN BY LD. I.T.A. NOS. 358 TO 360/MDS/11 6 CIT(APPEALS) TO THE ASSESSEE EVEN IN THE ABSENCE OF ANY CREDIBLE EVIDENCE. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE WAS OWNING 60 ACR ES OF AGRICULTURAL LAND OUT OF WHICH, 13 ACRES WERE LEASED OUT BY HIM TO HIS SONS. IT IS ALSO NOT DISPUTED THAT ASSESSEE IN 47 ACRES OF LAND , AGRICULTURAL OPERATIONS WERE CONDUCTED. ASSESSEE HAD PRODUCED V AO CERTIFICATE. ASSESSEE WAS ALSO HAVING 4 BORE-WELLS AND ELECTRICI TY CONNECTION FOR EACH OF THEM. ASSESSEE HAD ALSO PRODUCED ELECTRICI TY BILLS IN THIS CONNECTION. THERE IS ALSO NO DISPUTE THAT THE AREA WHERE THE AGRICULTURAL LAND WAS LOCATED WAS IN A FERTILE BELT . ASSESSEES ONLY OCCUPATION WAS AGRICULTURE AND THEREFORE, HE COULD HAVE INVESTED HIS TIME IN FULL FOR AGRICULTURAL OPERATIONS. JUST BEC AUSE HE DID NOT MAINTAIN BOOKS OF ACCOUNTS, WE CANNOT SAY THAT THE AGRICULTURAL OPERATIONS WOULD NOT HAVE YIELDED A REASONABLE INCO ME. IN OUR OPINION, CONSIDERING CULTIVATION OF TWO CROPS AS CE RTIFIED BY THE VAO, PER ACRE YIELD OF ` 20,000/- CAN BE SUBSTITUTED AGAINST ` 10,000/- ESTIMATED BY LD. CIT(APPEALS). WE, THEREFORE, HOLD THAT ASSESSEES I.T.A. NOS. 358 TO 360/MDS/11 7 AGRICULTURAL INCOME SHOULD BE FIXED AT ` 9,40,000/- FROM 47 ACRES HELD BY HIM, FOR IMPUGNED ASSESSMENT YEAR. SO, ADDITION OF UNEXPLAINED CREDIT CAN BE SUSTAINED ONLY FOR THE BALANCE ` 7,53,300/-. ORDERED ACCORDINGLY. APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. 9. NOW COMING TO APPEALS FILED BY SHRI D.N. CHOUDHA RY IN I.T.A. NOS. 358 AND 359/MDS,2011, FOR ASSESSMENT YEARS 200 3-04 AND 2004-05, THE ISSUE HERE IS ALSO AGRICULTURAL INCOME RETURNED BY THE ASSESSEE. 10. SHRI D.N. CHOUDHARY IS SON OF SHRI D. SHRI HARI RAO WHOSE CASE WE CONSIDERED AT PARA 8 ABOVE. FACTS ARE SIMI LAR AND THE LAND HELD BY SHRI D.N. CHOUDHARY WAS LEASED FROM SHRI D. SHRI HARI RAO. FOR THE SAME REASONS AS GIVEN AT PARA 8 ABOVE, WE H OLD THAT THE AGRICULTURAL INCOME OF THE ASSESSEE SHRI D.N. CHOUD HARY SHOULD ALSO BE TAKEN AT ` 20,000/- PER ACRE FOR THE LAND IN HIS POSSESSION. ACCORDINGLY, FOR 4 ACRES OF LAND HELD BY THE ASSESS EE ON LEASE FROM SHRI D. SHRI HARI RAO, THE AGRICULTURAL INCOME IS E STIMATED AT ` 80,000/-. THE ADDITION ON ACCOUNT OF UNEXPLAINED I NCOME OUT OF AGRICULTURAL INCOME RETURNED HAS TO BE SCALED DOWN ACCORDINGLY FOR I.T.A. NOS. 358 TO 360/MDS/11 8 BOTH THE YEARS. A.O. IS DIRECTED TO REDUCE THE ADD ITION MADE IN THIS REGARD, FOR BOTH THE YEARS. ORDERED ACCORDINGLY. APPEALS OF THE ASSESSEE FOR BOTH THE YEARS ARE TREATED AS PARTLY A LLOWED. 11. TO SUMMARISE, ALL THE THREE APPEALS ARE PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 19 TH AUGUST, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH AUGUST, 2011. KRI. COPY TO: (1) APPELLANTS (2) RESPONDENT (3) CIT(A)-II, CHENNAI-34 (4) CIT, CENTRAL-II, CHENNAI (5) D.R. (6) GUARD FILE