Motury Kanakeswara Rao, , Eluru V. The Income Tax Officer, Ward-1, Eluru

ITA 512/VIZ/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9262 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2002-2003
• Appeal Filed On: 04-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice
• Section: 201; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO S . 512 & 513 / VIZ /201 8 (ASST. YEAR : 20 02 - 0 3 & 200 3 - 0 4 ) MOTURI KANAKESWARA RAO, D.NO. 1 - 4 - 9/1, WESTERN STREET, GANDHI MAIDHANAM, ELURU. V S . IT O , WARD - 1, ELURU . PAN NO. ADIPM 1465 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 24 / 0 9 /201 9 . DATE OF PRONOUNCEMENT : 27 / 0 9 /201 9 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER THESE APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 12 , HYDERABAD , BOTH DATED 24 /0 5 /201 8 FOR THE ASSESSMENT YEARS 200 2 - 0 3 & 200 3 - 0 4 . SINCE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. THERE IS A DELAY OF 09 DAYS IN FILING EACH OF THE APPEAL . THE 2 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) ASSESSEE HAS FILED AN AFFIDAVIT ALONG WITH MEDICAL CERTIFICATE . WE FIND THAT THERE IS A SUFFICIENT CAUSE TO FILE THE APPEAL S BELATEDLY . THEREFORE, IT IS A FIT CASE TO CONDONE THE DELAY. ACCORDINGLY, DELAY IS CO NDONED. 3 . THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO ESTIMATION OF INCOME IN RESPECT OF LEASE D FISH TANKS CONSEQUEN T DIRECTION GIVEN BY THE LD. CIT(A) PASSED BY THE ASSESSING OFFICER DATED 07/07/2015 CONSTITUTES MISTAKE APPARENT ON RECORD OR NOT? 4 . IN THIS CASE, LD. CIT(A) BY ORDER DATED 22/05/2015 DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME OF THE LEASED FISH TANKS SUBJECT TO PRODUCE THE EVIDENCE BY THE ASSESSEE. THE ASSESSEE HAS NOT PRODUCED SUFFICIENT EVIDENCE TO ESTABLISH THAT HE H AS TAKEN FISH TANKS ON LEASE , THEREFORE , THE ASSESSING OFFICER AFTER EXAMINING THE MATERIAL AVAILABLE ON RECORD , FOUND SO MANY DEFECTS AND ASKED THE ASSESSEE TO APPEAR BEFORE HIM BY FILING THE RELEVANT DETAILS . THE ASSESSEE HAS NOT FILED SUFFICIENT EVIDENCE TO SUBSTANTIATE THAT HE HAS TAKEN FISH TANKS ON LEASE , THEREFORE, THE ASSESSING OFFICER ESTIMATED THE INCOME AS PER THE DIRECTION S GIVEN BY THE LD. CIT(A) BY TREATING IT AS HIS OWN LAND. SUBSEQUENTLY , THE ASSESSEE HAS FILED A PETITION U/SEC.154 BEFORE THE ASSESSING OFFICER TO RECTIFY THE MISTAKE COMMITTED IN THE ORDER DATED 07/07/2015. THE ASSESSING OFFICER BY CONSIDERING THE DETAILS AND 3 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) THE PETITION FILED BY THE ASSESSEE AND AFTER GIVING A REASONABLE OPPORTUNITY , GAVE A CATEGORICAL FINDING THAT THERE IS NO MISTAKE APPARENT ON RECORD IN THE ORDER DATED 07/07/2015 AND BY FOLLOWING THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF T.S. BALARAM, ITO VS. M/S. VOLKART BROTHERS (82 ITR 50) DISMISSED THE PETITION FILE D BY THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : ASSESSEE'S PETITION HAS BEEN EXAMINED CAREFULLY WITH RESPECT TO THE FACTS OF THE CASE AS WELL EVIDENCE ENCLOSED WITH THE PETITION. THE EVIDENCE IS IN THE FORM OF PHOTO COPY OF FIVE SHEETS AGREEMENT DATED 17.04.2000 ENTERED INTO BY THE ASSESSEE WITH 38 INDIVIDUALS FOR PAYMENT OF RS.7,84,000/ - PER ANNUM TOWARDS LEASE RENTALS FOR 49 ACRES OF FISH PONDS. AS PER PARA - 3 OF THE SAID LEASE AGREEMENT, ASSESSEE HAS PAID RS.7,84,000/ - TOWARDS FIRST YEAR LEASE RENTALS ON THE DATE OF AGREEMENT I . E. ON 17.04.2000. ASSESSEE RELIED ON THE ENDORSEMENT APPEARING ON THE REAR SIDE OF THE FIFTH PAGE OF THE AGREEMENT AND CLAIMED THE SAME AS EVIDENCE FOR PAYMENT OF LEASE RENT ALS. AS VERIFIED FROM THE PAGE, THE DESCRIPTION IS IN LOCAL VERNACULAR, TRUE TRANSLATION OF WHICH IS AS UNDER: 'RECEIVED LEASE OF THIS AGREEMENT UP TO 10.04.2002' THIS STATEMENT WAS SIGNED BY ONLY NINE PERSONS WHEREAS AGREEMENT WAS SIGNED BY PERSONS. QUANTUM OF AMOUNT RECEIVED WAS NOT M EN TIONED THEREIN; DATE OF RECEIPT OF THE AMOUNT WAS NOT MENTIONED. THE AGREEMENT AS WELL THE ENDORSEMENT RELIED ON BY THE ASSESSEE IS A PHOTO COPY. ASSESSEE HAS NOT FURNISHED THE ORIGINAL FOR MY VERIFICATION. IN VIEW OF THE ABOVE DEFECTS, IT HAS BEEN OPINED THAT THE SAID PETITION DESERVES REJECTION. HOWEVER, IN THE INTEREST OF NATURAL JUSTICE, AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO THE ASSESSEE VIDE THIS OFFICE NOTICE DT.2001 .2016 AND INFORMED THAT HIS CASE IS POS TED FOR HEARING AT 11.30 A.M. ON 27.01 .2016 AND REQUESTED T O APPEAR EITHER IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE AND FILE HIS OBJECTIONS, IF ANY. HE WAS INFORMED THAT IN CASE HE IS UNABLE/DO NOT INTEND TO APPEAR ON THE GIVEN DATE, TO FILE HIS OBJECTIONS IN WRITING SO AS TO REACH ME BY THE GIVEN DATE AND TIME, 4 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) WHICH WILL BE TAKEN INTO COGNIZANCE, BEFORE PASSING SUCH ORDER. THOUGH THE NOTICE WAS SERVED AT THE, GIVEN ADDRESS WELL BEFORE THE GIVEN DATE, ASSESSEE HAS NOT CHOSEN EITHER TO APPEAR IN P ERSON OR TO FILE ANY OBJECTIONS IN WRITING. AS SUCH THE APPLICATION FILED BY THE ASSESSEE IS DISPOSED OFF ACCORDINGLY AS UNDER PARA 5.3 OF THE ORDER OF THE LEARNED CIT(APPEALS) IS REPRODUCED BELOW: 'TAKING INTO CONSIDERATION ALL THE FACTS, I AM OF THE VIEW THAT IT WOULD BE APPROPRIATE AND REASONABLE TO ESTIMATE INCOME FROM OWN LANDS AT LS.18,000/ - FOR AY 2002 - 03 TO 2004 - 05 AND AT S.20,000/ - FOR AY 2005 - 06 TO AY 2007 - 08. IN RESPECT OF TANKS TAKEN ON LEASE FROM FAMILY MEMBERS, THE ASSESSING OFFICER IS, DIRECTED TO ESTIMATE THE INCOME BY ALLOWING DEDUCTION TOWARDS LEASE RENT ACTUALLY PAID TO THE FAMILY MEMBERS FROM THE INCOME OF RS.18,000/ - FOR AY 2002 - 03 TO AY 2004 - 05 AND PS.20,000/ - FOR AY 2005 - 06 TO AY 2007 - 08, AD DETERMINED ABOVE F OR OWN KINDS, SUBJE CT HOWEVER THAT THE INCOME SO DETERMINED SHALL NOT BE LESS THAN THE - INCOME ADMITTED BY THE ASSESSEE. IF THERE IS NO EVIDENCE FOR PAYMENT OF LEASE RENT TO FAMILY MEMBERS, THE INCOME AS ESTIMATED IN RESPECT OF OWN TANKS MAYBE ADOPTED: IN RESPECT OF TANKS TA KEN ON LEASE FROM OTHER ALSO, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE INCOME IN THE ABOVE MANNER. HOWEVER, IN CASE NO TANGIBLE EVIDENCE WAS AVAILABLE FOR THE PAYMENT OF LEASE RENT, THE INCOME MAY BE ESTIMATED AT RS.15,000/ - PER WATER SPREAD AREA' . CRUX OF THE ABOVE ORDER AS FOR AS INCOME FROM TANKS TAKEN ON LEASE FROM OUTSIDERS IS CONCERNED, TO ESTIMATE AT RS.18,000/ - PER ACRE AND TO ALLOW LEASE RENT PAID IF TANGIBLE EVIDENCE FOR SUCH PAYMENT IS AVAILABLE AND OTHERWISE, TO ESTIMATE AT RS. 15,000/ - PER ACRE OF WAFER SPREAD AREA. IN VIEW OF THE ABOVE, THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER , GIV ING EFFECT TO THE ORDER OF THE H ONOURABLE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ABOVE MENTIONED APPEAL ORDER IS REASONABLE AND AS PER THE DIRECTIONS OF THE APPELLATE ORDER. AS SUCH, THERE IS NO MISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF S EC.1 54 OF THE ACT. EVEN OTHERWISE ALSO, ASSESSEE'S THIS REQUES T CANNOT BE CONCEDED UNDER SEC.1 54 SINCE, SECTION 154 ALLOWS RECTIFICATION OF MISTAKE WHICH IS A PATENT MISTAKE APPARENT FRO M TH E. BARE RECORD. AS HELD BY THE H ONOURABLE APEX COURT IN THE CASE OF T.S. BALARAM, ITO VS. VOLKART BROTHERS REPORTED IN 82 ITR 50, A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING 5 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) WHICH CAN BE ESTABLISHED BY LONG DRAWN PROCESS OF REASONING ON POINT ON WHICH THERE MAY CONCEIVABLE TWO OPINIONS. IN THE PRESENT CASE, THERE IS NO EVIDENCE ON RECORD T O PROVE THAT THE ASSESSEE HAS PAID LEASE RENTALS TO OUTSIDERS FOR THE YEAR UNDER CONSIDERATION. FURTHER, THE EVIDENCE RELIED ON BY THE ASSESSEE IS NOT A TANGIBLE EVIDENCE AS REQUIRED BY THE H ONOURABLE COMMISSIONER OF INCOME TAX (APPEALS). HENCE THE PETITI ON FILED BY THE ASSESSEE IS HEREBY REJECTED. IF THE ASSESSEE INTEND TO APPEAL AGAINST THIS ORDER, HE 'MAY PRESENT AN APPEAL UNDER PART A OF CHAPTER XX OF THE INCOME TAX ACT, 1961, TO THE COMMISSIONER OF INCOME TAX (APPEALS), RAJAHMUNDRY WITHIN THIRTY DAYS OF THE RECEIPT OF THIS ORDER, IN FORM NO.35, DULY STAMPED AND VERIFIED AS LAID, DOWN IN THAT FORM. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6 . ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 7 . LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ONCE THERE IS AN AGREEMENT AND WHICH SHOWS THAT ASSESSEE HAS TAKEN THE LAND ON LEASE, THE ASSESSING OFFICER OUGHT TO HAVE BE EN ALLOWED THE DEDUCTION BY CONSIDERING THAT THE ASSESSEE HAS TAKEN THE FISH TANKS ON LEASE AND SUBMITTED THAT THE ORDER PASSED BY THE LD.CIT(A) MAY BE REVERSED. 8 . ON THE OTHER HAND, LD.DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 6 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) 10 . IN THE 154 ORDER PASSED BY THE ASSESSING OFFICER DATED 04/04/2016 , HE GAVE A CATEGORICAL FINDING THAT THERE IS NO MISTAKE APPARENT ON RECORD TO RECTIFY HIS ORDER PASSED ON 07/07/2015 . WE HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE ASSESSING OFFICER AND FIND THERE IS NO MISTAKE APPARENT ON RECORD COMMITTED BY THE ASSESSING OFFICER TO RECTIFY THE ORDER . ON APPEAL, T HE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : - 6.3 L HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE ORDE R OF THE ASSESSING OFFICER, AND THE WRITTEN SUBMISSIONS OF THE AR. AL L T HE CONTENTIONS OF TH E APPE L LANT HAVE BEEN EFFECTIVELY DEALT WITH BY THE AS S ESS I NG OFFICER IN THE ORDER U/S154, REPRODUCED IN PARA 6.1 A BOVE. AS POINT OUT BY THE AO, THE BASE AGRE E ME N T FURNISHED BY THE APPELLANT AS EV IDENCE SUFFERS FROM SEVERAL DEFECTS. THE STATE M ENT WHICH THE APPELLANT HAS FURNISHED IS SIGNED ONLY BY 9 PERSONS, WHEREAS THE LEASE AGREEMENT HAS BEEN ENTERED INTO WITH 38 PERSONS. NEITHER QUANTUM OF AMOUNT RECEIVED NOR DATE OF RECEIPT OF AMOUNT IS MENTIONED THEREIN. MOREO V ER, IN S PITE OF AN OPPORTUNITY OF BEING HEARD GIVEN BY THE ASSESSING OFFICER, THE APPELLANT HAS CHOSEN: NOT TO ATTEND. THE DIRECTIONS OF THE CIT(A) ON THE ISSUE WERE QUITE C ATEGORICAL: IN RESPECT OF TANKS TAKEN ON LEASE FROM OTHER ALSO, THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE INCOME IN THE ABOVE MANNER. HOWEVER, IN CASE NO TANGIBLE EVIDENCE WAS AVAILABLE FOR THE PAYMENT OF LEASE RENT, THE INCOME MAY BE ESTIMATED AT RS.15.000/ - PER WATER SPREAD AREA . IN VIEW THEREOF, I FIND NO REASON TO INTERFERE WITH THE ASSESSING OFFICERS ORDER. THE GROUNDS RELATED TO THIS ISSUE ARE DISMISSED. 11 . AFTER GONE THROUGH THE ORDER OF THE LD. CIT(A) , WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY HIM. THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 7 ITA NO S . 512 & 513/VIZ/2018 ( MOTURI KANAKESWARA RAO ) 12. IN REGARD TO ITA NO. 513/VIZ/2018 IS CONCERNED, THE FACTS INVOLVED IN THIS APPEAL ARE SIMILAR TO THE FACTS OF ITA NO.512/VIZ/2018 . THEREFORE, OUR DECISION ABOVE SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 13. IN THE RESULT, APPEAL S FILED BY THE ASSESSEE A R E DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 7 T H DAY OF SEPT . , 201 9 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 7 T H SEPTEMBER , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE MOTURI KANAKESWARA RAO, D.NO. 1 - 4 - 9/1, WESTERN STREET, GANDHI MAIDHANAM, ELURU. 2. THE REVENUE ITO, WARD - 1, ELURU. 3. THE PR. CIT , RAJAMAHENDRAVARAM. 4. THE CIT(A) - 12, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.