N.S.Rajeshwaran, The Nilgiris V. ITO, Ooty

ITA 456/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8218 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A M UBEIDULLA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.456/MDS/2015 ' (' / ASSESSMENT YEAR : 2007-08 SHRI N.S. RAJESHWARAN, C/O SHRI A.M. UBEIDULLA, 4/M, VISALATCHI COMPLEX, UPPER BAZAAR, OOTACAMUND THE NILGIRIS PAN : AGSPN 2154 L V. THE INCOME TAX OFFICER, WARD I(1), OOTY, 2 ND FLOOR, CHRISTO BUILDING, OOTACAMUND THE NILGIRIS (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI A.M. UBEIDULLA, FCA ,-*+ . / / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT 0 . 1$ / DATE OF HEARING : 30.08.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 21.10.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I, COIMBA TORE, DATED 12.11.2014 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.456/MDS/15 2. SHRI A.M. UBEIDULLA, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERA TION IS DISALLOWANCE OF AGRICULTURAL INCOME TO THE EXTENT OF ` 1,90,000/-. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSEE CLAIMED ` 1,90,000/- AS AGRICULTURAL INCOME. HOWEVER, THE ASSESSING OFFICER DISBELIEVED THE CLAIM OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE, THE CIT(A PPEALS), HOWEVER, DETERMINED THE AGRICULTURAL INCOME TO ` 1,00,000/- AND SUSTAINED THE DISALLOWANCE OF ` 90,000/-. ACCORDING TO THE LD. REPRESENTATIVE, WHEN THE ASSESSEE HAS FILED DETAILS OF LAND HOLDING, THE CIT(APPEALS) OUGHT TO HAVE ALLOWED THE ENTIRE C LAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS CLA IMED AGRICULTURAL INCOME OF ` 1,90,000/-, HOWEVER, NO EVIDENCE WAS PRODUCED EITHER BEFORE THE ASSESSING OFFICER OR BEF ORE THE CIT(APPEALS). THE CIT(APPEALS) ON THE PRESUMPTION THAT THE ASSESSEE WAS HOLDING AGRICULTURAL LAND, RESTRICTED THE AGRICULTURAL INCOME TO THE EXTENT OF ` 1,00,000/- AND DISALLOWED THE BALANCE AMOUNT OF ` 90,000/-. SINCE THE CIT(APPEALS) HIMSELF ALLOWED T HE CLAIM OF THE ASSESSEE WITHOUT ANY MATERIAL AVAILABL E ON RECORD, THE 3 I.T.A. NO.456/MDS/15 ASSESSEE CANNOT HAVE ANY GRIEVANCE IN RESTRICTING T HE AGRICULTURAL INCOME TO ` 1,00,000/-. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED ` 1,90,000/- TOWARDS AGRICULTURAL INCOME. THE CIT(APPEALS) ALLOWED TO T HE EXTENT OF ` 1,00,000/-, HOWEVER, DISALLOWED THE BALANCE AMOUNT OF ` 90,000/-. THE APPEAL OF THE ASSESSEE RELATES TO THE DISALLOWA NCE SUSTAINED BY THE CIT(APPEALS) TO THE EXTENT OF ` 90,000/-. AS RIGHTLY SUBMITTED BY THE LD. D.R., THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL WITH REGARD TO LAND HOLDING AND CROP CULTIVATION. UNLES S THE DETAILS OF LAND HOLDING AND CROP CULTIVATION ARE AVAILABLE ON RECORD, IT IS VERY DIFFICULT TO ESTIMATE THE INCOME FROM AGRICULTURE. AS RIGHTLY SUBMITTED BY THE LD. D.R., THE CIT(APPEALS) PRESUME D THAT THE ASSESSEE HAS INHERITED AGRICULTURAL LAND BELONGING TO HIS FATHER AND GRANDFATHER AND ALSO LEASE HOLDING LAND. WITHOUT A NY MATERIAL EVIDENCE, THE CIT(APPEALS) ACCEPTED THE CLAIM OF TH E ASSESSEE AND FOUND THAT THE ASSESSEE EARNED AGRICULTURAL INCOME OF ` 1,00,000/-. IN THE ABSENCE OF ANY MATERIAL, THE CIT(APPEALS) CO NFIRMED THE DISALLOWANCE TO THE EXTENT OF ` 90,000/- AFTER TAKING INTO THE LAND 4 I.T.A. NO.456/MDS/15 HOLDING AND NATURE OF CROP CULTIVATION. THIS TRIBU NAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF UNSECURED LOAN TO THE EXTENT OF ` 9,76,400/-. 6. SHRI A.M. UBEIDULLA, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CONSTRUCTED A PRIMARY S CHOOL IN A SMALL VILLAGE CALLED NANJANAD IN NILGIRIS DISTRICT. THE ASSESSEE, HOWEVER, COULD NOT COMPLETE THE CONSTRUCTION DUE TO LACK OF FUNDS. SEVERAL VILLAGERS LIVING IN THE VILLAGE CAME FORWARD TO ADV ANCE MONEY SO THAT THE CONSTRUCTION OF SCHOOL BUILDING COULD BE COMPLE TED. MANY PEOPLE ADVANCED LOAN TO THE EXTENT OF ` 9,76,400/-, WHICH WAS USED FOR CONSTRUCTION OF SCHOOL PREMISES. THE ASSESSEE HAS FURNISHED A LIST OF 67 INDIVIDUALS. THE ASSESSEE HAS ALSO RETU RNED BACK THE LOAN RECEIVED FROM THEM. THE ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE CLAIM TO THE EXTENT OF ` 9,76,400/- AND MADE AN ADDITION TO THE TOTAL INCOME. REFERRING TO THE ASS ESSMENT ORDER, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFF ICER HIMSELF ADMITTED THAT THE ASSESSEE HAS FURNISHED NAMES OF T HE PERSONS WHO LENT THE MONEY, WITH DOOR NUMBER. THE ASSESSIN G OFFICER HAS 5 I.T.A. NO.456/MDS/15 NOT MADE ANY ENQUIRY. WITHOUT MAKING ANY INVESTIGA TION, THE ASSESSING OFFICER FOUND THAT THE LOAN TRANSACTIONS ARE NOT GENUINE. REFERRING TO THE ASSESSMENT ORDER, THE LD. REPRESEN TATIVE SUBMITTED THAT ONE SHRI RAMAKRISHNAN AND SHRI M. SEKHAR, WHO ALSO ADVANCED MONEY AMONG 67 PERSONS, APPEARED BEFORE TH E ASSESSING OFFICER AND ADMITTED THAT THEY ADVANCED L OAN TO THE ASSESSEE. SINCE NO ENQUIRY WAS CONDUCTED, ACCORDIN G TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) IS NOT JUSTIFIED I N CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 7. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS MAD E INVESTMENT TO THE EXTENT OF ` 19,61,566/- DURING THE ASSESSMENT YEAR 2007-08. AFTER EXAMINING THE MATERIAL AVAILABLE ON RECORD, T HE ASSESSING OFFICER FOUND THAT THERE WAS INCREASE IN HOUSING LO AN TO THE EXTENT OF ` 2,23,029/-. CONSIDERING THE UNDISCLOSED SOURCE OF ` 9,76,400/- AND THE INVESTMENT MADE IN THE EARLIER ASSESSMENT Y EAR, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NO EX PLANATION FOR BALANCE AMOUNT OF ` 7,62,137/-. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS DISCLOSED THE LOAN OF ` 9,76,400/- FROM 169 PERSONS FROM NILGIRIS DISTRIST. AMOUNT RECEIVED FROM EACH PERSON WAS LESS 6 I.T.A. NO.456/MDS/15 THAN ` 20,000/- IN ORDER TO AVOID THE IMPLICATIONS OF SECT ION 269SS OF THE ACT. THE ASSESSEE HAS FURNISHED A LIST OF 27 N AMES FROM WHOM A SUM OF ` 12,88,500/- WAS SAID TO BE RECEIVED. HOWEVER, ACCO RDING TO THE LD. D.R., IN THE BALANCE SHEET WHAT WAS REFL ECTED IS ` 9,76,400/-. IN THE ABSENCE OF ANY DETAILS, ACCORDI NG TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE AD DITION MADE BY THE ASSESSING OFFICER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS CONSTRUCTING SCHOOL B UILDING IN A REMOTE VILLAGE CALLED NANJANAD IN NILGIRIS DISTRICT . DUE TO PAUCITY OF FUNDS, THE ASSESSEE RECEIVED LOAN FROM VARIOUS PERS ONS IN THE LOCALITY. THE ASSESSEE CLAIMS THAT THE LOAN WAS RE CEIVED FROM 169 INDIVIDUALS. THE ASSESSEE HAS FURNISHED THE NAMES OF 67 INDIVIDUALS ALONG WITH THEIR RESPECTIVE DOOR NUMBER IN WHICH THEY ARE RESIDING, BEFORE THE ASSESSING OFFICER. IN FAC T, SHRI RAMAKRISHNAN AND SHRI M. SEKHAR CONFIRMED THE FACT OF ADVANCING LOAN TO THE ASSESSEE. THE ASSESSING OFFICER HAS NO T EXAMINED THE OTHER INDIVIDUALS WHO SAID TO HAVE ADVANCED MONEY T O THE ASSESSEE. WHEN THE ASSESSEE HAS FURNISHED NAMES AN D DOOR 7 I.T.A. NO.456/MDS/15 NUMBERS OF THE INDIVIDUALS, WHO ARE RESIDING IN THE VILLAGE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE BURD EN OF PROOF WAS SHIFTED ON THE SHOULDER OF THE ASSESSING OFFICER. THE ASSESSING OFFICER OUGHT TO HAVE EXAMINED THE CLAIM OF THE ASS ESSEE BEFORE CONCLUDING THAT THE TRANSACTION WAS NOT GENUINE. U NFORTUNATELY, NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT THE TRANSACTION OF LOAN IS NOT GENUINE. IN VIEW OF THE FACT THAT THE ASSESSEE HAS FURNISHED NAMES OF 67 INDIVIDUALS, WHO SAID TO HAVE ADVANCED LOAN WITH RESPECTIVE DOOR NUMBERS IN WHICH THEY ARE RESI DING, AND THE ASSESSING OFFICER HAS NOT TAKEN ANY PAIN TO EXAMINE THE SAME, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSEE HAS ESTABLISHED THE BONA FIDE OF LOAN TRANSACTION. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE AUTH ORITIES BELOW AND THE ADDITION OF ` 9,76,400 MADE TOWARDS UNSECURED LOAN IS DELETED. 9. THE NEXT GROUND OF APPEAL IS WITH REGARD TO UNEX PLAINED INVESTMENT TO THE EXTENT OF ` 2,97,466/-. 10. SHRI A.M. UBEIDULLA, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CONSTRUCTED A HOUSE. O N THE BASIS OF DEPARTMENTAL VALUATION OFFICERS REPORT, THE ASSESS ING OFFICER MADE AN ADDITION OF ` 2,97,466/-. REFERRING TO THE PAPER-BOOK, MORE 8 I.T.A. NO.456/MDS/15 PARTICULARLY, COPIES OF THE LETTER SAID TO BE ADDRE SSED TO THE INCOME TAX OFFICER BY THE ASSESSEES MOTHER, THE LD. REPRE SENTATIVE FOR THE ASSESSEE SUBMITTED THAT THEY ARE HOLDING AGRICULTUR AL LAND AND THE ASSESSEES FATHER WAS ALSO A GOVERNMENT EMPLOYEE, W HO RETIRED FROM SERVICE. THE RETIREMENT BENEFIT RECEIVED BY T HE ASSESSEES MOTHER WAS SAID TO BE GIVEN TO THE ASSESSEE. MOREO VER, THE ASSESSEES MOTHER CLAIMS THAT THE INCOME FROM AGRIC ULTURAL PROPERTY WAS ALSO GIVEN TO THE ASSESSEE WHICH WAS USED FOR C ONSTRUCTION. WHEN THE ASSESSEES MOTHER CONFIRMED THAT THE RETIR EMENT BENEFIT OF THE ASSESSEES FATHER WAS GIVEN TO HIM AND AGRIC ULTURAL INCOME GENERATED FROM AGRICULTURAL LAND WAS ALSO GIVEN TO THE ASSESSEE, THE ADDITION OF ` 2,97,466/- IS NOT JUSTIFIED. 11. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS MAD E A CASH FLOW. ON THE BASIS OF THAT CASH FLOW, THE ASSESSING OFFIC ER DELETED THE ADDITION TO THE EXTENT OF ` 7,50,680/-. AFTER CONSIDERING THE DEPARTMENTAL VALUATION OFFICERS REPORT, THE ASSESS ING OFFICER FOUND THAT THERE WAS DIFFERENCE OF ` 2,97,466/- TOWARDS THE COST OF CONSTRUCTION. THIS WAS CONFIRMED BY THE CIT(APPEALS ) IN THE ABSENCE OF ANY MATERIAL. 9 I.T.A. NO.456/MDS/15 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEES FATHE R WAS A GOVERNMENT EMPLOYEE, WHO RETIRED FROM SERVICE AND T HE ASSESSEES MOTHER CLAIMS THAT THE RETIREMENT BENEFITS WERE GIV EN TO THE ASSESSEE. MOREOVER, THE INCOME GENERATED FROM AGRI CULTURAL PROPERTY BELONGS TO ASSESSEES MOTHER, WAS ALSO SAI D TO BE GIVEN TO THE ASSESSEE. IN THOSE FACTUAL CIRCUMSTANCES, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ADDITION MADE TO THE EXTENT OF ` 2,97,466/-. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND THE ADDITION OF ` 2,97,466/- IS DELETED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 21 ST OCTOBER, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 21 ST OCTOBER, 2016. KRI. 10 I.T.A. NO.456/MDS/15 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A) 4. 0 81 /CIT, 5. 69 ,1 /DR 6. :' ; /GF.