Shri. A. Nagaraju, Bangalore V. ITO, Bangalore

ITA 413/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9542 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-08-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.L.KALRA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE, K, JUDICIAL MEMBER ITA NO.413(BANG)/2009 (ASSESSMENT YEAR: 2005-06) SHRI A. NAGARAJU, EX. MLA, 282, 11 TH CROSS, 2 ND PHASE, MANJUNATHANAGAR, BANGALORE. .... APPELLANT VS. INCOME-TAX OFFICER, WARD 9(2), BANGALORE. .... RESPONDENT AND ITA NO.463(BANG)/2009 (ASSESSMENT YEAR: 2005-06) (BY THE REVENUE) ASSESSEE BY : SHRI NARENDRA SHARMA. REVENUE BY : SMT. V.S.SREELEKHA. O R D E R PER GEORGE GEORGE K, JM : THESE ARE CROSS APPEALS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-V, BANGALORE, DATED 4-3-2009. THE ASSESS MENT YEAR CONCERNED IS 2005-06. 2. ASSESSEES APPEAL (ITA NO.413(BANG)/2009): THERE ARE FIVE GROUNDS RAISED IN THIS APPEAL. GROUN D NOS.1 AND 5 ARE GENERAL IN NATURE AND NO ADJUDICATION IS CALLED FOR. GROUND NO.4 IS ONLY CONSEQUENTIAL AND HENCE SAME IS DISMIS SED. AT THE TIME OF HEARING, IT WAS SUBMITTED BY LEARNED AR THA T HE IS NOT PRESSING GROUND NO.3 AND HENCE SAME IS DISMISSED AS NOT PRESSED. ITA 413 & 469/B/2009 PAGE 2 OF 8 3. REMAINING GROUNDS NO.2, 2.1 AND 2.2 ARE DIRECTE D AGAINST THE ORDERS OF THE AUTHORITIES BELOW IN DISB ELIEVING THE ASSESSEES CLAIM OF RECEIPT OF AGRICULTURAL INCOME AND TREATING PORTION OF THE SAME (RS.16,65,000/-) AS INCOME FRO M OTHER SOURCES. 3.1 BRIEFLY STATED, FACTS WITH REFERENCE TO THE AB OVE GROUNDS ARE AS FOLLOWS: THE ASSESSEE IS AN INDIVIDU AL. FOR THE CONCERNED YEAR, HE FILED RETURN OF INCOME ON 31-1-2 007 DECLARING TOTAL INCOME AT RS.2,88,000/- AND AGRICULTURAL INCO ME AT RS.22,20,000/-. THE AO WAS OF VIEW THE AGRICULTURA L INCOME DECLARED BY ASSESSEE IS ON THE HIGH SIDE AND ESTIMA TED SAME AT 25% OF RS.22,20,000/- AND BALANCE 75% (RS.16,65,000 /-) WAS TREATED AS INCOME FROM OTHER SOURCES. RELEVANT F INDINGS OF THE AO ARE REPRODUCED BELOW: (C) AGRICULTURAL INCOME : THE ASSESSEE OWNS 12 ACRES OF AGL. LANDS AS REFLECTED IN THE BALANCE SHEET. T HE ASSESSEE HAS NOT FURNISHED ANY DETAILS. IN VIEW OF THIS, IT IS A CASE WHERE AGRICULTURAL INCOME IS TO BE ADOPTED ON ESTIMATE BASE. KEEPING IN VIEW THE EXTE NT OF AGL. INCOME OWNED, IT IS FAIR TO ADOPT AGRICULTU RAL INCOME AT 25% OF THE AGRICULTURAL INCOME DECLARED O F RS.22,20,000/- WHICH COMES TO RS.5,55,000/- AND BALANCE INCOME OF RS.16,65,000/- IS TREATED AS INCO ME FROM OTHER SOURCES AND TAXED ACCORDINGLY. 3.2 ON APPEAL BEFORE THE LD. CIT(A), IT WAS STATED, ASSESSEE HAD 27 ACRES OF LAND. OUT OF 27 ACRES OF L AND, IT WAS SUBMITTED; ASSESSEE HAD TAKEN ON LEASE 15 ACRES AND HAD OWNERSHIP IN RESPECT OF 12 ACRES. IT WAS FURTHER S UBMITTED, THE ITA 413 & 469/B/2009 PAGE 3 OF 8 ASSESSEE IS DERIVING AGRICULTURAL INCOME FROM SALE OF MULBERRY LEAVES. IT WAS CONTENDED THAT AGRICULTURAL INCOME SHOWN BY THE ASSESSEE WAS REASONABLE, CONSIDERING THE EXTENT OF LAND AND NATURE OF CROPS GROWN AND SAME OUGHT TO HAVE BEEN A CCEPTED BY THE AO. THE LD. CIT(A), FOR THE REASONS MENTIONED IN PARA.5 OF HIS ORDER DISMISSED THE APPEAL OF THE ASSESSEE. AS SESSEE, BEING AGGRIEVED IS IN SECOND APPEAL BEFORE US. 3.3 LEARNED AR REITERATED THE SUBMISSIONS MADE BEFO RE THE AUTHORITIES BELOW. ON THE OTHER HAND, LEARNED DR SUBMITTED, NO DETAILS WERE FURNISHED BEFORE THE AUTHORITIES BE LOW WITH REFERENCE TO EXTENT OF AGRICULTURAL HOLDING OR RECE IPT OF AGRICULTURAL INCOME AND HENCE AGRICULTURAL INCOME E STIMATED WAS REASONABLE AND NO INTERFERENCE IS CALLED FOR. 3.4 WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MAT ERIAL ON RECORD. ASSESSEE HAD SUBMITTED, HE HAD APPROXIMA TELY 27 ACRES OF LAND. ASSESSEE HAS NOT PRODUCED ANY EVIDE NCE REGARDING EXTENT OF AGRICULTURAL LAND, CROPS GROWN, INCOME RE CEIVED AND EXPENDITURE INCURRED ON AGRICULTURAL OPERATIONS THE REON. BASIC DETAILS WITH REFERENCE TO AGRICULTURAL INCOME HAVE NEITHER BEEN PRODUCED BEFORE THE AUTHORITIES BELOW NOR BEFORE US . HENCE, AOS ESTIMATE OF AGRICULTURAL INCOME AT RS.5,55,000 /- FROM 12 ACRES OF LAND IS REASONABLE AND JUSTIFIED. THEREFO RE, GROUNDS NO.2, 2.1 AND 2.2 IN ASSESSEES APPEAL ARE REJECTED . 3.5 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. 4. REVENUES APPEAL (ITA NO.463(BANG)/2009) : THE SOLITARY ISSUE IN REVENUES APPEAL IS REGARDING ADD ITION OF ITA 413 & 469/B/2009 PAGE 4 OF 8 RS.20,09,000/- IN RESPECT OF CASH DEPOSITS IN BANK. BRIEF FACTS IN REGARD TO THIS ISSUE ARE AS FOLLOWS: THE ASSESSEE H AD MADE CASH DEPOSITS OF RS.18 LAKHS ON 28-4-2004, RS.1,39,000/- ON 26-10-2001 AND RS.70,000/- ON 7-3-2005 IN HIS ACCOU NT NO.566 WITH KARNATAKA CO-OPERATIVE APEX BANK LTD. SINCE N O DETAILS WERE FORTHCOMING FROM THE ASSESSEE, THE TOTAL CASH DEPOSITS OF RS.20,09,000/- WAS TREATED AS UNEXPLAINED CASH DEPO SIT AND WAS BROUGHT TO TAX. 4.1 ON APPEAL, IT WAS CONTENDED BEFORE THE LD. CIT( A), THE ASSESSEE HAD DEPOSITED CASH FROM OUT OF EARLIER WIT HDRAWALS AND FROM OUT OF HIS AGRICULTURAL INCOME. IT WAS SUBMIT TED, DEPOSITS IN BANK ACCOUNTS WERE DISCLOSED IN THE STATEMENT OF AF FAIRS FILED ALONG WITH RETURN OF INCOME AND SAME WERE FROM KNOW N SOURCES OF FUNDS. THEREFORE IT WAS SUBMITTED, AO ERRED IN T REATING CASH DEPOSITS AS UNEXPLAINED INVESTMENTS. 4.2 THE LD. CIT(A), ALLOWED THE APPEAL OF THE ASSE SSEE AND THE RELEVANT PORTION OF THE LD. CIT(A)S ORDER IS R EPRODUCED BELOW: 6. THE NEXT ISSUE FOR CONSIDERATION IS REGARDING THE ADDITION OF RS.20,00,000/- IN RESPECT OF CASH DEPOS ITS IN THE BANK. IN THIS REGARD, THE ARGUMENTS OF THE APPELLANT THAT THE DEPOSITS WERE FROM WITHDRAWALS A ND AGRICULTURAL INCOME HAVE TO BE CONSIDERED AS THE APPELLANT REQUESTED FOR TELESCOPING THE INCOME IN RESPECT OF CASH DEPOSITS. IT IS STATED THAT THESE DEPOSITS WERE TAKEN INTO ACCOUNT WHILE PREPARING TH E STATEMENT OF AFFAIRS AS THE BALANCE IN THE BANK ACC OUNT WAS REFLECTED. THE AO OUGHT TO HAVE TELESCOPED THE ADDITION MADE TOWARDS THE DEPOSITS IN THE BANK TO T HE EXTENT OF AGRICULTURAL INCOME ASSESSED AS INCOME FR OM OTHER SOURCES. IN VIEW OF THIS, I AM OF THE OPINION THAT ITA 413 & 469/B/2009 PAGE 5 OF 8 THE AO HAD DISALLOWED RS.16,65,000/- FROM AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES. THEREFORE, THE DISALLOWANCE MADE ON ACCOUNT OF AGRICULTURAL INCOME PROVED THAT THE APPELLANT HAS SOURCES OF INCOME TO BE DEPOSITED IN THE BANK. THE DISALLOWANCE MADE BY THE AO IN RESPECT OF AGRICULTU RAL INCOME HAS BEEN CONFIRMED. IN VIEW OF THIS, I AM OF THE OPINION THAT THE ADDITION OF CASH DEPOSITS IN T HE BANK STAND EXPLAINED AND THE SAME CANNOT BE DISALLOWED AGAIN AS IT WILL AMOUNT TO DOUBLE TAXATI ON. THE ADDITION ON THIS ACCOUNT IS UNJUSTIFIED AND THE SAME CANNOT BE SUSTAINED. THE APPELLANT SUCCEEDS AN D THE ADDITION OF RS.20,09,000 IS DELETED ACCORDINGLY . 4.3 REVENUE BEING AGGRIEVED IS IN APPEAL, RAISING T HE FOLLOWING GROUNDS: 2. THE CIT(A) OUGHT TO HAVE GIVEN THE AO AN OPPORTUNITY OF VERIFYING THE FRESH GROUND/EVIDENCES ADDUCED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. THE CIT(A)V ERRED IN HOLDING THAT THE AO HAD DISALLOWED RS.16,65,000/- FROM AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES AND THEREFORE THE DISALLOWANCE MADE ON ACCOUNT OF AGRICULTURAL INCOME PROVED THAT THE APPELLANT HAD SOURCES OF INCOME TO BE DEPOSITED IN THE BANK. 4. THE CIT(A)V IS NOT JUSTIFIED IN HOLDING THAT CONSIDERING THE FACT THAT THE DISALLOWANCES MADE BY THE AO IN RESPECT OF AGRICULTURAL INCOME HAS BEEN CONFIRMED AND IN VIEW OF THIS THE ADDITION OF CASH DEPOSITS IN THE BANK STAND EXPLAINED AND THE SAME CANNOT BE DISALLOWED ITA 413 & 469/B/2009 PAGE 6 OF 8 AGAIN AS IT WILL AMOUNT TO DOUBLE TAXATION. 5. THE CIT(A)V FAILED TO APPRECIATE THAT THE ADDITION OF RS.20,09,000/- IN RESPECT OF CASH DEPOSITS IN BANK NEED NOT BE FROM THE DISALLOWANCE MADE OUT OF AGRICULTURAL INCOME AND HENCE THE CIT(A)V ERRED IN HOLDING THAT THE ARGUMENTS OF THE APPELLANT THAT THE DEPOSITS WERE FROM WITHDRAWALS AND AGRICULTURAL INCOME HAVE TO BE CONSIDERED AS THE APPELLANT REQUESTED FOR TELESCOPING THE INCOME IN RESPECT OF CASH DEPOSITS. 6. THE ASSESSEE AND HIS AR HAD THE OPPORTUNITY OF AVAILING OF THE BENEFIT OF TELESCOPING, IF ANY, THEY COULD HAVE CHOSEN TO DO SO DURING THE ASSESSMENT PROCEEDINGS ITSELF AND THE FRESH GROUND TAKEN BY THE ASSESSEE BEFORE CIT(A)V SHOULD NOT HAVE BEEN ENTERTAINED. 4.4 LEARNED DR SUBMITTED, THE ASSESSEE, BEFORE THE AO, HAD NOT SUBMITTED ANY EXPLANATION WITH REFERENCE TO SOURCE OF CASH DEPOSITS IN BANK. IT WAS SUBMITTED THAT THE L D. CIT(A) ERRED IN HOLDING THAT CASH DEPOSITS WERE FROM WITHDRAWALS AND AGRICULTURAL INCOME AND THE SAME HAS TO BE TELESCOP ED. IT WAS FURTHER ARGUED THAT DEPOSITS IN BANK NEED NOT BE FR OM DISALLOWANCE MADE OUT OF AGRICULTURAL INCOME AND TH E LD. CIT(A) HAS ERRONEOUSLY GIVEN THE BENEFIT OF TELESCOPING. 4.5 LEARNED AR, ON THE OTHER HAND, SUBMITTED THE EXPLANATIONS WERE SUBMITTED BEFORE THE AO. HOWEVER , THE SAME HAS NOT BEEN CONSIDERED BY HIM. IT WAS SUBMITTED, B ANK STATEMENTS WERE FURNISHED TO THE AO AND FROM THE BA NK ITA 413 & 469/B/2009 PAGE 7 OF 8 STATEMENTS HE FOUND THE CASH DEPOSITS AND MADE ADDI TIONS TREATING THE SAME AS UNEXPLAINED CASH DEPOSITS. IT WAS SUBMITTED BY THE LEARNED AR, ON MERE PERUSAL OF BANK STATEMEN TS IT IS CLEAR THERE WERE ENOUGH WITHDRAWALS PRIOR TO CASH DEPOSIT S OF RS.18 LAKHS, AND AMOUNTS WITHDRAWN WERE DEPOSITED ON 28-4 -2004 (RS.18,00,000/-). IT WAS FURTHER STATED; ASSESSEE HAD SUFFICIENT AGRICULTURAL INCOME FOR MAKING CASH DEPOSITS ON 4-1 1-2004 AND 7-3-2005. 4.6 WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED M ATERIAL ON RECORD. THE ASSESSEE HAD FURNISHED PAPER BOOK RU NNING INTO 14 PAGES. BANK STATEMENT IS FURNISHED AT PAGES 10 TO 14. OUT OF THE TOTAL DEPOSITS AMOUNTING TO RS.20,09,000/- MAJO R DEPOSIT OF RS.18 LAKHS WAS MADE ON 28-4-2004. ON PERUSAL OF TH E BANK STATEMENT, WE NOTICE THE WITHDRAWALS ON THE FOLLOWI NG DATES: 2-4-2004 . RS.1,00,000/- 16-4-2004 RS.10,00,000/- 27-4-2004 . RS.6,00,000/- 28-4-2004 . RS.45,000/- THESE AMOUNTS AGGREGATING TO RS.17,40,000/- WAS AVA ILABLE WITH THE ASSESSEE AND SAME WAS DEPOSITED BACK IN BANK AC COUNT ON 28-4-2004. THE DIFFERENCE OF RS.55,000/- CAN BE TA KEN CREDIT FROM THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE . AS REGARDS DEPOSIT OF RS.1,39,000/- ON 4-11-2004 AND RS.70,000 /- ON 7-3- 2005, WE ARE OF THE VIEW THAT THESE ARE CASH DEPOSI TS OUT OF AGRICULTURAL INCOME OF THE ASSESSEE AND ALSO OUT OF WITHDRAWALS MADE FROM BANK ACCOUNT ON DIFFERENT DATES. EVEN GO ING BY THE ESTIMATION OF AGRICULTURAL INCOME BY THE AO, THE AS SESSEE IS HAVING AGRICULTURAL INCOME TO THE EXTENT OF RS.5,55 ,000/- AND THE ITA 413 & 469/B/2009 PAGE 8 OF 8 SAME IS GOOD ENOUGH TO TAKE CARE OF THE CASH CREDIT S ON 4-11-2004 AND ON 7-3-2005. THEREFORE, WE ARE OF TH E VIEW THAT THE LD. CIT(A)S CONCLUSION IS CORRECT AND NO INTER FERENCE IS CALLED FOR. THE GROUNDS RAISED ARE DISMISSED. 4.7 IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST, 2009. SD/- SD/- (N.L.KALRA) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 21 ST AUGUST,2009. EKS* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A)-V, BANGALORE. 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRA R, ITAT, BANGALORE.