L.Srinivas, Yanam V. THE DCIT, CIRCLE - 1, Kakinada

ITA 459/VIZ/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6566 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 21-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K SETHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 459 / VIZ /201 4 (ASST. YEAR : 20 08 - 09 ) SRI KANCHERLA SRINIVAS, S/O LATE KAMESWARA RAO, D.NO. 4 - 59, PILLARAYA STREET, YANAM - 533 464 V . D CIT, CIRCLE - 1 , KAKINADA. PAN NO. AFRPK 0954 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI M.K. SETHI - DR DATE OF HEARING : 28 / 1 1 /201 6 . DATE OF PRONOUNCEMENT : 25 / 01 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , VISAKHAPATNAM , DATED 27 /0 5 /201 4 FOR THE ASSESSMENT YEAR 2008 - 09 . 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER EXPENDITURE INCURRED TOWARDS IMPROVEMENT OF LAND IS ALLOWABLE OR NOT. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF 17,55,000/ - TOWARDS COST OF IMPROVEMENT OF AC. 7 - 25 CTS. OF LAND HELD BY HIM. THE ASSESSING OFFICER AS KE D THE ASSESSEE TO PRODUCE THE DETAILS OF THE EXPENDITURE INCURRED RELATING TO IMPROVEMENT OF THE LAND. IN RESPONSE, THE ASSESSEE VIDE HIS LETTER DATED 2 ITA NO. 459/VIZ/2014 21/10/2010 SUBMITTED THAT THE LAND SOLD BY HIM IS IN A LOW LYING AREA AND RAIN WATER WAS STAGNATED DURING RAINY SEASON , THEREFORE, H E MADE AN IMPROVEMENT BY FILLING SOIL LEVELLING THE LAND AND SOLD THE SAME. HE ALSO SUBMITTED THAT THERE ARE FIVE PERSONS, WHO UNDERTOOK THE DEVELOPMENT WORK. WHEN ASSESSING OFFICER ASKED THE ASSESSEE, HE PRODUCED ONLY TWO PERSONS NAMELY SRI V. ANJANEYA RAJU AND SRI G.SRINIVASA RAJU @ SUBBARAJU . THE ASSESSING OFFICER RECORDED THE STATEMENTS OF BOTH THE PARTIES AND BOTH THE PARTIES SUBMITTED THAT THEY TOOK THE DEVELOPMENT WORK AND FURTHER STATED THAT THEY HIRED TRACTORS FROM OUTSIDE. WHEN ASSESSING OFFICER ASKED THE DETAILS OF THE TRACTORS, BOTH THE PARTIES WERE NOT ABLE TO EXPLAIN FROM WHOM THEY WERE HIRED . THE ASSESSING OFFICER ALSO NOTED THAT BOTH THE PERSONS , THROUGH WHOM THE WORK WAS EXECUTED BY THE ASSESSEE , ARE AGRICULTURISTS AND TH EY DO NOT HAVE ANY SELF - FINANCE AND ALSO NOTED THAT THEY BORROWED FUNDS FROM THEIR RELATIVES AND EXECUTED THE WORK. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE DEVELOPMENT WORK CARRIED OUT IS NOT GENUINE AND THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE WAS DISALLOWED. 3 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSING OFFICER HAS EXAMINED THE TWO PARTIES FROM WHOM THE ASSESSEE H AS EXECUTED THE WORK, THEY COULD NOT FURNISH ANY PARTICULARS OR SUPPORTIVE EVIDENCE AS TO HOW THE EXPENSES ARE MET AND ALSO OBSERVED THAT THE ASSESSEE HAD NOT MADE THE PAYMENTS IMMEDIATELY, HE PAID ONLY IN THE MONTH OF JANUARY, 2009 I.E. AFTER ONE YEAR OF COMPLETION OF WORK , HENCE, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3 ITA NO. 459/VIZ/2014 4 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE CASE OF THE ASSESSEE IS THAT HE DEVELOPED THE LAND TO THE EXTENT OF AC.7 - 25 CTS. BY FILLING SOIL . THE SAME IS SOLD AND CLAIMED AN AMOUNT OF 17,55,000/ - AS AN IMPROVEMENT EXPENDITURE. BEFORE THE ASSESSING OFFICER, HE PRODUCED TWO PERSONS, THROUGH WHOM THE WORK IS EXECUTED . THE ASSESSING OFFICER EXAMINED BOTH THE PARTIES , THEY HAVE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE WO RK BELONGING TO THE ASSESSEE WAS EXECUTED BY THEM BY HIRING THE TRACTORS FROM OUTS I DERS AND THE EXPENDITURE INCURRED BY THEM W AS BORROWED FROM THEIR RELATIVES. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF BOTH THE PARTIES ON THE GROUND THAT THEY ARE AGRICULTURISTS AND ALSO THEY DONT HAVE EXPERIENCE, HENCE, CANNOT EXECUTE THE WORK. HE FURTHER OBSERVED THAT BOTH THE PARTIES HAVE NOT PRODUCED ANY DETAILS IN RESPECT OF WHOM THE WORK IS EXECUTED. O N APPEAL, COMMISSIONER OF I NCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON TH E GROUND THAT EXPENDITURE IS NOT GENUINE EXPENDITURE. IN THIS CASE, IT IS NOT A DISPUTED FACT THAT THE ASSESSEE HAD SOLD THE LAND. INSOFAR AS IMPROVEMENT EXPENDITURE IS CONCERNED, THE ASSESSEE SUBMITTED A DETAILED NOTE BEFORE THE ASSESSING OFFICER THAT WHOM THROUGH WORK IS EXECUTED AND ALSO RECORDED IN HIS BOOKS, PAYMENT HAS ALSO BEEN MADE IN THE MONTH OF JANUARY, 2009 . THE ASSESSING OFFICER AFTER EXAMINING THE TWO PARTIES SRI V. ANJANEYA RAJU AND SRI G. SRINIVASA RAJU @ SUBBARAJU , CAME TO THE CONCLUSION TH AT THEY CANNOT EXECUTE THE WORK FOR THE REASON THAT BOTH THE 4 ITA NO. 459/VIZ/2014 PARTIES HAVE NO EXPERIENCE . SO FAR AS THE ABOVE FINDING OF THE ASSESSING OFFICER IS CONCERNED TO LEVEL THE LAND BY FILLING WITH SOIL, NO EXPERIENCE IS REQUIRED. BOTH THE PARTIES SUBMITTED BEFORE THE ASSESSING OFFICER THAT THEY HIRED THE TRACTORS FROM THIRD PARTIES AND FILLED THE LAND WITH SOIL. WHEN THE ASSESSING OFFICER ASKED ABOUT THE DETAILS OF THE TRACTORS FROM WHOM THEY HIRED , THEY WERE NOT ABLE TO EXPLAIN. ON THAT COUNT ALONE , IT CANNOT BE SAID THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT GENUINE EXPENDITURE. 5. SO FAR AS PAYMENTS MADE BY THE ASSESSEE AFTER ONE YEAR IS CONCERNED, THE ASSESSEE HAS RECORDED THE PAYMENTS IN HIS BOOKS OF ACCOUNT , THE SAME WAS ACCEPTED BY BOTH THE PARTIES THAT THEY RECEIVED PAYMENT. SO, THE DELAY IN PAYMENT CANNOT BE A GROUND TO SAY THAT THE TRANSACTION IS NOT A GE N UINE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD HAVE BEEN INCURRED SOME EXPENDITURE TO DEVELOP THE LOW LEVEL LAND . IN VIEW O F THE ABOVE, WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE EXPENDITURE INCURRED BY THE ASSESSEE IS ALLOWED TO THE EXTENT OF 5,00,000/ - . O RDER ED ACCORDINGLY. 6 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 2 5 T H DAY OF JANUARY , 201 7 . S D / - S D / - ( G. MANJUNATHA ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 5 T H JANUARY , 201 7 . 5 ITA NO. 459/VIZ/2014 VR/ - COPY TO: 1 . THE ASSESSEE. SRI KANCHERLA SRINIVAS, S/O LATE KAMESWARA RAO, D.NO. 4 - 59, PILLARAYA STREET, YANAM - 533 464 2 . THE REVENUE - DCIT, CIRCLE - 1, KAKINADA. 3 . THE CIT, RAJAHMUNDRY . 4 . THE CIT(A) , VISAKHAPATNAM. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., VISAKHAPATNAM .