S.Elango, CHENNAI V. DCIT, CHENNAI

ITA 741/CHNY/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5806 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 2(14); 43

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ' , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.741/CHNY/2017 ( ( /ASSESSMENT YEAR: 2008-09 SHRI S. ELANGO, C/O. SHRI S.SRIDHAR, A.S.SRIRAMAN, ADVOCATES NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. V . THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III(1), CHENNAI. [PAN: AACPE 6397 G ] ( + /APPELLANT) ( ,-+ /RESPONDENT) + . / APPELLANT BY : MR. S.SRIDHAR, ADV. ,-+ . /RESPONDENT BY : MS.R.ANITHA, JCIT . /DATE OF HEARING : 14.11.2019 . /DATE OF PRONOUNCEMENT : 10.02.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 13.02.2017 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI (HEREINAFTER CALLED THE CIT( A)), IN ITA NO.290/10- 11 FOR ASSESSMENT YEAR (AY) 2008-09, THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARISEN FROM ASSESSMENT ORDER DAT ED 30.12.2010 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CA LLED THE AO) U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). ITA NO.741/CHNY/2017 :- 2 -: 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) 19, CHENNAI DATED 13.02.2017 IN L.T.A.NO.290/2010-11 FOR THE AB OVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN T HE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN PARTLY SUSTAINING THE ASSESSMENT OF AGRICULTURAL INCOME UNDER THE HEAD 'INCOME FROM OTH ER SOURCES' IN THE COMPUTATION OF TAXABLE TOTAL INCOME WITHOUT ASSIGNI NG PROPER REASONS AND JUSTIFICATION. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOTICED THE HISTORY OF THE CASE WITH REGARD TO THE GENERATION OF THE AGRIC ULTURAL INCOME AND ITS ACCEPTANCE IN THOSE EARLIER ASSESSMENT YEARS, THE R ESTRICTION OF THE CLAIM OF SUCH INCOME AT RS. 10,000/- PER ACRE FOR THE PUR POSE OF SUSTAINING THE BALANCE AS INCOME FROM OTHER SOURCES WAS WRONG, ERR ONEOUS, UNJUSTIFIED, INCORRECT AND NOT SUSTAINABLE IN LAW. 4. THE CIT (APPEALS) WENT WRONG IN RECORDING THE FI NDINGS IN THIS REGARD IN PARA 5 OF THE IMPUGNED ORDER WITHOUT ASSIGNING PROP ER REASONS AND JUSTIFICATION. 5. THE CIT (APPEALS) FAILED TO APPRECIATE THAT THER E WAS NO PROPER OPPORTUNITY GIVEN BEFORE PASSING OF THE IMPUGNED OR DER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES NATURAL JUSTI CE WOULD BE NULLITY IN LAW. 6. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS/ARGUMENTS AT THE TIME OF HEARING. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND PROPERTY DEVELOPERS . THE ONLY EFFECTIVE GROUND RAISED BY ASSESSEE IS WITH REGARD TO ASSESSM ENT OF AGRICULTURAL INCOME DECLARED BY ASSESSEE TO THE TUNE OF RS. 10,20,708/- IN THE RETURN OF INCOME FILED WITH REVENUE, WHICH WAS BROUGHT TO TAX BY AO AS INCOME FROM UNEXPLAINED SOURCES UNDER THE HEAD INCOME FRO M OTHER SOURCES. ITA NO.741/CHNY/2017 :- 3 -: THE ASSESSEE SUBMITTED BEFORE THE AO COPY OF PASALI , WHEREIN, IT IS MENTIONED THAT CROPS SUCH AS CASUARINAS, COFFEE, PE PPER AND CARDAMOM ARE GROWN. HOWEVER, NO DETAILS OF YIELD IS MENTION ED IN THE SAID PASALI AND IN VIEW OF THAT THE AO WAS OF THE VIEW THAT QUA NTUM OF RECEIPTS THROUGH SALE OF THESE CROPS CANNOT BE ASCERTAINED. THE AO ALSO OBSERVED THAT ASSESSEE HAS NOT FURNISHED DETAILS OF THE RECE IPT OF THE SALE PROCEEDS, SUCH AS THE DATE OF SALE, MODE OF PAYMENT, DATE OF RECEIPT OF PAYMENT, NAME AND ADDRESS OF THE PURCHASER TO WHOM THE SALES WERE MADE ETC. . THE AO REJECTED CLAIM OF THE ASSESSEE TO TREAT SAID INCOME AS AGRICULTURE INCOME AND THE SAME WAS BROUGHT TO TAX AS INCOME FR OM UN-EXPLAINED SOURCES UNDER THE HEAD INCOME FROM OTHER SOURCES BY AO VIDE ASSESSMENT ORDER DATED 30.12.2010 PASSED BY AO U/S 143(3) OF THE 1961 ACT. 4. THE ASSESSEE BEING AGGRIEVED BY AN ASSESSMENT FR AMED BY AO U/S 143(3) VIDE ASSESSMENT ORDER DATED 30.12.2010, FILE D FIRST APPEAL WITH LEARNED CIT(A) WHO WAS PLEASED TO PARTLY ALLOW APPE AL FILED BY ASSESSEE VIDE APPELLATE ORDER DATED 13.02.2017, BY HOLDING A S UNDER : 4. THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS.10,20, 708 AS AGRICULTURAL INCOMES. THE ASSESSEE OWNS ABOUT 21 ACRES OF DRY LA ND NEAR SALEM AND THE OWNERSHIP OF THE SAID LANDS HAS BEEN ACCEPTED B Y THE HONBLE ITAT EARLIER. THE ASSESSEE IS A REAL ESTATE AND PROPERT Y DEVELOPER BASED OUT OF CHENNAI AND COULD NOT HAVE BECOME AN AGRICULTURIST BY HIMSELF. AT BEST, HE COULD HAVE BEEN AN ABSENTEE LANDLORD EXPECTING INCOME FROM FAR OFF LANDS. IN THIS REGARD, THE AR HAS MADE THE FOLLOW ING WRITTEN SUBMISSION. IN ADDITION TO THE SUBMISSIONS OF THE APPELLANT DAT ED 11.2.2025, IT IS HUMBLY SUBMITTED WITH RESPECT TO THE ISSUE OF CL AIM OF AGRICULTURAL INCOME, PURSUANT TO THE ORDER OF THE ITAT IN THE EA RLIER AYRS, THE SAID CLAIM OF THE APPELLANT WAS ALLOWED IN FULL BY THE AO AND THE ITA NO.741/CHNY/2017 :- 4 -: RELEVANT ASSESSMENT ORDERS PASSED IN TERMS OF SECTI ON 254 R.W.S. 143(3) OF THE ACT ARE ENCLOSED HEREWITH. FURTHER THE DETAILS WITH REGARD TO THE INCOME AND EXPENDITURE OF THE AGRICUL TURAL ACTIVITIES ALONG WITH CHITTA AND ADANGAL EXTRACTS PRODUCED BEF ORE THE AO DURING THE COURSE OF THE ASSESSMENT ARE ALSO ENCLOS ED HEREWITH. FURTHER THE APPELLANT HAS ALSO PLACED ON RECORD THE SCRUTINY ORDERS FOR THE AYRS.2012-13, 2013-24 & 2014-15 WHEREIN THE CLAIM OF AGRICULTURAL INCOME WAS ALLOWED IN FULL. IN SUCH C IRCUMSTANCES, THE APPELLANT PLEADS FOR ALLOWING THE SAME IN FULL IN THE INTEREST OF JUSTICE. *** 5. THE SUBMISSIONS ARE FURTHER CONSIDERED. ASSESSEE HAS NOT GIVEN ANY DETAILS OF CROPS SOWN AND HARVESTED. THE DETA ILS OF AGRICULTURAL OPERATIONS CONDUCTED WITH PURCHASE OF SEEDS, MANUR E OR PESTICIDES HAVE NOT BEEN GIVEN. ASSESSEE IS NOT ABLE TO SHOW A SI NGLE RUPEE OF EXPENDITURE INCURRED EITHER BY MEANS OF BANK TRANSA CTION OR ANY PURCHASE VOUCHER MAINTAINED. ASSESSEE HAS CLAIMED THE ENTIR E RECEIPT IN CASH AND THE SOURCE OF SAID CASH RECEIPT HAS ALSO NOT BEEN R EVEALED. IT APPEARS THAT THE ASSESSEE IS TRYING TO PASS OFF HIS OTHERWISE CA SH INCOMES AS AGRICULTURAL INCOME. HOWEVER, ASSESSEE HAS PROVED T HE OWNERSHIP OF LAND. IN VIEW OF THE SAME, ASSESSEE IS GIVEN THE BENEFIT OF HAVING RECEIVED RS.10,000 PER ACRE OF DRY LAND AS ABSENTEE LAND LOR D OF LANDS IN SALEM DISTRICT. AO IS DIRECTED TO ALLOW AN AMOUNT OF RS,2 ,10,000 NS AGRICULTURAL INCOME AND BRING THE BALANCE OF RS.8,10,708 AS UNEX PLAINED INCOME FROM OTHER SOURCES. 5. THE ASSESSEE BEING AGGRIEVED BY AN APPELLATE ORD ER PASSED BY LEARNED CIT(A), FILED SECOND APPEAL WITH TRIBUNAL AND IT WA S SUBMITTED BEFORE THE BENCH BY LEARNED COUNSEL FOR THE ASSESSEE THAT LD.C IT(A) HAS ADMITTED THAT ASSESSEE IS ENGAGED IN AGRICULTURAL OPERATIONS AND THE ASSESSEE IS OWNING 21 ACRES OF AGRICULTURAL LAND NEAR SALEM IT WAS SUBMITTED THAT IN ASSESSMENT YEAR 2009-10, THE LD.CIT(A) WAS PLEASED TO ALLOW 50% OF THE INCOME DECLARED BY ASSESSEE AS AN AGRICULTURE INCOM E DERIVED FROM SAID LAND AND WHEN THE MATTER CAME UP BEFORE TRIBUNAL I N SECOND APPEAL FILED BY ASSESSEE, THE TRIBUNAL WAS PLEASED TO ALLOW 75% OF THE INCOME DECLARED BY ASSESSEE AS AN AGRICULTURE INCOME. THE LD.DR OBJECTED TO THE ITA NO.741/CHNY/2017 :- 5 -: SAME AND SUBMITTED THAT 21 ACRES OF AGRICULTURAL L AND COULD NOT YIELD THAT MUCH QUANTUM OF AGRICULTURAL INCOME. OUR ATTENTION WAS DRAWN BY LEARNED DR TO PAGE NO.20 OF THE PAPER BOOK, WHEREIN , ASSESSEE HAS SUBMITTED AGRICULTURAL INCOME AND EXPENDITURE ACCO UNT FOR THE FINANCIAL YEAR 2007-08(AY: 2008-09) AND THE ASSESSEE IS SHOW ING LEASE RENT FROM PADAPPAI LANDS AND KOLLI HILLS . IT WAS SUBMITTED B Y LEARNED DR THAT 21 ACRES OF LAND CANNOT YIELD SUCH A HIGH REVENUE/INCO ME. THE LEARNED DR HAS PLACED ON RECORD SOME CLIPPINGS DOWNLOADED FROM INTERNET PREPARED BY ONE JAGDISH REDDY WHEREIN IT IS CLAIMED THAT B LACK PEPPER CAN YIELD PROFIT OF ONLY RS. 1,65,000/- PER ACRE IN 8 YEARS, TO JUSTIFY HER STAND THAT THE ASSESSEE IS DECLARING HIGHER INCOME AS AGRICULT URE INCOME, WHICH AS PER LEARNED DR IS INFACT INCOME NOT DERIVED FROM AG RICULTURAL OPERATIONS BUT IS AN INCOME FROM UNEXPLAINED SOURCES. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT SIMILAR ISSUE CAME UP BEFORE CHENNAI- TRIBUNAL FOR AY: 2009-10 IN ASSESSEES OWN CASE , W HEREIN AFTER CONSIDERING CONTENTIONS OF BOTH THE PARTIES AND PER USING MATERIAL ON RECORD , TRIBUNAL WAS PLEASED TO HOLD THAT 75% OF THE INCOME DECLARED BY ASSESSEE TO BE AN INCOME FROM AGRICULTURAL , VIDE I TS ORDERS IN ITA NO.1031/MDS/2014 DATED 07.10.2016 , BY HOLDING AS UNDER: 5. THE FIRST GROUND RELATES TO RESTRICTING THE CLA IM OF AGRICULTURAL INCOME AT 50% OF RS.18,33,002/-. IN THE RETURN OF INCOME, THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME AT RS.18,33,002/-. SINCE THE AS SESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL OPERATION, THE ASSESSING OFFICER TREAT ED THE ABOVE INCOME AS INCOME FROM UNEXPLAINED SOURCES AND BROUGHT TO TAX. ITA NO.741/CHNY/2017 :- 6 -: 5.1 ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AND BY FOLLOWING THE DECISION OF COORDINATE BENCH OF THE T RIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS IN I.T.A. NOS. 1507 TO 1511/MDS/2011 DATED 06.06.2013, WHEREIN IT WAS HELD THAT ONCE THE ASSES SEE HAS PROVED THE HOLDING OF THE AGRICULTURAL LANDS, TO PRESUME THAT NO AGRICULT URAL INCOME WAS DERIVED THEREFROM WAS UNFAIR, THE LD. CIT(A) HAS RESTRICTED 50% OF THE INCOME OF RS.18,33,002/- AS INCOME DERIVED FROM THE SAID LAND HOLDINGS AND SUSTAINED BALANCE 50%. 5.2 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) WAS NOT CORRECT IN RESTRICTING THE AGRICULTU RAL INCOME AND PLEADED THAT THE DISALLOWANCE OF 50% OF AGRICULTURAL INCOME SHOULD B E TREATED AS INCOME FROM AGRICULTURE. ON THE OTHER HAND, THE LD. DR SUPPORTE D THE ORDER OF THE LD. CIT(A). 5.3 WE HAVE CONSIDERED BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME AT RS.18,33,002/-. SINC E THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF REAL ESTATE, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE CANNOT BE CONSIDERED AS A CULTIVATOR OR RECEIVER OF RENT IN KIND AS PER THE DEFINITION UNDER SECTION 2(14) OF THE ACT AND MADE THE DISALLOWANCE BY TREATING THE ABOVE INCOME AS INCOME FROM UNEXPLAINED SOURCES . IT IS NOT DISPUTED THAT THE ASSESSEE WAS HOLDING AGRICULTURAL LAND TO CLAIM AGR ICULTURAL INCOME. IN THIS CASE, THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME IN THE FORM OF LEASE RENT RECEIPT IN RESPECT OF THE AGRICULTURAL LANDS AT DIFFERENT PLAC ES. AGAINST THE APPEALS FILED BY THE ASSESSEE FOR EARLIER ASSESSMENT YEARS, THE TRIB UNAL VIDE ITS ORDER DATED 06.06.2013 HAS HELD THAT ONCE THE ASSESSEE HAS PROV ED THE HOLDING OF THE AGRICULTURAL LANDS TO PRESUME THAT NO AGRICULTURAL INCOME WAS DERIVED THEREFROM WAS UNFAIR. HOWEVER, IN THE ABSENCE OF COMPLETE DET AILS WITH REGARD TO DERIVING OF INCOME FROM THE SAID LANDS, THE LD. CIT(A) ALLOWED 50% OF THE INCOME OF RS.18,33,002/- AS INCOME DERIVED FROM THE SAID LAND HOLDINGS AND SUSTAINED THE BALANCE DISALLOWANCE. 5.4 THE MAIN DISPUTE OF THE DEPARTMENT IS WITH REGA RD THE INCOME FROM THE LANDS AT KOLLI HILLS AND ULAGANKATHAN VILLAGE. THE ABOVE LOCATION OF THE LAND HOLDINGS ARE NOT SITUATED IN METRO CITY SO THAT THE LEASE-HOLDER CAN EXECUTE AGREEMENT OR OF ANY KIND AND THE ASSESSEE CAN PRODU CE THE SAME BEFORE THE AUTHORITIES BELOW. WE HAVE CAREFULLY CONSIDERED THE APPELLATE ORDER AND ASSESSMENT ORDER PASSED BY THE AUTHORITIES BELOW ON THIS ISSUE. WHEN THE AGRICULTURAL LAND HELD BY THE ASSESSEE WAS NOT DISP UTED, IT CANNOT BE HELD THAT THERE WAS NO INCOME FROM THE ABOVE SAID AGRICULTURA L LAND HOLDINGS. SINCE THE LD. CIT(A) RESTRICTED THE DISALLOWANCE ON ESTIMATED BAS IS IN THE ABSENCE OF MATERIAL EVIDENCE FOR THE INCOME EARNED BY THE ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) I S ON HIGHER SIDE AND IT HAS TO BE REASONABLY REDUCE THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A). ACCORDINGLY, WE ALLOW 75% OF THE INCOME OF RS.18,33,002/- AS INCOME DERIVED FROM THE SAID LAND HOLDINGS AND THE ASSESSING OFFICER IS DIRECTED TO D ISALLOW THE BALANCE 25%. THUS, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED . 6.2 RESPECTFULLY FOLLOWING THE AFORESAID APPELLATE ORDER DATED 07.10.2016 PASSED BY TRIBUNAL IN ITA NO.1031/MDS/2014 FOR AY: 2009-10 AND IN ORDER TO MAINTAIN CONSISTENCY , WE ALLOW 75% OF THE INCOM E TO THE TUNE OF RS. 10,20,708/- DECLARED BY ASSESSEE AS AGRICULTURAL IN COME , BY RELYING ON ITA NO.741/CHNY/2017 :- 7 -: THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF RADHASOAMI SATSANG V. CIT REPORTED IN (1992) 193 ITR 321(SC) I N ORDER TO MAINTAIN CONSISTENCY. WE NOTE THAT LEARNED CIT(A) ACCEPTED A GRICULTURE INCOME FROM SAID LANDS HELD BY ASSESSEE TO THE TUNE OF RS. 10,000/- PER ACRE FOR IMPUGNED AY AND REVENUE HAS NEITHER FILED ANY APPEA L NOR FILED ANY CROSS OBJECTIONS AGAINST THE SAID DECISION OF LEARNED CIT (A) ACCEPTING AGRICULTURAL INCOME PARTIALLY FROM SAID LAND TO THE TUNE OF RS. 10,000/- PER ACRE. THUS, THE APPEAL FILED BY ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 741/CHNY/2017 FOR AY: 2008-09 IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THE 10 TH DAY OF FEBRUARY, 2020 IN CHENNAI. SD/- SD/- ( . . . ) ( N.R.S. GANESAN ) /JUDICIAL MEMBER ( ' ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 10 TH FEBRUARY, 2020. TLN . ,'3 43 /COPY TO: 1. + /APPELLANT 4. 5 /CIT 2. ,-+ /RESPONDENT 5. 3 , /DR 3. 5 ( ) /CIT(A) 6. ( /GF