N. Ravindranath Reddy, Hyderabad V. DCIT, Central Circle-6, Hyderabad

ITA 729/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53840 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: A V RAGHURAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBE R. ITA NO.727 TO 729/HYD/2011 ASSESSMENT YEAR 2003-04 TO 2005-06 SHRI N. RAVIND RANATH REDDY, HYDERABAD (PAN AAPPN8552P) VS THE DCIT, CENTRAL CIRCLE-6, HYDERABAD APPELLANT RESPONDENT ITA NO.730 TO 734/HYD/2011 ASSESSMENT YEAR 2002-03 TO 2006-07 SHRI N. GOVARDHAN REDDY, HYDERABAD (PAN ACPPN 9497 B) VS THE DCIT, CENTRAL CIRCLE- 6, HYDERABAD APPELLANT RESPONDENT APPELLANTS BY : SHRI A.V. RAGHURAM RESPONDENT BY : SHRI V. SRINIVAS DATE OF HEARING : 3.11.2011 DATE OF PRONOUNCEMENT : 27.12.2011 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THESE APPEALS PREFERRED BY TWO ASSESSEES, RELATED TO EACH OTHER, ARE DIRECTED AGAINST THE ORDERS PASSED BY TH E CIT(A) I, HYDERABAD AND PERTAIN TO THE ASSESSMENT YEARS 2002- 03 TO 2005-06 IN THE CASE OF SHRI N.RAVINDRANATH REDDY AND FROM 2002 -03 TO 2006-07 IN THE CASE OF SHRI N.GOVERDHAN REDDY. SINCE COMM ON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOSED OFF BY A COMMON CONSOLIDATED ORDER. ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 2 2. FACTS OF THE CASE, AS TAKEN FROM APPEALS OF SHRI N.RAVINDRANATH REDDY, ARE THAT A SEARCH AND SEIZUR E OPERATION U/S.132 OF THE I.T ACT WAS CONDUCTED AT THE RESIDEN TIAL PREMISES OF THE ASSESSEES ON 17.10.2007. CONSEQUENT TO THE SEARCH NOTICE U/S.153A WAS ISSUED TO THE ASSESSEES IN RESPONSE TO WHICH T HE ASSESSEES FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 TO 2005-06 ADMITTING TOTAL INCOME AS BELOW:- ASST, YEAR INCOME ADMITTED AGRL. INCOME DECLARED 2002-03 RS.1,55,000 RS. 50,000 2003-04 RS.1,55,000 RS.7,98,000 2004-05 RS.2,30,000 RS.7,84,000 2005-06 RS.2,30,000 RS.8,00,000 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER EXAMINED THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE FOR THE AFOREMENTIONED YEARS. THE ASSESS EE WAS REQUESTED TO FILE THE DOCUMENTARY EVIDENCES RELATING TO THE A GRICULTURAL INCOME, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE REGARDI NG THE AGRICULTURAL INCOME. THE ASSESSING OFFICER THEREFORE TREATED THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES AND ADDED BACK THE SAM E TO THE TOTAL INCOME OF THE ASSESSEE AND ACCORDINGLY COMPLETED TH E ASSESSMENTS FOR THE YEARS UNDER APPEAL. BEING AGGRIEVED AGAINST T HE AFORESAID ADDITIONS / DISALLOWANCES, APPEALS WERE FILED BEFOR E THE CIT(A) WITH THE FOLLOWING GROUNDS OF APPEAL. 1...... 2. THE ASSESSING OFFICER ERRED BY TREATING THE AGRI CULTURAL INCOME SHOWN BY THE APPELLANT AS INCOME FORM OTHER SOURCES . 3. ON THE FACTS OF THE CASE AND CONSIDERING THE PRA CTICES PREVAILING IN THE AGRICULTURAL SECTOR, THE AO ERRED BY DISBELIEVING THE AGRICULTURAL INCOME SHOWN BY THE A SSESSEE ON THE SOLD GROUND OF ABSENCE OF EVIDENCE IN SUPPORT O F EXPENSES AND SALE OF PRODUCE IN SPIRE OF FILING CERTIFICATES ISSUED BY THE REVENUE AUTHORITIES EVIDENCING THE LAND UNDER POSSE SSION, ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 3 THEIR ACTUAL CULTIVATION CROP GROWN AND PROBABLE IN COME THEREOF. 4. .... 4. THE CIT(A), BY THE COMMON APPELLATE ORDER DAT ED 7.2.2011, IMPUGNED IN THE APPEALS FOR THE YEARS UND ER CONSIDERATION, HELD AS FOLLOWS- THE ONLY EFFECTIVE GROUND OF APPEAL FOR THE FOUR A SSESSMENT YEARS RELATES TO TREATING OF AGRICULTURAL INCOME AS INCOM E FROM OTHER SOURCES. APPARENTLY, THE ASSESSEE HAD SHOWN AGRIC ULTURAL INCOME IN ITS RETURN OF INCOME. HOWEVER, NO SATISFACTORY EVI DENCE IN RESPECT OF THE SAID INCOME WAS FILED BEFORE THE AO. THE AO TH EREFORE TREATED THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES AN D ADDED BACK THE SAME TO THE TOTAL INCOME. THE ASSESSEE CONTENDED T HAT IT HAD FILED CERTIFICATES ISSUED BY THE REVENUE AUTHORITIES EVID ENCING POSSESSION OF LAND AND THEIR CULTIVATION AND PROBABLE INCOME T HEREOF., I AM OF THE VIEW THAT SIMPLE POSSESSION OF THE AGRICULTURAL LAND DOES NOT NECESSARILY MEAN THAT THE ASSESSEE DERIVED AGRICULT URAL INCOME UNLESS HE ESTABLISHES THAT THERE WAS ACTUAL AGRICUL TURAL OPERATION. SIMILARLY, THE CERTIFICATE OF REVENUE AUTHORITIES I NDICATING PROBABLE YIELD AND INCOME CANNOT BE CONSIDERED AS ACTUAL INC OME UNLESS IT IS BACKED BY NECESSARY EVIDENCE. THE AO HAD CALLED FO R EVIDENCES LIKE EXPENDITURE IN CONNECTION WITH THE AGRICULTURAL OPE RATION AND ALSO PROOF RELATING TO THE SALE OF AGRICULTURAL PRODUCE. THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS THAT IT HAD GENERATED AGRICULTURAL INCOME OUT OF THE AGRICULTURAL LAND ALLEGEDLY OWNED BY HIM . EVEN DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FAILED TO ADDUC E ANY EVIDENCE IN SUPPORT OF THE GENERATION OF AGRICULTURAL INCOME. IT MAY ALSO BE NOTED THAT THERE IS INCONSISTENCY IN THE AGRICULTUR AL INCOME DECLARED BY THE ASSESSEE. FOR EXAMPLE, THE ASSESSMENT YEAR 2 002-03 THE AGRICULTURAL INCOME DECLARED IS RS.50,000/- BUT IN THE IMMEDIATELY NEXT YEAR THERE IS A QUANTUM JUMP IN THE SAME AND T HE ASSESSEE DECLARES INCOME OF RS.7,98,000/- SUCH A HUGE DIFFER ENCE ON THE SAME LAND IS NOT BELIEVABLE. IN THE COURSE OF APPELLAT E PROCEEDING THE AR OF THE ASSESSEE RELIED ON THE DECISION OF THE HONB LE ITAT HYDERBAD B BENCH IN THE CASE OF T.C.REDDY IN ITA NO 469/HY D/2009 AND ITA NO 228/HYD/2010. I HAVE GONE THROUGH THE DECISION. I AM OF THE VIEW THAT THE DECISION RELIED ON BY THE ASSESSEE IS DISTINGUISHABLE. IN THAT CASE THE ASSESSING OFFICER HAD NOT DOUBTED THE AGRICULTURAL INCOME BUT HAD DISPUTED THE QUANTUM OF AGRICULTURAL INCOME DECLARED. IN THE APPEALS UNDER CONSIDERATION, THE VERY EXISTE NCE OF AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IS QUESTIONED. TO THAT EXTENT I DO NOT AGREE WITH THE AR THAT THE CASE RELIED ON BY HIM IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. OT HERWISE ALSO AN IDENTICAL ISSUE WAS DECIDED BY ME IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO 1040 TO 1042/CC-6 /HYD/CIT(A)- I/09-10 DATED 10.09.2010 WHEREIN ON IDENTICAL FACT I HAD CONFIRMED THE STAND TAKEN BY THE ASSESSING OFFICER TREATING T HE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES. THUS, FOR THE REASON DISCUSSED ABOVE, AND FOLLOWING THE STAND TAKEN EARLIER ON THE ISSUE I HOLD THAT ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 4 THE AO WAS JUSTIFIED IN TREATING THE AGRICULTURAL I NCOME AS INCOME FROM OTHER SOURCES. 5. AGGRIEVED THE ASSESSEE WERE FILED APPEALS BEFO RE US. 6. FACTS OF THE CASE IN THE MATTERS RELATING TO SH RI N.GOVERDHAN REDDY, INCLUDING THE AMOUNTS OF AGRICUL TURAL INCOME DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2 002-03 TO 2005- 06, BUT TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES ARE IDENTICAL. AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07, FOR WHICH YEAR ALSO THERE IS AN APPEAL FILED BY THIS ASSESSEE BEFORE US, WHICH HAS BEEN TREATED AS INCOME FROM OTHER SOURCES IS RS.8,50,000. 7. AT THE OUTSET, THE LEARNED COUNSEL FOR THE AS SESSEES, SHRI A.V.RAGHURAM, SUBMITTED THAT HE IS NOT PRESSING GRO UND NO. 3, WHICH, COMMON IN ALL THESE APPEALS, IS AS FOLLOWS:- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED BY UP HOLDING THE ACTION OF THE ASSESSING OFFICER TREATING THE AG RICULTURAL INCOME AS INCOME FROM OTHER SOURCES IN AN ASSESSMEN T COMPLETED U/S.153A, WITHOUT ANY MATERIAL ON RECORD, GATHERED EITHER DURING SEARCH OR SUBSEQUENT THERETO ACCORDINGLY, THE ABOVE GROUND OF APPEAL TAKEN BY TH E ASSESSEE IS REJECTED AS NOT PRESSED. 8. AS FOR THE OTHER GROUNDS, IN WHICH THE GRIEVAN CE OF THE ASSESSEES IS AGAINST THE ACTION OF THE REVENUE AUTH ORITIES IN TREATING THE AGRICULTURAL INCOMES DECLARED BY THE ASSESSEES FOR THE YEARS UNDER APPEAL, AS INCOME FROM OTHER SOURCES, IT WAS SUBMI TTED AS FOLLOWS:- THE HONBLE ITAT HYDERABAD IN THE CASE OF MR.T.C.RE DDY IN ITA NO 469/HYD/2009 AND ITA NO 228/HYD/2010 THAT WHERE THE LAND HOLDING AND CULTIVATION THEREOF IS NOT IN DISP UTE, THE ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 5 ASSESSING OFFICER CANNOT BE SIMPLY REJECT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE AGRICULTURAL INCOME. I T WAS FURTHER HELD THAT AS AGRICULTURAL IN THIS COUNTRY IS AN UNO RGANISED SECTOR AND SALE OF AGRICULTURAL PRODUCE IS ALSO NOT PROPERLY ORGANISED., ONE CANNOT BLAME THE ASSESSEE FOR NOT M AINTAINING THE BOOKS OF ACCOUNT FOR THE PURPOSE OF CULTIVATION AND THEREFORE NON MAINTENANCE OF BOOKS OF ACCOUNTS CANN OT BE A GROUND TO REJECT THE CLAIM OF THE ASSESSEE. ESTIMAT E OF RS.15,000/- AND RS.10,000/- PER ACRE IN A YEAR WAS HELD TO BE REASONABLE IN RESPECT OF CULTIVATION OF MANGO AND P ADDY RESPECTIVELY. 9. IT WAS FURTHER SUBMITTED THAT CONSIDERING THE EVIDENCE FILED IN RESPECT OF LAND-HOLDING, CULTIVATION THEREOF, CR OPS GROWN THEREON AND APPROXIMATE INCOME THERE FROM, THE AGRICULTURAL INC OME SHOWN BY THE ASSESSEES WAS REASONABLE AND HENCE THE ADDITIONS SH OULD BE DELETED. THE LEARNED COUNSEL FOR THE ASSESSEES ALSO RELIED O N THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.726/HYD/ 2010 FOR THE ASSESSMENT YEAR 2002-03, WHEREIN IT HAS BEEN HELD AS FOLLOWS:- 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE TREATMENT OF AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES, O NLY ON THE GROUND THAT THERE WAS O EVIDENCE IN SUPPORT OF INCOME AND EXPENDITURE. IT APPEARS THAT THE ASSESSEE PRODUCED CERTIFICATE BEFO RE THE LOWER AUTHORITIES IN SUPPORT OF THE LAND HOLDING, THE ACT UAL CULTIVATION THEREOF AND THE PROBABLE INCOME THERE FROM. IN SPIT E OF THE ABOVE, THE DEPARTMENT TREATED THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE AS INCOME FORM OTHER SOURCES, ONLY ON SURMISES, SU SPICION AND CONJECTURES. AFTER CONSIDERING THE TOTALITY OF FAC TS AND THE CIRCUMSTANCES OF THE CASE AND GOING THROUGH THE ORD ERS OF THE AUTHORITIES, WE FIND THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN TREATING THE AGRICULTURAL INCOME AMOUNTING TO RS.50 ,000/- AS INCOME FROM OTHER SOURCES. ACCORDINGLY, WE DELETE THE SAM E AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE 10. THE LEARNED DEPARTMENTAL REPRESENTAT IVE RELIED ON THE ORDER OF THE TRIBUNAL DATED 26.5.2011IN THE CASES O F SHRI N.RAVIDNRANATH REDDY FOR THE ASSESSMENT YEARS 2006- 07 TO 2008-09, IN ITA NOS 1672 TO 1674/HYD/2010, WHEREBY THE MATTE R HAS BEEN SET ASIDE TO THE FILE OF THE CIT(A) FOR FRESH CONSIDERA TION AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTI ATE HIS CASE. ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 6 11. WE HAVE GONE THROUGH THE RECORDS AND HEARD TH E PARTIES. FOR THE ASSESSMENT YEARS 2003- 04 TO 2005-06, ACCO RDING TO THE ASSESSING OFFICER, THE ASSESSEES HAVE NOT PRODUCED ANY EVIDENCE IN THE FORM OF EXPENDITURE INCURRED FOR CULTIVATING, SALE OF AGRICULTURAL PRODUCE ETC., AND HENCE AGRICULTURAL INCOME HAS BEE N TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSEES HAVE TO P RODUCE THE MATERIAL NECESSARY TO SUBSTANTIATE THEIR CLAIMS FOR THE ASSESSMENT YEARS UNDER APPEAL AND NOT MERELY RELY ON THE VIEW TAKEN FOR PREVIOUS ASSESSMENT YEAR 2002-03, FOR WHICH THE TRIBUNAL HAS DECIDED SIMILAR ISSUE IN HIS FAVOUR. FURTHER, WE FIND THAT THE DEC ISION OF THE TRIBUNAL IN THE CASE OF T.C.REDDY (SUPRA) RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEES, IS DISTINGUISHABLE, AS OBSERVED BY T HE CIT(A) SINCE THE ASSESSEES HAVE NOT PROVED TO THE SATISFACTION OF TH E DEPARTMENT, AS TO THE VERY EXISTENCE OF AGRICULTURAL INCOME, WHEREAS IN THE CASE OF T.C.REDDY ONLY THE QUANTUM OF AGRICULTURAL INCOME W AS IN DISPUTE AND NOT THE VERY FACT OF AGRICULTURAL LAND- HOLDING. 12. TAKING TOTALITY OF FACTS AND CIRCUMSTANCES O F THE CASE INTO CONSIDERATION, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND R ESTORE THESE MATTERS TO THE FILE OF THE ASSESSING OFFICER, FOR APPROPRIA TE DECISION IN ACCORDANCE THE LAW, AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEES TO SUBSTANTIATE THEIR CLAIMS WITH REGARD TO THEIR LAND HOLDING, BESIDES THE AGRICULTURAL INCOMES DERIVED B Y THEM DURING THE YEARS UNDER APPEAL. THE ASSESSEES ARE DIRECTED TO PRODUCE NECESSARY EVIDENCE, LIKE CERTIFICATE ISSUED BY THE VILLAGE SE CRETARY, SAVI SATTYPALLY PANCHAYAT, KASINAYANA MANDAL ANNEXED IN THE PAPER BOOK FILED AT PAGE 19 AND EVIDENCE OF AGRICULTURAL LAND HOLDING BY THE ASSESSEES TO THE EXTENT OF 266 ACRES AS EVIDENT FRO M PAGES 20 TO 23 OF THE PAPER BOOK FILED BEFORE US AND ALSO OTHER RE LEVANT MATERIALS, TO ITA NO.727 TO 734/HYD/2011 S SHRI N.RAVINDRANATH REDDY & ANR., HYDERABAD 7 SUBSTANTIATE THEIR CONTENTION THAT THEY HAVE EARNED AGRICULTURAL INCOMES DURING THE YEARS UNDER CONSIDERATION, AS C LAIMED BY THEM. 13. IN THE RESULT THE APPEALS ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 27.12.20 11 SD/- SD/- (CHANDRA POOJARI) (ASHA V IJAYARAGHAVAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 27TH DECEMBER, 2011 COPY FORWARDED TO: 1. SHRI N.RAVINDRANATH REDDY, C/O. M/S RADHA REALITY C ORPORATION I P LTD., 8-2-293/82/A/1097, BESIDES SVM MALL, RD. NO .36, JUBILEE HILLS, HYDERABAD-33. 2. SHRI N.GOVERDHAN REDDY, C/O. M/S RADHA REALITY CORP ORATION I P LTD., 8-2-293/82/A/1097, BESIDES SVM MALL, RD. NO.3 6, JUBILEE HILLS, HYDERABAD-33. 3. THE DCIT, CENTRAL CIRCLE 6, HYDERABAD 4. THE CIT(A)- I, HYDERABAD 5. THE CIT, HYDERABAD 6. THE DR, ITAT, HYDERABAD B.V.S.