Rakesh Kumar Tiwari, V. Income Tax Officer-I,

ITA 7/JAB/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5720 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D R LATHORIYA
• Keywords: Reopening of assessment; Unexplained investment; Principle of natural justice
• Section: 147

Judgement Text

1 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BEFORE S/SHRI N.S. SAINI (AM) N. K. CHOUDHRY (JM ) I.T.A. NO.07 /JAB/2014 (ASSESSMENT YEARS :2008-09) RAKESH KUMAR TIWARI, VILLAGE: RAIPUR,DIST: HOSHANGABAD VS. THE ITO, ITARSHI, MP. (APPELLANT) .. ( RESPONDENT) I.T.A. NO.08 /JAB/2014 (ASSESSMENT YEARS :2008-09) ALOK KUMAR TIWARI, VILLAGE: RAIPUR,DIST: HOSHANGABAD VS. THE ITO, ITARSHI, MP. (APPELLANT) .. ( RESPONDENT) APPELLANTS BY : SH. GAGAN TIWARI RESPONDENTS BY : SH. D.R.LATHORIYA DATE OF HEARING : 04-04-2016 DATE OF PRONOUNCEMENT : 04-04. 2016 O R D E R PER N.K.CHOUDHRY, JM BOTH THE APPEALS FILED BY DIFFERENT ASSESSEE ARE EMANA TING FROM SEPARATE ORDERS OF THE LD CIT(A)-1, BHOPAL BOTH DATED 25.10.2013, I N THE MATTER OF ASSESSMENT UNDER SECTION 147 R.W.S. 144 OF F THE INCOME TAX ACT, 1961, FO R THE ASSESSMENT YEAR 2008-09. 2. THE COMMON GROUNDS RAISED IN BOTH THE APPEALS ARE AS UNDER: 1. THAT ENTIRE ASSESSMENT IS ARBITRARY ILLEGAL & WIT HOUT JURISDICTION. THE REOPENING OF ASSESSMENT ON THE BASIS OF CBDT INSTRUCTIONS A ND WITHOUT OPINION OF THE AO HIMSELF IS ARBITRARY, ILLEGAL AND WITHOUT JURISDICTION. 2 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) 2. THAT THERE IS NO JUSTIFICATION EITHER IN LAW OR ON FACTS FOR THE CIT (8A) TO CONFIRM THE ASSESSMENT ORDER PASSED UNDER SECTION 144/147 O F THE I.T.ACT. 3. THAT THE LD CIT(A) ERRED BOTH IN LAW OR ON FACTS IN CONFIRMING THE ADDITION OF RS.9,82,423/- ON ACCOUNT OF UNEXPLAINED IN VESTMENT IN PURCHASE OF AGRICULTURAL LAND. THE AUTHORITIES BELOW HAVE FAILED TO CONSIDER THAT THE APPELLANT HAD NO OTHER SOURCE OF INCO ME EXCEPT AGRICULTURAL INCOME AND THEREFORE THE INVESTMENT COULD ONLY BE FROM AGRICULTURAL INCOME AND IN THAT EVENT THERE COULD HAV E BEEN NO ADDITION FOR UNEXPLAINED INVESTMENT. 4. THAT THE LD CIT(A) & AO ERRED BOTH IN LAW OR ON FACTS IN NOT ACCEPTING THE WRITTEN SUBMISSION AND AFFIDAVIT FILED BY THE APPE LLANT AND THUS THE APPELLATE AND THE ASSESSMENT ORDERS BOTH ARE IN VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE. 5. THAT THE LD CIT(A) ERRED BOTH IN LAW OR ON FACTS IN CONFIRMING THE LOW ESTIMATION OF THE AGRICULTURAL INCOME BY THE AO AT RS.1 230690/- AS AGAINST RS.2100000/- CLAIMED BY THE APPELLANT. 6. THAT THE LD CIT(A) AND THE AO BOTH ERRED IN LAW AND ON FACTS IN NOT GIVING CREDIT OF PAST SAVINGS ON THE APPELLANTS FAMILY AS CLAIMED BY THE APPELLANT AND RESTRICTING THE PAST SAVINGS TO AN ARBITR ARY AMOUNT OF RS.5,00,000/- AND WITHOUT CONSIDERING THE PAST SAVINGS FR OM THE YEAR 2005 WHEN EXTRA LAND WAS TAKEN BY THE FAMILY ON BATAI . MOREOVER, NO CREDIT OF PAST SAVINGS OF THE PAST 15 YEARS HAS BEEN GIVE N BY THE CIT(A) AND THE AO WHICH IS ARBITRARY AND UNJUSTIFIED. 7. THAT THE LD CIT(A) ERRED IN LAW AND ON FACTS IN ASSU MING THAT SINCE LOAN WAS TAKEN BY THE APPELLANTS THEREFORE THERE WOULD BE NO PAST SAVINGS. NO OPPORTUNITY OF HEARING WAS GIVEN BY THE C IT(A) BEFORE ARRIVING AT THIS CONCLUSION AND THE CONCLUSION IS BASED ON PRESUMPTIONS, CONJECTURES AND SURMISES. 3. ALTHOUGH THE ASSESSEES HAVE RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE SOLE GRIEVANCE IS WHETHER OR NOT THE LD CIT(A) IS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.9,82,423/- BEING 50% OF RS.19,64,845/- ON ACCOUNT O F UNEXPLAINED INVESTMENT IN PURCHASE OF AGRICULTURAL LAND IN RESPECT OF BOTH THE A SSESSES. 3 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) 4. SINCE FACTS IN CASE OF BOTH THE ASSESSES ARE IDENTICAL, W E DISCUSS THE RELEVANT FACTS IN CASE OF RAKESH KUMAR TIWARI AND THE DECISION WIL L APPLY MUTATIS-MUTANDIS TO ALOK KUMAR TIWARI. 5. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER U/S 147 R.W.S144 OF THE I.T.ACT, 196 1 WERE THAT THE ASSESSEE IS AN INDIVIDUAL AN D ENGAGED IN THE AGRICULTURAL ACTIVI TIES AT HIS AGRICULTURAL LAND SITUATED AT VILLAGE RAIPUR, DIST: HOSHANGABAD. FOR THE ASSESSMENT YE AR UNDER CONSIDERATION, THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME SINCE THERE WA S NO OTHER INCOME EXCEPT AGRICULTURAL INCOME. ON 21.5.2007, THE ASSESSEE HAD PURCH ASED AGRICULTURAL LAND SITUATED AT VILLAGE: SICANDRABAD, DIST: BHOPAL FOR RS. 41,16,535/- IN THE JOINT OWNERSHIP OF HIS BROTHER ALOK KUMAR TIWARI. 6. THE AO ISSUED NOTICE U/S.148 OF THE ACT TO THE ASSESSEE ON 5.10.2009 TO FILE HIS RETURN OF INCOME. HOWEVER, THE ASSESSEE DID NOT FILE T HE RETURN OF INCOME. IN VIEW OF THIS, THE AO COMPLETED THE ASSESSMENT U/S.147 R.W.S. 144 OF THE ACT ON 20.10.2010 DETERMINING TOTAL INCOME AT RS.9,82,423/-. THE AO W AS IN POSSESSION OF AN INFORMATION THAT THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND FOR RS. 35,40,000/- FOR THE ASSESSMENT YEAR 2008-09. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THE LAND WAS PURCHASED BY HIM ALO NGWITH JOINT SHARE OF HIS BROTHER FOR TOTAL INCOME OF RS.41,16,535/- AND IN RE GARD TO INVESTMENT IN PURCHASE OF LAND, IT WAS SUBMITTED THAT AN AMOUNT OF RS.4,21,000/ - WAS CONTRIBUTED BY HIS PARENTS, RS.21,00,000/- OUT OF AGRICULTURAL INCOME DERIVED FROM 25.216 ACRES OF LAND OWNED BY 4 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) HIS FAMILY ALONGWITH 16.83 ACRES LAND TAKEN ON BATAI AND RS.18,00,000/- FROM PAST SAVINGS OF THE FAMILY FROM AGRICULTURAL INCOME. WHEN THE AO REQUIRED THE ASSESSEE TO FURNISH THE DOCUMENTARY EVIDENCE IN SUPPORT OF ABOVE CL AIM, THE ASSESSEE ONLY FURNISHED WRITTEN SUBMISSION/AFFIDAVIT AND SUBMITTED THA T SINCE HE IS AN AGRICULTURIST, NO BILLS AND VOUCHERS ARE AVAILABLE WITH HIM FOR SUCH AGRICU LTURAL INCOME. IT WAS SUBMITTED THAT THE AGRICULTURAL INCOME CONSISTED FROM SALE OF FRUI TS LIKE MANGO, LEMON, KATHHAL, KAROND, JAMUN, AMRUD, AWLS, ETC ALONGWITH SALE OF VEGET ABLE, AND GRAINS LIKE DHAN, SOYHABEEN, WHEAT, CHANNA, ETC AMOUNTING TO RS.35,00,00 0/-. IT WAS CLAIMED THAT THE HE HAD INCURRED AGRICULTURE EXPENSE AT 40% OF THE TO TAL INCOME. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND ALSO ON THE BASIS OF INSPECTORS REPOR T, THE AO ESTIMATED THE AGRICULTURAL INCOME/INCOME OF EARLIER YEARS/PARENTS CONTRIBUTION OF THE ASSESSEE AS UNDER: I) RS.15,000/- PER ACRE PER ANNUM ON 41.046 ACRES TOTAL ING TO: RS.6,30,690/- . II) INCOME FROM FRUITS AND VEGETABLES : RS.6,00,000 /- III) INCOME FROM EARLIER YEARS : RS.5,00,000/- IV) AMOUNT RECEIVED FROM PARENTS : RS.4,21,000/- TOTAL: : RS.21,51,690/ ACCORDINGLY, THE AO TREATED THE ABOVE AMOUNT OF RS.21, 51,690/- AS EXPLAINED AND OPINED THAT THE BALANCE AMOUNT I.E. RS.19,64,845/- ( RS.41,16,535 RS.21,51,690) REMAINED UNEXPLAINED AND TREATED THE SAME AS INCOME FR OM UNDISCLOSED SOURCES. SINCE THE LAND WAS PURCHASED IN THE JOINT SHARE OF ASSESSEE S BROTHER SHRI ALOK KUMAR TIWARI, THE AO WORKED OUT THE ASSESSEES SHARE AS UNEXPLAI NED INVESTMENT AT 5 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) RS.9,82,423/- BEING 50% OF RS.19,64,845/- AND MADE TH E ADDITION OF RS.9,82,423/- AS HALF SHARE OF THE ASSESSEE TO THE TOTAL INCOME. 7. ON SIMILAR BASIS, THE AO ADDED 50% OF SHARES I.E. RS.9 ,82,423/- IN THE HANDS OF SHRI ALOK KUMAR TIWARI, THE BROTHER OF THE ASSESSEE. 8. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LD CIT(A), THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. IT WAS ALSO, INTER ALI A, SUBMITTED THAT THE ASSESSEE HAD NO OTHER INCOME EXCEPT AGRICULTURAL INCOME SINCE LAST 15 YEARS AND THE INCOME FROM AGRICULTURE CANNOT BE OVERLOOKED BY THE AO. THE LD CI T(A) IN THE IMPUGNED ORDER OBSERVED THAT SINCE THE ASSESSEE HAD NOT FILED RETURN OF INCOME, THE AO ISSUED NOTICE U/S.148 AND COMPLETED THE ASSESSMENT U/S.147 R.W.S. 144 OF THE ACT. LD CIT(A) FURTHER OBSERVED THAT THE AO HAS CONSIDERED ALL ASPECTS WHILE CON SIDERING THE AGRICULTURAL INCOME AND THE CONTRIBUTION OF THE PARENTS TOWARDS PURCH ASE OF LAND, WHICH PROVES TO BE SAVINGS OUT OF AGRICULTURAL INCOME OF THE FAMILY. L OOKING TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, LD CIT(A) UPHELD THE ACTION OF THE AO. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 9. AT THE TIME OF HEARING, LD COUNSEL FOR THE ASSESSEE RE ITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. LD COUNSEL SUBMITTE D THAT THE CONTRIBUTION OF THE PARENTS IS NOT FROM AGRICULTURAL INCOME OF THE FAMILY BUT SAVINGS OUT OF THEIR PENSIONS AS BOTH FATHER AND MOTHER WERE GOVERNMENT EMPLOYEES. H E SUBMITTED THAT THE HOUSEHOLD 6 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) EXPENSES IS OF RS.25,000/- PER MONTH AND THE SURPLUS SAVIN GS PER YEAR COMES TO RS.18,00,000/-. HE SUBMITTED THAT THE ASSESSEE IS ONLY A N AGRICULTURIST AND EXCLUSIVELY ENGAGED IN THE AGRICULTURAL ACTIVITIES. HE HAS INVESTE D THE TOTAL SAVINGS OF LAST 15 YEARS FROM AGRICULTURAL INCOME AND INCLUDING THE SAVINGS OF HI S PARENTS FOR PURCHASE OF LAND. HE SUBMITTED THAT THE AUTHORITIES BELOW WITHOUT GIVING ANY COGENT REASON HAVE DOUBTED THE INCOME OF THE ASSESSEE ON SURMISES AND CONJECTURES. H E PRAYED THAT CONSIDERING THE FAMILY BACKGROUND AND THE INCOME OF THE ASSESSEE FOR LAST 15 YEARS, THE ADDITION MADE BY THE AUTHORITIES BELOW ON ACCOUNT OF UNEXPLAINE D INVESTMENT BE DELETED. EVEN OTHERWISE, THE ASSESSEE IS UNEDUCATED AND DO NOT KNOW THE INTRICACIES OF LAW AND SOLELY DEPENDS UPON THE AGRICULTURAL INCOME. 10. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW AND FORCEFULLY ARGUED THAT THE FINDINGS OF LD CIT(A) IS L IABLE TO BE UPHELD. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD OF THE CASE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS AN AGRICULTURIST AND H IS MAIN INCOME IS FROM AGRICULTURAL INCOME. THE AGRICULTURAL ACTIVITIES ON TH E LAND IN QUESTION HAVE NOT BEEN DISPUTED. SINCE THE LAND HOLDING HAS NOT BEEN DISPUTE D BY ANY OF THE AUTHORITIES, THE AGRICULTURAL INCOME SHOULD BE ESTIMATED ON THE BASIS OF AGRICULTURAL LAND HOLDING. IN THE AGRICULTURAL ACTIVITIES PEOPLE HARDLY MAINTAIN THE BOO KS OF ACCOUNT BUT IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS ONLY EARNED SPECIFIC INCOME AS PER THEIR WHIMS. GENERALLY THE AGRICULTURAL INCOME IS ESTIMATED ON THE B ASIS OF LAND HOLDING. IN THE INSTANT CASE, THE LAND HOLDING BY THE ASSESSEE IS NOT DISPUTED. IT IS ALSO CLAIMED BY THE ASSESSEE THAT HIS PARENTS ARE RETIRED GOVERNMENT EMPLOYEE S AND GETTING PENSION EVERY 7 I.T.A. NO.07 & 08 /JAB/2014 (ASSESSMENT YEARS :2008-09) MONTH, WHICH IS ALSO NOT DISPUTED BY THE DEPARTMENT. H OWEVER, WE ALSO FIND SOME MERITS IN THE FINDINGS OF THE AO REGARDING THE AGRICUL TURAL INCOME SHOWN BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE AGRICU LTURAL INCOME DECLARED BY THE ASSESSEE SHOULD NOT BE DISPUTED WITHOUT BRINGING ANY COGEN T MATERIAL ON RECORD. EVEN THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE OF LAND HO LDING OWNED BY THE ASSESSEE. THEREFORE, TO MEET THE ENDS OF JUSTICE, WE SET A SIDE THE ORDERS OF AUTHORITIES BELOW AND RESTRICT THE ADDITION TO 25% OF RS.19,64,845 /-, WHICH COMES TO RS.4,91,211/-.. WE ORDER ACCORDINGLY. WITH THE SAME DIRECTION, THE DISA LLOWANCE IN RESPECT OF ALOK KUMAR TIWARI IS ALSO RESTRICTED TO RS.4,91,211/- BEING 2 5% OF RS.19,64,845/-. 12. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4/4/2016 . SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER J UDICIAL MEMBER JABALPUR, DATED 4 / 4/2016 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : M/S. S.NAND SINGH KESHAR SINGH & COMPANY, GUJARATI BAZAR, SAGAR (MP) 2. THE RESPONDENT: ITO-II, SAGAR (MP) 3. THE CIT(A). JABALPUR 4. CIT . JABALPUR 5. DR, ITAT, JABALPUR 6. GUARD FILE. B Y ORDER, //TRUE COPY// SR. PS, ITA T, CAMP: JABAL PUR