Smt Aalimilli Venkata Jyothi., Eluru V. The ITO, Ward-2., Eluru

ITA 518/VIZ/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1702 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 19-12-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGHDR
• Keywords: Business income
• Section: 69B

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.518 /VIZAG/2006 ASSESSMENT YEAR: 2003-04 AALIMILLI VENKATA JYOTHI, ELURU VS. ITO, WARD-2, ELURU (APPELLANT) (RESPONDENT) PAN NO. AFAPV 8178B APPELLANT BY: SHRI GVN HARI, CA RESPONDENT BY: SHRI D S SUNDER SINGH,DR ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9.10.2006 PASSED BY THE LD CIT (A) RAJAHMUNDRY AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE ARE STATED BELOW: 2.THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF RS.192910/- TOWARDS AGRI CULTURAL INCOME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE DELETED THE ENTIRE ADDITION OF RS.84,00 0/- TOWARDS FISH COMMISSION BUSINESS INCOME INSTEAD OF GIVING PART RELIEF OF RS.50,000/- 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.3,57,946 /- TOWARDS EXCESS OF ASSETS OVER LIABILITIES. PAGE 2 OF 5 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 AD MITTING A TOTAL INCOME OF RS.66,000/- AND AGRICULTURAL INCOME OF RS.4.00 LAKH S. THE TOTAL INCOME OF RS.66,000/- DECLARED BY THE ASSESSEE WAS RELATED TO THE INCOME FROM FISH BROKERAGE, WHICH WAS ESTIMATED AT RS.5500/-P.M. SIN CE THE ASSESSEE DID NOT MAINTAIN ANY RECORD TO PROVE THE EARNING OF RS.66,0 00/- FROM FISH BROKERAGE, THE AO ESTIMATED THE INCOME NET OF EXPENSES AT RS.1,50, 000/-. THE LD CIT (A) REDUCED THE SAID INCOME OF RS.1.00 LAKH. WITH REGAR D TO THE AGRICULTURAL INCOME THE ASSESSEE CLAIMED THAT SHE IS IN POSSESSION OF 1 2.05 ACRES OF AGRICULTURAL LAND AND FURTHER 21.33 ACRES WERE TAKEN ON LEASE. IN SUP PORT OF AGRICULTURAL HOLDINGS, THE ASSESSEE FILED COPIES OF CERTIFICATES OBTAINED FROM VILLAGE ADMINISTRATIVE OFFICER AND MANDAL REVENUE OFFICER. HOWEVER, THE AS SESSEE COULD NOT PRODUCE DETAILS SUCH AS SALE BILL, INVOICES FOR PURCHASE OF SEEDS, FERTILIZERS, PESTICIDES ETC., HENCE THE AO ARRIVED AT AN AGRICULTURAL INCOME OF R S.1,89,000/- AS DETAILED BELOW: ON A GENERAL OBSERVATION OF MANY OF THE COMPARABLE CASES FOUND IN THESE AREAS THE YIELD OF PADDY IN RESPECT OF 1 ST CROP IN A YEAR IS OF 25 BAGS. WHEREAS THE SECOND CROP IS ABOUT 35 BAGS. THE EXPENDITURE INVOLVED IN AGRICULTURAL OPERATION WOULD GENERALLY RANGE ABOUT 40% OF THE TOTAL YIELD OR IN THE ALTERNATIVE THE FIRST CROP CAN BE TAKEN FOR EXPENSES LEAVING A NET INCOME EQUAL TO THE VALUE OF SECOND CROP. THAT IS TO SAY IN A YEAR THE YIELD WOULD BE AROUND 35 BAGS PER ACRE WITH 65 TO 75 KGS OF PADDY PER BAG. THIS IS AFTER S ETTING OF THE EXPENSES LIKE PADDY SEED, FERTILIZERS, PESTICIDES, WATER PROVISION, POWER CONSUMPTION, LABOUR IN RESPECT OF EVERY ASPEC T OF CULTIVATION AND TRANSPORT. THIS EXCLUDES ANY BROKERAGE PAID TO MIDDLE MAN WHEN NOT SOLD DIRECTLY TO A MILLER AND ANY LEASE PA YABLE TO LAND LORD. TAKING INTO ACCOUNT THESE FACTORS THE ASSESSEE WHO IS THE OWNER HIMSELF SHOULD GET AN AGRICULTURAL INCOME NET OFF E XPENSES AT 35 BAGS PER ACRE. HENCE THE INCOME FROM AGRICULTURAL C AN AT BEST BE 35 BAGS X 12.05 ACRES421.75 X 65 KGS PER ACRE 100 KGS 274QUINTALS X RS.530 PER QUINTAL HIGHEST PREVAILING RATE AT THE R ELEVANT TIME) 145220/-. SINCE SHE COULD NOT PRODUCE ANY RECEIPTS IN SUPPORT OF SALE OF PADDY TO ANY MILLER, SHE MUST HAVE SOLD IT THROUGH A MIDDLEMAN, WHICH COSTS A FURTHER EXPENDITURE BY WAY OF LOOSING A COMMISSION TO HIM ATLEAST TO THE EXTENT OF RS.7261/ -. TAKING ROUNDLY PAGE 3 OF 5 THE NET INCOME FROM AGRICULTURAL WOULD AT BEST BE R S.138000 FROM HER OWN LANDS. FURTHER SHE HAS CLAIMED THAT ABOUT ACRE 21.33 CENTS OF LAND TAKEN ON LEASE AND SHE HAS TO PAY RS.9000/- PER ACRE TOWA RDS LEASE. BUT THE ACTUAL LAND HOLDINGS IS ONLY 20.83 AS CAN BE SE EN FROM THE ADANGAL TAKEN ON 14.11.2001 AND THE CERTIFICATE TAK EN FROM VAO ON 14.11.2001 ALSO REFLECTS THE LAND HOLDINGS AT 20.83 . THEREFORE, THE LEASED LAND HOLDINGS ARE TAKEN AT ONLY 20.83 ACRES AND NOT AT 21.33 ACRES. ACCORDINGLY THE INCOME ON ACCOUNT OF THIS AC TIVITY IS COMPUTED AS UNDER. 20.83 X 35 BAGS X 65 KGS 100 KGS 485 QUINTALS X R S.530 PER QUINTAL RS.2,51,158- BROKERAGE COMMISSION AT 5% 1 2,558 RS.2,38,500/- - RS.1,87,470/- (RS.9000 LEASE PER AC RE X 20.83 ACRES)- 51,030. THE NET INCOME DERIVED OUT OF LEASE /HOLD AGRICULTURAL LANDS CAN THEREFORE BE ONLY RS.51,030/-. THUS, THE AGGREGATE AGRICULTURAL INCOME CAN BE 1,89,030/- OR ROUNDLY RS .1,89,000 AGAINST WHICH THE ASSESSEE ADMITTED A RECEIPT OF RS.1,00,00 0 WHICH IS QUITE EXCESSIVE. HENCE THE EXCESS INCOME RS.2,11,000/- IS TREATED AS HER INCOME FROM OTHER SOURCES AND IS BROUGHT TO TAX RS. 2,11,,000/- 4. THE LD CIT (A) ENHANCED THE AGRICULTURAL INCOME TO RS.2,07,090/- BY TAKING THE AVERAGE AGRICULTURAL INCOME AT REST. 12,000/- F ROM OUT OF THE AGRICULTURAL LAND OWNED BY THE ASSESSEE AND NET INCOME OF RS.3000/- F ROM OUT OF THE LAND TAKEN ON LEASE. DURING THE COURSE OF THE ASSESSMENT PROCEED INGS THE ASSESSEE FILED A ROUGH BALANCE SHEET WHEREIN THE LIABILITY SHOWN EXCEEDED THE VALUE OF ASSETS BY RS.11.52 LAKHS. SUBSEQUENTLY, THE ASSESSEE FILED ANOTHER REV ISED ROUGH BALANCE SHEET, WHEREIN THE EXCESS OF ASSET OVER LIABILITIES STOOD AT RS.5, 27,946/-. ACCORDING TO AO, THIS DIFFERENCE IN BALANCE SHEET IS ASSESSABLE TO TAX. HOWEVER, THE AO GAVE A SET OFF OF RS.1.70 LAKH AND ADDED BALANCE AMOUNT OF RS.3,57,94 6/- AS INCOME FROM OTHER SOURCES. THE LD CIT (A) CONFIRMED THE SAID ADDITION . AGGRIEVED BY THE ORDER OF LD CIT(A). THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WITH REGARD TO THE AGRICULTURAL INCOME, IT IS A FACT THAT THE ASSE SSEE COULD PRODUCE ONLY CERTIFICATE FROM THE VAO AND MRO AND THE ASSESSEE COULD NOT PRO DUCE ANY OTHER EVIDENCES LIKE SALE BILL, BILL FOR PURCHASE OF SEEDS, FERTILIZERS, PESTICIDES ETC., HENCE THE AO RESORTED PAGE 4 OF 5 TO ESTIMATE THE AGRICULTURAL INCOME ON A RATIONAL B ASIS, WHICH WAS FOUND REASONABLE BY LD CIT (A). HOWEVER, AGAINST AN AVERAGE AGRICULT URAL INCOME OF RS.11,497/- PER ACRE WORKED OUT BY THE AO, THE LD CIT (A) ENHANCED TO RS.12,000/- PER ACRE. IN OUR OPINION, THE TAX AUTHORITIES HAVE ARRIVED AT THE AG RICULTURAL INCOME ON A REASONABLE BASIS AND THE ASSESSEE COULD NOT FURNISH ANY MATERI AL TO CONTROVERT THE WORKINGS MADE BY THE AO. HENCE, WE DO NOT FIND ANY NECESSIT Y TO INTERFERE WITH THE DECISION OF THE LD CIT (A). 5.1 SIMILARLY WITH REGARD TO THE FISH BROKERAGE INCOME THE ASSESSEE COULD NOT FURNISH ANY DETAIL. HENCE THE SAID INCOME WAS INCRE ASED BY RS. 34,000/- BY THE LD CIT (A). HOWEVER, THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WAS TREATED AS INCOME FROM OTHER SOURCES TO THE TUNE OF RS.192910/ -. HENCE IN OUR OPINION THE INCREASE MADE IN THE FISH BROKERAGE INCOME MAY BE T ELESCOPED WITH THE AGRICULTURAL INCOME PARTIALLY TREATED AS INCOME FROM OTHER SOURC ES. IN OUR VIEW, THIS WOULD MEET THE ENDS OF JUSTICE AND WE ORDER ACCORDINGLY. IN VI EW OF THIS NO SEPARATE ADDITION IS REQUIRED TO BE MADE FOR FISH BROKERAGE INCOME. 6. WITH REGARD TO THE ADDITION OF RS.3,57,946/- PER TAINING TO DIFFERENCE IN BALANCE SHEET, IT IS TO BE NOTED THAT THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNTS. THE TRIAL BALANCE SUBMITTED BY THE ASSESSEE WHICH I S TITLED AS ROUGH TRIAL BALANCE, WHICH IS NOT SUPPORTED BY ANY BOOKS OF ACCOUNTS. H ENCE IN OUR OPINION NO RELIANCE CAN BE PLACED ON THE SAID TRIAL BALANCE. IN ANY CASE AS CONTENDED BY THE LD AR ALL THE ASSETS SHOWN IN THE ROUGH TRIAL BALANCE WERE PURCHA SED IN THE EARLIER YEARS. IN THAT CASE NO ADDITION CAN BE MADE DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF THE SAID ASSETS U/S 69B OF THE ACT. HENCE THE SAID ADDI TION IS LIABLE TO BE DELETED AND WE ORDER ACCORDINGLY. 7. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF SMC BENCH PASSED IN HER HANDS IN ITA NO.517/V/06 RELATING TO THE ASSESSMENT YEAR 2002-03 WHEREIN THE CONTENTION OF THE ASSESSEE THAT IN THE ABSENCE OF A NY EVIDENCE TO SHOW THAT THE PAGE 5 OF 5 ASSESSEE HAS EARNED ADDITIONAL INCOME IN THE CASE O F AGRICULTURAL INCOME, THE ADDITION ARE NOT TO BE MADE MERELY BECAUSE THE CLAIM OF AGRI CULTURAL INCOME WAS REJECTED BY THE AO. UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE WE ARE UNABLE TO AGREE WITH THE DECISION OF THE SMC BENCH FOR THE REASON THAT T HE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNTS AND FURTHER THE ASSESSEE WAS NOT ABLE TO FILE STATEMENT OF AFFAIRS BY PROPERLY DISCLOSING THE ASSETS AND LIABILITIES. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. PRONOUNCED IN THE OPEN COURT ON 21.10.2009 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, 21 ST OCTOBER, 2009. COPY TO 1 MS. AALIMILLI VENKATA JYOTHI, D.NO. 2-51/1, KATT A SUBBA RAO THOTA, ELURU, W.G DISTT. AP 2 THE ITO WARD-2 ELURU 3 THE CIT RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM