Smt. D.Lakshmi Ammal, Coimbatore V. ITO, Coimbatore

ITA 470/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61187 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAMAD ITYA IRS JT
• Assessee Lawyers: T BANUSEKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 470/MDS/2011 ASSESSMENT YEAR : 2007-08 SMT. D. LAKSHMI AMMAL 418, METTUPALAYAM ROAD, COIMBATORE 641 048. PAN-AARPL0297R (APPELLANT) VV VS. THE INCOME-TAX OFFICER, WARD-II(3), COIMBATORE-641018. (RESPONDENT) APPELLANT BY : SHRI T.BANUS EKAR, FCA RESPONDENT BY : SHRI VIKRAMAD ITYA, IRS, JT.CIT DATE OF HEARING : 21 ST MAY, 2012 DATE OF PRONOUNCEMENT : 22 ND MAY, 2012 O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE A SSESSMENT YEAR 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I AT COIMBATOR E DATED ITA 470 /11 :- 2 -: 27.1.2011 AND ARISES OUT OF THE ASSESSMENT OMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961. 2. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, S HE HAS DECLARED AN AGRICULTURAL INCOME OF ` 26,48,006/-. THIS INCOME CONSISTED OF INCOME FROM COCONUT AND ARECANUT CULTI VATION ALONG WITH THE INCOME FROM VEGETABLES. THE INCOME FROM S ALE OF VEGETABLES ALONE CONSTITUTED A MAJOR PORTION OF THE AGRICULTURAL INCOME. THE INCOME FROM VEGETABLES WAS REPORTED AT ` 22,12,549/-. 3. THE INCOME REPORTED FROM VEGETABLE CULTIVATION W AS NOT ACCEPTABLE TO THE ASSESSING AUTHORITY. HE OPINED T HAT AS THE AGRICULTURAL LAND OF THE ASSESSEE CONSISTED OF MAIN LY COCONUT AND ARECANUT FARMS, NO FREE SPACE IS AVAILABLE FOR CULT IVATING VEGETABLES TO THE EXTENT CLAIMED BY THE ASSESSEE. TO THIS OBJECTION, THE ASSESSEE REPLIED THAT SHE HAS CULTIV ATED VEGETABLES AS INTER CROPS. THE ASSESSING AUTHORITY POINTED OU T THAT WHEN THE VEGETABLES ARE CULTIVATED AS INTER CROPS, THE YIELD WOULD BE VERY LOW ESPECIALLY IN THE CASE OF PRODUCE OF TOMATO. T HE ASSESSING OFFICER CAUSED TO VERIFY THE LAND RECORDS AND ADANG AL DOCUMENTS ITA 470 /11 :- 3 -: OF THE ASSESSEE AVAILABLE IN THE VILLAGE OFFICE. H E ALSO MADE FIELD ENQUIRIES THROUGH THE INCOME-TAX INSPECTOR. THE VI LLAGE ADMINISTRATIVE OFFICER(VAO) HAS FILED CERTAIN CERTI FICATES AND HE WAS SUMMONED AND EXAMINED BY THE ASSESSING OFFICER. 4. AFTER EXAMINING ALL THE DETAILS COLLECTED BY HIM , THE ASSESSING OFFICER HELD THAT THE MAXIMUM AGRICULTURA L INCOME, WHATEVER MAY BE THE CROP WOULD BE NOT MORE THAN ` 60,000/- OR ` 70,000/- PER ANNUM. ON THE ABOVE GROUND, HE DECLIN ED TO ACCEPT THE INCOME STATED TO BE EARNED OUT OF VEGETABLE CUL TIVATION. THE AMOUNT OF ` 22,12,549/- WAS THUS, ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 5. IN FIRST APPEAL, THE COMMISSIONER OF INCOME-TAX( APPEALS) AGAIN EXAMINED THE CASE AND FOUND THAT THE ASSESSEE HAD POSSESSED SUFFICIENT EXTENT OF LAND TO CARRY ON AGR ICULTURAL ACTIVITIES AND SHE HAD REASONABLE INCOME FROM AGRIC ULTURE. BUT HE AGREED WITH THE ASSESSING OFFICER THAT THE INCOM E REPORTED BY THE ASSESSEE AGAINST THE SALE OF VEGETABLES PRODUCE CANNOT BE ACCEPTED AS SUCH. HE, THEREFORE, HELD THAT 35% OF THE INCOME REPORTED FROM VEGETABLE CULTIVATION MAY BE TREATED AS AGRICULTURAL ITA 470 /11 :- 4 -: INCOME IN THE HANDS OF THE ASSESSEE AND THE BALANCE 65% MAY BE TREATED AS TAXABLE INCOME. THE ASSESSEE IS NOT SATISFIED WITH THE ABOVE RELIEF GRANTED BY THE COMMISSIONER OF INC OME- TAX(APPEALS). THEREFORE, THE SECOND APPEAL HAS BEE N FILED BEFORE THE TRIBUNAL. 6. THE DETAILED GROUNDS RAISED BY THE ASSESSEE IN T HE PRESENT APPEAL READ AS BELOW : (2) THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) WENT WRONG IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER TO THE EXTENT OF 65% OF THE ADDIT IONS AMOUNTING TO ` 14,38,157/-. (3) THE LEARNED COMMISSIONER OUGHT TO HAVE NOTED THAT THE APPELLANT IS BASICALLY AN AGRICULTURIST HA VING EXPERIENCE OF MORE THAN 50 YEARS AND HAVE UTILIZED AGRICULTURAL LANDS TO THE EXTENT OF AROUND 14 ACRES THROUGHOUT THE YEAR FOR AGRICULTURAL OPERATIONS. H E OUGHT TO HAVE CONCLUDED THAT THE APPELLANT COULD NO T HAVE GROWN SUFFICIENT VEGETABLES TO EARN THE INCOME OFFERED BY HER. ITA 470 /11 :- 5 -: (4) THE LEARNED COMMISSIONER AFTER HAVING ASCERTAINED/CONFIRMED THAT THE ASSESSEE HAD SUFFICIENT FERTILE LANDS, NECESSARY INFRASTRUCTURE SUCH AS BORE-WELLS, MAN-POWER ETC., TO CARRY ON AGRICULTURA L OPERATIONS ON A REASONABLE SCALE, THE EXPERIENCE OF YOUR APPELLANT OF MORE THAN 50 YEARS IN THE AGRICUL TURAL FIELD, ETC.. OUGHT TO HAVE ACCEPTED THE SUBMISSIONS OF THE APPELLANT AND DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. (5) THE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIATED THE FACT HIGHLIGHTED BY THE APPELLANT I N THEIR SUBMISSIONS THAT THE REPORT FILED BY THE A.O. BASED ON THE INSPECTION BY THE INSPECTORS OF INCOME TAX WAS VAGUE AND ARBITRARY AND CONSEQUENTLY SHOULD HAVE REJECTED THE REPORT AND UPHELD THE CLAIM OF TH E APPELLANT. (6) THE LEARNED COMMISSIONER WENT WRONG IN IGNORING THE REPORT/INFORMATION OF THE HORTICULTURE CONSULTA NT WHO HAS VERY CLEARLY BROUGHT OUT THE POTENTIAL OF T HE ITA 470 /11 :- 6 -: LAND BROUGHT UNDER CULTIVATION AFTER TAKING INTO CONSIDERATION THE EXTENT OF LAND, FERTILITY OF THE LAND AND THE INFRASTRUCTURE AVAILABLE FOR THE AGRICULTURAL OPERATIONS. (7) THE LEARNED COMMISSIONER ERRED IN RELYING TOTAL LY ON THE FACT THAT THERE WERE NOT ADEQUATE ENTRIES AN D RECORDINGS IN THE ADANGAL REGISTER OF THE VAO. HE OUGHT TO HAVE NOTED THAT THE VAO ENTRY DETAILS IN T HE ADANGAL REGISTER ARE BASED ON THE SUBMISSIONS OF TH E AGRICULTURISTS AND GENERALLY NOT BASED ON THE PHYSI CAL INSPECTION BY THEM OF THE LANDS OF THE AGRICULTURIS TS. HE OUGHT TO HAVE APPRECIATED THAT YOUR APPELLANT FOLLOWED THE GENERAL PRACTICE OF NOT INFORMING THE VAO PERIODICALLY ON THE VARIOUS PRODUCE FROM HER LANDS EVEN THOUGH THERE IS A PROCEDURAL REQUIREMENT FOR T HE SAME. (8) HE OUGHT TO HAVE NOTED THAT MERE LACK OF ENTRIE S IN THE ADANGAL REGISTER CANNOT LEAD TO A CONCLUSION TH AT THE INTER CROPS COULD NOT HAVE BEEN GROWN IN THE FE RTILE ITA 470 /11 :- 7 -: LANDS ESPECIALLY WHEN THE SOLE PROFESSION OF THE APPELLANT IS OF AGRICULTURE AND THE HORTICULTURE CONSULTANT HAD CLEARLY OPINED ON THE POTENTIAL OF T HE LAND. (9) THE LEARNED COMMISSIONER HAVING OBSERVED THAT THE VEGETABLES SAID TO HAVE BEEN GROWN BY THE APPELLANT ARE NOT SEASONAL CROPS AND CAN BE GROWN THROUGHOUT THE YEAR AS INTER CROPS AND ALSO HAVING OBSERVED THAT THE FARM HAD ADEQUATE INFRASTRUCTURE FACILITIES AND ALSO NOTE THE INTEREST AND PASSION I N AGRICULTURAL OPERATIONS OF THE APPELLANT, SHOULD HA VE ACCEPTED THE CLAIM OF YOUR APPELLANT RATHER THAN GRANTING A MARGINAL RELIEF OF 35% OF THE ADDITIONS MADE BY THE ASSESSING OFFICER. 7. WE HEARD SHRI T. BANUSEKAR, THE LEARNED CHARTERE D ACCOUNTANT APPEARING FOR THE ASSESSEE AND SHRI VIK RAMADITYA, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX APPEAR ING FOR THE REVENUE. ITA 470 /11 :- 8 -: 8. AFTER GOING THROUGH THE CASE, WE FIND THAT THERE ARE NO DISPUTES REGARDING THE PHYSICAL FACTS OF THE CASE. THE ASSESSING OFFICER ACCEPTS THAT THE ASSESSEE IS HAVING REPORTE D EXTENT OF LAND AVAILABLE FOR AGRICULTURAL PURPOSES. THE ASSE SSING OFFICER HAS ALSO NOT DISPUTED ON THE FACT THAT THE ASSESSEE HAD ENGAGED IN EXTENSIVE CULTIVATION IN HER AGRICULTURAL LAND. THE OBJECTION OF THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS INFL ATED THE INCOME ATTRIBUTABLE TO THE CULTIVATION OF VEGETABLES. 9. THE EXPLANATION OF THE ASSESSEE WAS THAT APART F ROM THE COCONUT AND ARECANUT CULTIVATION, THE ASSESSEE WAS ALSO CULTIVATING VEGETABLES LIKE BANANA, BANANA LEAVES, TOMATO, CORIANDER LEAVES ETC. IT IS WITH REFERENCE TO THE ABOVE CROPS THAT THE ASSESSING AUTHORITY HAS MADE CERTAIN ENQUIRIES IN THE CONCERNED VILLAGE OFFICE. THE ASSESSEE HERSELF HAD PRODUCED A CERTIFICATE FROM THE VAO THAT SHE HAS BEEN CULTIVAT ING ALL THE VEGETABLES EXPLAINED BY HER. WHEN THE INCOME-TAX I NSPECTOR WENT FOR FIELD VERIFICATION, HE REPORTED THAT THE A SSESSEE WAS CULTIVATING ONLY COCONUTS AND ELEPHANT GRASS. WHEN THE VAO WAS SUMMONED AND EXAMINED BY THE ASSESSING OFFICER, HE STATED THAT THE ASSESSEE HAS BEEN CULTIVATING ONLY COCONUTS AND ARECANUTS ITA 470 /11 :- 9 -: AND SOME CURRY LEAVE PLANTS HERE AND THERE. THEREF ORE, IT IS SEEN THAT THE REPORT COLLECTED BY THE INCOME-TAX INSPECT OR FROM THE FIELD ENQUIRY AND THE VAOS STATEMENT GIVEN TO THE ASSESS ING AUTHORITY ARE NOT TALLYING EACH OTHER. THIS CONTRADICTION HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER WHILE REJECTING T HE CONTENTIONS OF THE ASSESSEE. THE ASSESSING OFFICER HIMSELF SAY S THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT IN SUPP ORT OF THE AGRICULTURAL OPERATIONS CARRIED OUT BY HER. SHE HA S ALSO PRODUCED SALE BILLS, PURCHASE BILLS FOR MANURE AND OTHER ITE MS, THE DETAILS OF WAGE PAYMENTS ETC. THE ASSESSEE IS SELLING THE VEG ETABLES TO M/S. SREE ANNA POORNA SREE GOWRISANKAR HOTELS PVT. LTD. OWNED BY HER HUSBAND. THE SALE PRICE WAS EXAMINED BY THE ASSESSING OFFICER AS FURNISHED BY THE ASSESSEE AND NO DISPARI TY WAS POINTED OUT. 10. MOREOVER, WHEN WE SUM UP ALL THE EVIDENCES AVAI LABLE BEFORE US, WE FIND THAT THE ASSESSEE HAS MAINTAINED THE BOOKS OF ACCOUNT, DETAILS AND DOCUMENTS TO SUPPORT HER AGRIC ULTURAL OPERATIONS. THE ASSESSING OFFICER HAS ERRED IN NOT RECONCILING THE CONTRADICTION IN THE STATEMENT REPORTED BY THE INCO ME-TAX INSPECTOR AND THE VAO. IN THESE CIRCUMSTANCES, WE ARE OF THE ITA 470 /11 :- 10 -: VIEW THAT THE ASSESSING OFFICER HAS ERRED IN REJECT ING THE ENTIRE AGRICULTURAL INCOME RELATING TO VEGETABLE CULTIVATI ON AND THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS NOT GRANTED SUFFICIENT RELIEF IN THIS REGARD. BUT AT THE SAME TIME, THE O BSERVATIONS MADE BY THE ASSESSING OFFICER DO NOT PERMIT US TO ACCEPT THE CONTENTIONS OF THE ASSESSEE AS SUCH. WE DO NOT BEL IEVE THAT THE ASSESSEE HAS NOT AT ALL INFLATED HER INCOME FROM VE GETABLE CULTIVATION. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IT IS NECESSARY IN THE INTEREST OF JUSTICE TO CLOSE THIS FILE AFTER MAKING REASONABLE ESTIMATE OF AGRICULTURAL INCOME ACCOUNTA BLE IN THE HANDS OF THE ASSESSEE. THE DISPUTE IS WITH REFEREN CE TO THE INCOME FROM VEGETABLE PRODUCES. WE DIRECT THAT 60% OF THE INCOME REPORTED BY THE ASSESSEE FROM VEGETABLE CULT IVATION MAY BE TREATED AS AGRICULTURAL INCOME IN THE HANDS OF T HE ASSESSEE AND THE REMAINING 40% INCOME REPORTED BY THE ASSESS EE OUT OF VEGETABLE CULTIVATION WILL BE TREATED AS TAXABLE IN COME IN THE HANDS OF THE ASSESSEE. 12. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA 470 /11 :- 11 -: ORDER PRONOUNCED ON TUESDAY, THE 22 ND OF MAY, 2012 AT CHENNAI. SD/- SD/- (V.DURGA RAO) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED THE 22 ND MAY, 2012 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR