Asstt. Commissioner of Incme Tax-4, Kanpur V. Shri Virendra Kumar Jhunjhunwala , Kanpur

ITA 43/LKW/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5678 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: S K JAIN SHRI SWARN SINGH
• Keywords: Capital asset; Salary income; Onus to prove

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.43/LKW/13 A.Y.:09 - 10 A.C.I.T. - 4, KANPUR. VS. SHRI VIRENDRA KUMAR JHUNJHUNWALA, 117/K/13, GUTAIYA, KANPUR. PAN:ABNPJ4853C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI S. K. JAIN, ADVOCATE SHRI SWARN SINGH, ADVOCATE DATE OF HEARING 31/01/2014 DATE OF PRONOUNCEMENT 2 8 /02/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT ( A) - I, KANPUR DATED 31/10/2012 FOR ASSESSMENT YEAR 2009 - 2010. 2. THE GROUND NO. 1 RAISED BY THE REVENUE IS AS UNDER: 1. THAT THE L D. COMMISSIONER OF INCOME TAX - ,(APPEALS) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS . 13,98,213/ - MADE BY THE AO WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 3. BRIEF FACTS REGARDING THIS ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LEARNED CIT ( A) IN PARA 4.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 4.1 IN THIS REGARD, THE A.O. HAS OBSERVED AS UNDER: ' THE ASSESSEE EARNS INCOME FROM SALARY AS PRESIDENT AND IS EMPLOYED IN THE COMPANY, M/S M. P. CHINI INDUSTRIES LTD., INCOME FROM CAPITAL GAIN AT RS.1,36,912/ - AND HE HAS ALSO SHOWN 2 INCOME FROM OTHER SOURCES AT RS.20,393/ - , THE DETAILS OF WHICH WERE FILED AN D VERIFIED BY ME. ASSESSEE IS THE PRESIDENT OF M/S M. P. CHINI MILLS INDUSTRIES LTD. A PERUSAL OF THE DETAILS OF AGRICULTURAL INCOME FILED REVEALED THAT THE ASSESSEE IS HAVING THE ALLEGED AGRICULTURAL LAND ADJACENT TO M/S M. P. CHINI INDUSTRIES LTD. ASSESSEE HAS CLAIMED THAT THIS LAND IS AN AGRICULTURAL LAND AND SO THE SALE OF PRODUCE FROM THIS LAND WILL QUALIFY FOR EXEMPTION AS AGRICULTURAL INCOME. HOWEVER, A CLOSE SCRUTINY OF THE FACT REVEALED THAT THIS LAND IS PRACTICALLY AN INDUSTRIAL LAND AS THIS LAND IS SITUATED WITHIN THE VICINITY OF M/S M. P. CHINI INDUSTRIES LTD. AND WHICH IS LOCATED IN THE INDUSTRIAL AREA. I AM SUPPORTED IN THIS REGARD BY THE SUBSEQUENT SALE OF M/S M. P . CHINI INDUSTRIES LTD. AND LAND APPURTENANT TO IT WHICH WAS PURCHASED BY M/S BIRLA GROUP AND THE ALLEGED LAND HAS BEEN CATEGORIZED FOR BUSINESS USE WHICH IS AMPLY BORNE BY THE SALE DEED EXECUTED BY THE ASSESSEE WITH M/S BIRLA GROUP WHERE IT IS CLEARLY MEN TIONED THAT THIS LAND IS BEING PURCHASED FOR BUSINESS PURPOSES. THE ASSESSEE'S ALLEGED CLAIM OF AGRICULTURAL INCOME IS NOTHING BUT A PLOY TO TREAT THE INCOME FROM OTHER SOURCES FROM THE SALE OF SUGAR CANE AS AGRICULTURAL INCOME. ASSESSEE'S CLAIM THAT THI S LAND IS ENTERED IN THE REVENUE RECORD AS AGRICULTURAL IS ALSO OF NOT MUCH HELP TO THE ASSESSEE. REFERENCE IS INVITED IN THIS REGARD IN THE CASE OF SARIFABIBI MOHAMMED IBRAHIM AND OTHERS VS. CIT (SC) 204 ITR 631 WHEREIN THEIR LORDSHIP HAS HELD THAT 'LAND NOT AGRICULTURAL THOUGH ENTERED IN THE REVENUE RECORD AS AGRICULTURAL - AGRICULTURAL I NCOME NOT ALLOWABLE.' SIMILARLY THE STATUS OF LAND DETERMINES THE NATURE OF INCOME - SINCE THE SAND IS INDUSTRIAL SO THE INCOME WILL QUALIFY AS INCOME FROM OTHER SOURCES AND NOT AGRICULTURAL INCOME THOUGH SUBSEQUENTLY AGRICULTURAL OPERATION MIGHT HAVE BEEN CARRIED ON, REFERENCE IS INVITED IN THIS REGARD TO THE CASE OF KAIPETTA ESTATES LIMITED VS. CIT (KER) 185 ITR 318 WHEREIN THEIR LORDSHIP HAS HELD THAT 'AGRICULTURAL LAND - BURDEN OF PROOF IS ON ASSESSEE TO SHOW THAT IT WAS AGRICULTURAL LAND - FOREST LANDS ACQUIRED WITH THE INTENTION OF EXTENDING PLANTATION - TRANSFER OF LAND LEAD TO CAPITAL GAINS.' AS I HAVE ALREADY DISCUSSED EARLIER THAT THIS LAND HAD BEEN PURCHASED BY M/ S BIRLA GROUP AND THE SALE DEED CLEARLY SHOWS THE INTENT BEING THE BUSINESS USE, SO THE BENEFIT OF AGRICULTURAL 3 INCOME ON THIS GROUND CAN ALSO NOT BE GIVEN. I AM FURTHER FORTIFIED IN THIS REGARD BY THE RATIO IN THE CASE OF DEVENDRA PAL SINGH VS. CIT ( AII) 243 ITR WHEREIN THEIR LORDSHIP HAS HELD THAT 'WHEN ASSESSEE ENTERED INTO AN AGREEMENT TO SELL LAND TO A DEVELOPER FOR DEVELOPING AS HOUSE SITES AND APPLIED FOR APPROVAL OF LAY - OUTS - LAND IS NO LONGER AGRICULTURAL LAND. THUS BASED ON ABOVE RATIO AND ALSO THE FACTS OF THE CASE, I TREAT THIS ALLEGED AGRICULTURAL INCOME AS CLAIMED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND ACCORDINGLY MAKE A ADDITION OF RS.11,59,985/ - BEING THE OPENING BALANCE OF THE ASSESSEE UNDER THE HEAD INCOME FROM AGRICULTURAL OPER ATION AND RS.2,38,228/ - BEING THE ALLEGED AGRICULTURAL INCOME DURING THE YEAR UNDER CONSIDERATION. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I. T. ACT FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME SHALL ALSO BE INITIATED ON THIS UNDISCL OSED INCOME. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DELETED THE ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US. 5. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE A SSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 6. THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA 4.2 OF HIS ORDER, WHICH IS ALSO REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 4.2 THE A.O. HAS NOT DISPUTED THE FACT THAT THE IMPUGNED INCOME SHOWN BY THE ASSESSEE WAS ON ACCOUNT OF SALE OF SUGARCANE. GROWING OF SUGARCANE IS AN AGRICULTURAL ACTIVITY AND THEREFORE RECEIPTS/ INCOME ON ACCOUNT OF ITS SALE WOULD CONSTITUTE AGRICULTURAL INCOME, WHICH IS EXEMPT FROM TAX. THE CASE LAWS RELIED BY THE A .O. ARE TOTALLY MISPLACED AS THEY ARE IN RESPECT OF CAPITAL GAINS AND NOT IN RESPECT OF AGRICULTURAL INCOME. IN THIS VIEW OF THE MATTER, THE STAND TAKEN BY THE A.O. ON THIS ISSUE IS UNTENABLE IN LAW. ACCORDINGLY, IT IS TO BE HELD THAT THE IMPUGNED INCOME OF THE ASSESSEE IS INDEED AGRICULTURAL INCOME AND IS AN EXEMPTED INCOME AS PER THE EXPRESS PROVISIONS OF SEC. 10 OF THE I.T. ACT. THE ADDITION MADE STANDS DELETED. 4 6.1 FROM THE ABOVE PARA OF THE ORDER OF LEARNED CIT(A), IT IS SEEN THAT A CLEAR FINDING IS GIVEN BY LEARNED CIT(A) THAT THE INCOME IN DISPUTE IS REGARDING SALE OF SUGARCANE . HE HAS ALSO GIVEN A FINDING THAT IT IS ALSO NOT DISPUTED BY THE ASSESSING OFFICER THAT THE IMPUGNED INCOME SHOWN BY THE ASSESSEE WAS ON ACCOUNT OF SALE OF SUGARCANE. HE H AS ALSO GIVEN A FINDING THAT THE G ROWING OF SUGARCANE IS AN AGRICULTURAL ACTIVITY AND THEREFORE , RECEIPTS/ INCOME ON ACCOUNT OF ITS SALE WOULD CONSTITUTE AGRICULTURAL INCOME, WHICH IS EXEMPT FROM TAX. 7. LEARNED D.R. OF THE REVENUE COULD NOT CONTROVERT TH ESE CLEAR FINDING S OF LEARNED CIT(A). HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). THIS GROUND OF APPEAL IS REJECTED. 8. GROUND NO. 2 OF THE APPEAL IS AS UNDER: 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, K ANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,00,000/ - MADE BY THE AO ON ACCOUNT OF LOW WITHDRAWALS WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 9. BRIEF FACTS REGARDING THIS ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LEARNED CIT(A) IN PARA 5.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 'THE ASSESSEE HAS MADE A WITHDRAWAL OF RS.1,81,730/ - ON ACCOUNT OF HOUSE HOLD EXPENSES AND THE TOTAL WITHDRAWAL OF THE FAMILY IS APPROXIMATE AT RS.2,53,415/ - CONSISTING OF SELF, WIFE AND DAUGHTER. HOWEVER, LOOKING TO THE STATUS OF THE FAMILY AND ALSO THE INFLATION PREVAILING THE WITHDRAWALS MADE ARE ON LOWER SIDE. AS I HAVE ALREADY STATED EARLIER THAT THE ASSESSEE IS A PRESIDENT OF M/S M. P. CHINI INDUSTRIES LTD. AND MAINTAINS A VERY HIGH STATUS IN THE SOCIETY SO THE WITHDRAWALS MADE BY HIM ARE NOT SUFFICIENT TO MEET THE ASSESSEE'S STATUS. I, THEREFORE, MAKE A ADDITION OF RS.1,00,000/ - ON ACCOUNT OF LOW WITHDRAWALS BY THE ASSESSEE. PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME SHALL ALSO BE INITIATED ON THIS UNDISCLOSED INCOME. 5 10. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DELETED THE ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US. 11. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT CIT(A) HAS DELETED THIS ADDITION ON THE BASIS THAT THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT BRINGING ANY RELEVANT MATERIAL ON RECORD. WE ALSO FIND THAT IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS ALLEGED THAT HOUSE HOLD WITHDRAWA L IS LOW WITHOUT POINTING OUT ANY BASIS FOR THIS ALLEGATION. THE FAMILY OF THE ASSESSEE IS CONSISTING OF THREE PERSONS I.E. THE ASSESSEE, HIS WIFE AND DAUGHTER. TOTAL DRAWING SHOWN BY THE ASSESSEE AND HIS FAMILY IS OF RS.2,53,415/ - . NOTHING HAS BEEN BR OUGHT ON RECORD BY THE ASSESSING OFFICER POINTING OUT ANY MAJOR EXPENDITURE, WHICH CANNOT BE COVERED IN THIS AMOUNT OF HOUSEHOLD WITHDRAWALS. HENCE, ON THIS ISSUE ALSO, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). THIS GROUND IS ALSO RE JECTED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 / 02 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR