Ramasahayam Jayanth Reddy , Khammam V. Income Tax Officer, Ward-1, Khammam

ITA 815/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0899 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 23-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 20-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURTHY NAIR
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A - SMC BENCH : HYDERABAD BEFORE S HRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER ITA NO. 815 /HYD./201 9 ASSESSMENT YEAR: 20 14 - 15 SH. RAMASAHAYAM JAYANTH REDDY VS. ITO WARD 1 H.NO.3 - 23, PALAIR MAIN ROAD KHAMMAM KUSUMANCHI MANDAL 6 - 3 - 655/2/3, SOMAJIGUDA KHAMMAM 507 001 PAN: A LLPR9022K (APPELLANT) (RESPONDENT) FOR ASSESSE E : S MT. S. SANDHYA, A.R. FOR REVENUE : S H. M. MURTHY NAIR, D.R. DATE OF HEARING : 23 / 01/2020 DATE OF PRONOUNCEMENT : 05 / 06 / 2020 O R D E R THIS APPEAL IS FILED BY ASSESSEE AGGRIEVED BY THE ORDER OF THE LD.CIT(A) - 8 DATED 1 4 .0 2 .201 9 IN ITA NO. 10272 / CIT(A) - 8/HYD/2018 - 19 FOR THE A.Y. 20 14 - 15 . 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL. HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION OF RS.1 6,65,0 00/ - BEING THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS HOTELS AND RESTAURANTS FOR WHICH SOURCE IS NOT EXPLA INED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL EARNING INCOME FROM AGRICULTURE AND INCOME FROM OTHER SOURCES. I NFORMATION WAS RECEIVED FROM N MS THAT THE ASSESSEE HAD MADE PAYMENTS TO HOTELS AND RESTAURANTS TO THE TUNE OF RS. 16,65,000/ - BASED ON WHICH A LETTER WAS ISSUED ITA NO. 815 /HYD./201 9 AY 20 14 - 15 SRI RAMASAHAYAM JAYANTH REDDY, KHAMMAM VS. ITO, WARD 1, KHAMMAM . 2 TO THE ASSESSEE ON 06.05.2016 CALLING FOR THE EXPLANATION FOR THE SOURCE OF INCOME FOR MAKING PAYMENTS TO HOTELS AND RESTAURANTS . THEREAFTER THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT A.Y. 20 14 - 15 ON 14.06.2017 ADMITTING TOTAL INCOME OF RS. 1 , 50,000/ - . SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY. ON QUERY WITH RESPECT TO THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE, IT WAS EXPLAINED BY THE LD.A.R. THAT BASICALLY THE ASSESSEE I S AN AGRICULTURIST OWNING 20.33 ACRES OF AGRICULTURAL LAND AT PALLAIR VILLAGE KUSUMANCHI MANDAL, KHAMMAM DISTRICT. THE LD.AR ALSO SUBMITTED COPY OF THE PATTADAR PASS BOOK OF THE LAND OWNED BY THE ASSESSEE. IT WAS ALSO EXPLAINED THAT THE ASSESSEE HAD INHE RITED THE AGRICULTURAL LAND FROM HIS ANCESTORS. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE IS CULTIVATING THE AGRICULTURAL LAND SINCE HE INHERITED THE LAND AND WAS E ARNING GOOD AMOUNT OF AGRICULTURAL INCOME. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS ONE DAUGHTER AND ONE SON AND THE EXPENDITURE INCURRED FOR RS.16,65,000/ - WAS WITH RESPECT TO THE PAYMENTS MADE TO HOTELS AND RESTAURANTS , ON THE OCCASION OF THE MARRIAGE OF THE ASSESSEES DAUGHTER. THE LD.AR FURTHER SUBMITTED THAT THE ENTIRE EXPENDITURE WAS MADE OUT OF THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE OVER A PERIOD OF TIME. HOWEVER, SINCE THE ASSESSEE HAD NOT SUBMITTED THE B ANK ACCOUNT DETAILS, THE LD.AO OPINED THAT THE SOURCES OF INCOME TOWARDS THE PAYMENTS MADE TO HOTELS AND RESTAURANTS WERE NOT PROPERLY EXPLAINED. HENCE LD.AO MADE ADDITION OF RS.16.65,000/ - IN THE HANDS OF THE ASSESSEE INVOKING PROVISIONS OF SEC.144 OF TH E INCOME TAX ACT, 1961 (THE ACT) BECAUSE NEITHER THE ASSESSEE NOR HIS COUNSEL APPEARED FURNISHING THE DETAILS OF BANK ACCOUNTS THOUGH SEVERAL LETTERS WERE ISSUED AND THE CASE WAS GETTING TIME BARRED BY LIMITATION. 4. ON APPEAL THE LD.CIT(A) ALSO PASSED AN EX - PARTE ORDER AS THE ASSESSEE HAD FAILED TO APPEAR BEFORE HIM . THE LD.CIT(A) HAS OPINED THAT SINCE THE EVIDENCE OR DETAILS WERE NOT FILED BY ASSESSEE DURING THE APPELLATE PROCEEDINGS, THE ORDER OF LD.AO DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY HE CONFIRMED THE ORDER OF THE LD.AO. ITA NO. 815 /HYD./201 9 AY 20 14 - 15 SRI RAMASAHAYAM JAYANTH REDDY, KHAMMAM VS. ITO, WARD 1, KHAMMAM . 3 5. BEFORE ME THE LD.AR VEHEMENTLY ARGUED STATING THAT THE ASSESSEE IS ONLY AN AGRICULTURIST OWNING EXTENSIVE AGRICULTURAL LAND AND THE ENTIRE INCOME EARNED BY HIM IS FROM AGRICULTURAL OPERATIONS. THE LD.AR FURTHER SUB MITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS PAYMENTS MADE TO HOTELS AND RESTAURANTS TO THE TUNE OF RS.16,65,000/ - WAS WITH RESPECT TO THE MARRIAGE FUNCTION OF HIS DAUGHTER. THE LD.AR FURTHER ARGUED THAT THE ASSESSEE HAD ALSO PRODUCED THE PROOF OF OWNING THE AGRICULTURAL LAND BY THE ASSESSEE AND ACCRUAL OF AGRICULTURAL INCOME WAS NOT DISPUTED BY THE LD.REVENUE AUTHORITIES. LD.AR FURTHER SUBMITTED THAT THE ENTIRE ADDITION MADE BY THE LD. REVENUE AUTHORITIES W AS FOR THE ONLY REASON THAT T HE ASSESSEE HAD NOT PRODUCED THE BANK PASS BOOK TO ESTABLISH THE ACCUMULATION OF FUNDS. THE LD.AR PRAYED THAT THE AGRICULTURIST IN REMOTE AREAS OFTEN DO NOT ACCUMULATE THE FUNDS IN THE BANK ACCOUNT BUT KEEP IT UNDER VARIOUS OTHER FORMS WHICH WILL BE UTIL ISED FOR NECESSITIES AT THE APPROPRIATE TIME. IT WAS, THEREFORE, PLEADED THAT THE ADDITION MADE BY THE LD.AO MAY BE DELETED. 5. LD.DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF LD. REVENUE AUTHORITIES AND PLEADED FOR CONFIRMING THEIR ORDERS. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD AND I FIND MERIT IN THE SUBMISSIONS OF THE LD. A R. THERE IS NOT DOUBT THAT THE ASSESSEE IS IN POSSESSION OF AGRICULTURAL LAND TO THE EXTENT OF 20.33 ACRES WHICH IS EVIDENCED BY THE PATTADAR PASS BOOK. THE REVENUE HAS NOT DISPUTED THE SAME EITHER . MOREO VER, THERE IS NOTHING ON RECORD TO ESTABLISH THAT THE ASSESSEE WAS NOT EARNING AGRICULTURAL INCOME. FOR AN AGRICULTURIST OWNING MORE THAN 20 ACRES OF LAND , IT IS QUITE NORMAL TO ACCUMULATE FUNDS TO THE EXTENT OF APPROXIMATELY R S.20 LAKHS OVER A PERIOD OF TIME IN ORDER TO MEET THE MARRIAGE EXPENDITURE OF HIS DAUGHTER. IT IS NOT NECESSARY FOR A N AGRICULTURIST TO ACCUMULATE THE ENTIRE SAVINGS FROM AGRICULTURAL INCOME IN THE BANK ACCOUNT . H E IS AT LIBERTY TO RETAIN THE SAME IN VARIOUS OTHER FORMS AND UTILISE AT THE TIME OF NEED. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES ITA NO. 815 /HYD./201 9 AY 20 14 - 15 SRI RAMASAHAYAM JAYANTH REDDY, KHAMMAM VS. ITO, WARD 1, KHAMMAM . 4 OF THE CASE, I AM OF THE VIEW THAT THE ADDITION MADE BY THE LD.AO WHICH IS FURTHER SUSTAINED BY THE LD.CIT(A) IS NOT WARRANTED. HENCE I HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE FOR RS.16,65,000/ - TOWARDS THE PAYMENTS MADE BY ASSESSEE TO HOTELS AND RESTAURAN TS BY TREATING THE SOURCE OF SUCH EXPENDITURE A S NOT ESTABLISHED. 6.1. BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING WHICH IS THOUGH AGAINST THE USUAL NORMS , I FIND IT APPROPRIATE TAKING INTO CONSID ERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DUE TO COVID 19 PANDEMIC. WHILE DOING SO I HAVE RELIED IN THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14 TH MAY, 2020. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE 05 TH JUNE, 2020 . SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER DATED: 05 TH JUNE, 2020 . *GMV COPY FORWARDED TO: 1. SRI RAMASAHAYAM JAYANTH REDDY, HNO.3 - 23, PALAIR MAIN ROAD, KUSUMANCHI MANDAL, KHAMMAM 507 001. 2. ITO, WARD 1, KHAMMAM 3. ACIT, KHAMMAM RANGE , KHAMMAM /CIT(A) - 8 HYD. 4. PR.CIT - 7 , HYDERABAD 5 . D.R. ITAT HYDERABAD 6 . GUARD FILE // C O P Y // ITA NO. 815 /HYD./201 9 AY 20 14 - 15 SRI RAMASAHAYAM JAYANTH REDDY, KHAMMAM VS. ITO, WARD 1, KHAMMAM . 5 1. DRAFT DICTATED ON 02/06/2020 2. DRAFT PLACED BEFORE THE AUTHOR 04/06/2020 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 05/06/2020 7. FILE SENT TO BENCH CLERK