ITO, Ward-2, Khammam V. Sri B Venugopal Reddy (HUF), Khammam

ITA 408/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5575 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Reassessment proceedings
• Section: 143(3); 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.408/HYD/2013 ASSESSMENT YEAR 2007-08. INCOME-TAX OFFICER, -V- SRI B. VENUGOPAL REDDY (HUF) WARD-2, KHAMMAM. KHAMMAM. PAN:AAEHB5787R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. YADAGIRI RESPONDENT BY SHRI D.L. NARASIMHA RAO DATE OF HEARING 11-02-2014 DATE OF PRONOUNCEMENT 11-02-2014 ORDER PER SAKTIJIT DEY, J.M: THE ONLY ISSUE IN THE AFORESAID APPEAL IS WITH REGA RD TO CIT (A) DELETING ADDITIONS OF RS.1,93,419 AND RS.1 LAKH ON ACCOUNT OF UNEXPLAINED INCOME AND LOW WITHDRAWALS OF DOMESTIC EXPENDITURE RESPECTIVELY. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE HUF IS CARR YING ON BUSINESS AS A TRANSPORT CONTRACTOR. FOR THE IMPUGNED ASSESS MENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME ON 31-10-2007 D ECLARING INCOME OF RS.2,38,048/- BESIDES AGRICULTURAL INCOME OF RS .1,50,000/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 1 5-12-2009 2 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. DETERMINING THE TOTAL INCOME AT RS.5,27,280/-. LAT ER ON, THE TOTAL INCOME WAS MODIFIED TO RS.7,38,250/- THROUGH AN ORD ER PASSED U/S 154 OF THE ACT ON 9-1-2012. ASSESSMENT COMPLETED U/S 143(3) WAS SUBJECTED TO PROCEEDINGS U/S 263 OF THE ACT BY THE CIT. DURING THE COURSE OF REVISION PROCEEDINGS, THE CIT NOTICED THA T THE ASSESSEE HAD PAID A SUM OF RS.1,93,419 TOWARDS PAYMENT OF IN TEREST ON HOUSING LOAN AND ALSO REPAYMENT OF HOUSING LOAN WHI CH HAS NOT BEEN DEBITED TO THE CAPITAL ACCOUNT. HE THEREFORE S ET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AND D IRECTED THE ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER AF TER CONSIDERING THIS ASPECT. DURING THE REASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE HUF POSSESSED 65 ACRES OF AGRICULTURAL LAND AND DERIVED INCOME OF RS.4 LAKHS PER ANNUM FROM A GRICULTURAL OPERATIONS. IT WAS FURTHER SUBMITTED THAT THE PAYM ENTS FOR INTEREST AND PRINCIPAL OF HOUSE BUILDING LOAN AND HOUSEHOLD EXPENSES WERE MET OUT OF THIS AMOUNT AND ONLY THE NET INCOME AFTE R DEDUCTING THESE EXPENSES WAS CREDITED TO THE CAPITAL ACCOUNT AS INCOME FROM AGRICULTURE. 3. IT WAS THEREFORE SUBMITTED THAT ERROR/MISTAKE POINTED OUT BY THE CIT IN HIS REVISIONAL ORDER PASSED U/S 263 OF T HE ACT IS ONLY A TECHNICAL FLAW FOR RECORDING THE NET AGRICULTURAL I NCOME AS INCOME FROM AGRICULTURAL OPERATIONS. IT WAS FURTHER STATE D THAT THE ASSESSEE IS WELL AWARE ALL AGRICULTURAL LAND THAT THE ASSESSEE HAS HE HAS ENGAGED ONE SUPERVISOR WHO IS LOOKING AFTER ALL HIS AGRICULTURAL LANDS. AS HE KNOWS EACH AND EVERY LAND , AS SUCH THERE IS NO PROBLEM TO CULTIVATE AND DERIVE AGRICULTURAL INCOME FROM LANDS SITUATED AT FAR AWAY PLACE IN CHITTOOR DISTRICT. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CONTENTIONS OF T HE ASSESSEE BY 3 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. OBSERVING THAT KNOWING THE LANDS IS DIFFERENT FROM CULTIVATING THE SAME. HE FURTHER NOTED THAT THE DETAILS OF SALARY P AID TO SUPERVISOR WAS NOT FURNISHED BY THE ASSESSEE WHO IS A TRANSP ORT CONTRACTOR AND HAS A TURNOVER FROM BUSINESS AT RS.72.7 LAKHS D URING THE YEAR. HE FURTHER OBSERVED THAT PARTITION OF HUF TOOK P LACE W.E.F. 3/6/2009 ONLY AND PRIOR TO THAT THE ENTIRE AGRICULT URAL INCOME WAS EARNED IN THE STATUS OF JOINT FAMILY AND NO EVIDENC E WAS PRODUCED TO SHOW THAT THE ASSESSEE EARNED AGRICULTURAL INCOME O F RS.4 LAKH. HE THEREFORE TREATED THE INTEREST AND PRINCIPAL AMOUNT REPAID ON HOUSING LOAN TOTALLING TO RS.1,93,419/- AS INCOME FROM UNEXPLAINED SOURCES AND ADDED IT TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO ADDED AN AMOUNT OF RS.1 LAKH TOWARDS L OW WITHDRAWALS. BEING AGGRIEVED OF THE ADDITIONS MADE IN THE ASSESS MENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). 4. BEFORE THE CIT (A), THE ASSESSEE CONTENDED THAT EVEN AFTER PARTITION OF THE BIGGER HUF, THE ASSESSEE HELD EXTE NSIVE AGRICULTURAL LAND TO THE EXTENT OF 20.63 ACRES IN V.R. AGRAHARA M VILLAGE YERRAVARI PALEM REVENUE MANDAL, CHITTOOR DISTRICT A ND 44.10 ACRES IN BODEVANDLAPALLI VILLAGE YERRAVARIPALEM MANDAL, C HITTOOR DISTRICT. THUS, THE TOTAL EXTENT OF LAND AVAILABLE WITH THE A SSESSEE IS 64.73 ACRES WHICH IS ALSO CERTIFIED BY THE TAHSILDAR, YE RRUVARIPALEM MANDAL. THE TEHSILDAR ALSO CERTIFIED PADDY AND MAN GOES ARE RAISED ON THE LAND OF 31.76 ACRES FROM WHICH HE WAS GETTIN G ANNUAL INCOME OF ABOUT RS.4.00 LAKHS. IT WAS ALSO GETTING INCOME FROM THE REMAINING LAND OF ABOUT 33 ACRES. IT WAS SUBMITTED THAT THE ENTIRE AGRICULTURAL; OPERATIONS ARE MONITORED BY THE SUPE RVISOR ENGAGED BY THE ASSESSEE AND AFTER MEETING A PART OF THE DO MESTIC EXPENSES OF ABOUT RS.50,000/- THERE FROM AND AGRICULTURAL E XPENSES, SAVINGS 4 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. FROM AGRICULTURAL INCOME WHICH COULD BE UTILISED FO R MEETING HOUSING LOAN AND INTEREST THEREON WAS SUFFICIENT TO MEET TH E EXPENSES OF RS.1,91,419. IT WAS SUBMITTED THAT AFTER MEETING A LL THESE EXPENDITURES, THE ASSESSEE HAS SHOWN THE NET INCOME OF RS.1,50,000/- FROM AGRICULTURAL OPERATIONS IN THE R ETURN OF INCOME FILED. THE CIT (A) AFTER CONSIDERING THE SUBMISSI ON OF THE ASSESSEE IN THE CONTEXT OF MATERIALS ON RECORD DELETED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER:- 8. NO DOUBT THERE LIES A TECHNICAL LAPSE ON THE APP ELLANTS PART IN NOT DISCLOSING THE TRUE AGRL., INCOME OF RS .4.00 LAKHS WHILE FILING THE ORIGINAL RETURN OF INCOME. IT IS THE PLEADING OF THE APPELLANT THAT THE AGRL. INCOME OF RS.1.50 L AKHS SHOWN IN THE ROI REPRESENTED THE NET INCOME AFTER MEETING A PART OF THE DOMESTIC EXPENSES OF RS.50,000/- AGRL., EXPENSE S AND ALSO THE REPAYMENT OF HOUSING LOAN TOGETHER WITH IN TEREST OF RS.1,91,419/-. THOUGH PATENTLY THERE LIES SOME TEC HNICAL FLAW, YET, GOING BY THE FACT THAT IT WAS HOLDING EX TENSIVE AGRL., LANDS OF THE MAGNITUDE OF 64.73 ACRES, ITS C LAIM CANNOT ALTOGETHER BE REJECTED. FURTHER DERIVING OF AGRICU LTURAL INCOME TO THE EXTENT OF RS.4.00 LAKHS FROM A PART O F THE LAND HOLDING ANNUALLY IS EVIDENCED BY THE CERTIFICATE IS SUED BY THE MRO., I AM OF THE VIEW THAT THE APPELLANT WAS HOLDI NG AGRL., INCOME TO THE EXTENT CLAIMED WHICH COULD HAVE BEEN UTILISED FOR MEETING THE PAYMENT OF HOUSING LOAN AND INTERES T THEREON OF THE AGGREGATE EXTENT OF RS.1,91,419/- AND IN THE CON TEXT OF HOLDING ADEQUATE RESOURCES, IT IS FELT THAT IT I S NOT JUSTIFIABLE TO REJECT THE CLAIM OF THE APPELLANT ON TECHNICAL GROUNDS. ACCORDINGLY, THE ADDITION OF RS.1,91,419/ - IS ORDERED TO BE DELETED. 5 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. 9. IN VIEW O THE ESTABLISHMENT OF HOLDING OF AGRIL. , INCOME OF RS.4.00 LAKHS, THE APPELLANTS CLAIM THAT HE UTI LISED A PART OF AGRL., INCOME AMOUNTING TO RS.50,000 TOWARDS DOM ESTIC EXPENSES CANNOT E REJECTED. TAKING COGNIZANCE OF T HE SAME AND ALSO THE CONTRIBUTION MADE BY OTHERS TOWARDS DO MESTIC EXPENSES AS RECORDED IN THE IMPUGNED ASSESSMENT ORD ER I DO NOT THINK IT REASONABLE TO MAKE AN ADDITION OF RS.1 ,00,000 TOWARDS LOW WITHDRAWALS FOR DOMESTIC EXPENDITURE. ACCORDINGLY, THE ADDITION OF RS.1,00,000/- IS ORDER ED TO BE DELETED. HOWEVER, WHILE DETERMINING THE TAX, THE A GRL., INCOME OF RS.4.00 LAKHS MAY BE SUBSTITUTED IN THE P LACE OF RS.1,50,000/- ADMITTED BY THE ASSESSEE FOR RATE PUR POSES. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RE CORD. IT IS CONTENTION OF THE LEARNED DR THAT THE CERTIFICATE O F THE MRO DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION TH EREFORE IT CANNOT BE HELD THAT FOR THE IMPUGNED ASSESSMENT YEA R ALSO THE ASSESSEE WAS HAVING INCOME FROM AGRICULTURAL OPERA TIONS AT RS.4 LAKHS. IT IS ALSO THE CONTENTION OF HE LEARNE D DR THAT THE LAND IN QUESTION IS A DRY LAND WHICH CANNOT YIELD I NCOME OF RS.4 LAKH PER ANNUM. IT WAS FURTHER CONTENDED THAT THE ASSESSEE ITSELF HAVING SHOWN IN THE RETURN OF AGRICULTURAL I NCOME AT RS.1,50,000/- SUBSEQUENT CHANGE IN THE STAND OF THE ASSESSEE TO SAY THAT HE WAS HAVING AGRICULTURAL INCOME OF RS .4 LAKH IS NOT VERIFIABLE. ON THE OTHER HAND, THE LEARNED AR CONTENDED THAT THOUGH THE PETITION OF THE BIGGER HUF TOOK PLA CE IN THE YEAR 2009 BUT THE AGRICULTURAL INCOME DERIVED FROM LAND HELD 6 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. JOINTLY WERE SHARED BETWEEN THE MEMBERS OF HUF. TH E LEARNED AR ALSO CONTENDED THAT THE CERTIFICATE OF MRO SUBMI TTED BY THE ASSESSEE DOES NOT SAY THAT THE AGRICULTURAL INCOME RS.4 LAKH DOES NOT PERTAIN TO THE ASSESSMENT YEAR UNDER CONSI DERATION THOUGH THE CERTIFICATE MIGHT HAVE BEEN ISSUED IN TH E YEAR 2011. AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES, W E FIND THAT THE ASSESSING OFFICER DOES NOT DISPUTE THE EXTENT OF LAND HOLDING OF THE ASSESSEE WHICH ACCORDING TO THE CLA IM OF THE ASSESSEE IS 64.75 ACRES. THEREFORE, IT IS NOT UNVE RIFIABLE THAT THE ASSESSEE MUST BE DERIVING CERTAIN AMOUNT OF INC OME FROM AGRICULTURAL OPERATIONS EVEN ASSUMING THAT THE LAND S ARE DRY LAND. THAT BESIDES THE ASSESSEE HAS FURNISHED A C ERTIFICATE FROM MRO WHO HAS CERTIFIED THE ANNUAL AGRICULTURAL INCOME FROM PADDY AND MANGOES AT RS.4 LAKH. THE MRO IS A GOVER NMENT OFFICER AND CANNOT BE EXPECTED OF ISSUING A FALSE C ERTIFICATE FAVOURING THE ASSESSEE. THAT APART WHEN THE ASSESS EE HAS SUBMITTED A CERTIFICATE FROM THE MRO, THE ASSESSING OFFICER CANNOT JUST BRUSH IT ASIDE WITHOUT BRINGING MATERI AL ON RECORD TO SHOW THAT THE AGRICULTURAL INCOME MENTIONED IN T HE CERTIFICATE OF THE MRO IS NOT CORRECT. SO FAR AS T HE CONTENTION OF THE DEPARTMENT THAT THE ASSESSEE HAS ONLY CLAIME D ONLY RS.1,50,000/- FROM AGRICULTURAL OPERATIONS S CONCER NED, WE AGREE WITH THE VIEW OF THE CIT (A) IT IS ONLY A T ECHNICAL FLAW ON THE PART OF THE ASSESSEE. IN THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT (A) 7 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM. IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFF ICER. ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE D EPARTMENT. 6. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 11-02-2014. S D / - (CHANDRA POOJARI) ACCOUNTANT MEMBER S D / - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 11 TH FEBRUARY, 2014. JMR* COPY TO:- 1) ITO, WARD-2, AAYAKAR BHAVAN, BEHIND KINNERASANI THEATRE, KHAMMAM. 2) SRI B. VENUGOPAL REDDY (HUF), DOOR NO.5-1-13/2, KAI RAJ NAGAR, KHAMMAM. 3) CIT(A), VIJAYAWADA. 4) CIT, VIJAYAWADA. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. 8 ITA NO.408 OF 2013 SRI VENUGOPAL REDDY (HUF), KHAMMAM.