M. Ramachander Rao, Nalgonda, Hyderabad V. ITO,Ward-1(1), Nalgonda, Nalgonda

ITA 92/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6396 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 22-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 28-01-2016
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: RAVINDRA CHENJI
• Keywords: Income from undisclosed sources; Source of fund
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 92/HYD/2016 ASSESSMENT YEAR: 2005-06 M. RAMACHANDER RAO, NALGONDA [PAN: AGJPM8303K] VS INCOME TAX OFFICER, WARD-1(1), NALGONDA (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI RAVINDRA CHENJI, AR FOR REVENUE : SHRI M. SITARAM, DR DATE OF HEARING : 22-06-2016 DATE OF PRONOUNCEMENT : 30-06-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-3 HYDERABAD DA TED 19-10-2015 CONFIRMING THE AMOUNT OF RS. 5,75,000/- AS INCOME FROM UNDISCLOSED SOURCES U/S. 69 OF THE INCOME TAX ACT [ACT]. 2. ON VERIFICATION OF PAYMENTS MADE TO M/S. PRATHIM A INSTITUTE OF MEDICAL SCIENCES, KARIMNAGAR FOR ASSESSEES DAUG HTERS ADMISSION INTO MBBS COURSE, THE ASSESSING OFFICER (AO ) NOTICED THAT ASSESSEE HAS PAID FEE OF RS. 11,50,000/- ON 23-0 7-2004 AND ALSO RS. 3,89,381/- AND RS. 4 LAKHS IN SUBSEQUENT PE RIOD. AO ENQUIRED THE SOURCES OF PAYMENTS FOR WHICH ASSESSEE E XPLAINED THAT HE HAS LAND MEASURING 34 ACRES IN THE HUF STATUS A ND HAS AGRICULTURAL INCOME. ASSESSEE ALSO SHOWED RETURN OF HUF FILED ON 27-03-2003 FOR AY. 2002-03 ADMITTING AGRICULTURAL INC OME OF RS. 2,33,000/-. AO WHILE ACCEPTING 50% OF THE AMOUNT HAVI NG SOURCES I.T.A. NO. 92/HYD/2016 M. RAMACHANDER RAO :- 2 -: FROM AGRICULTURAL INCOME, TREATED THE BALANCE 50% OF TH E FEE PAID AS INCOME FROM UNDISCLOSED SOURCES AND BROUGHT TO TA X AN AMOUNT OF RS. 5,75,000/- FOR THE AY. 2005-06. SIMILA RLY, HE BROUGHT TO TAX AN AMOUNT OF RS. 1,94,690/- IN AY. 2008 -09 AND RS. 2 LAKHS IN AY. 2009-10. 3. BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT ASSESSEE HAS AGRICULTURAL SOURCES AND THE AMOUNTS CANNOT BE BROUGH T TO TAX. WHILE ACCEPTING THAT ASSESSEE HAS SOURCES FROM AGRICUL TURAL INCOME, LD. CIT(A) DELETED THE ADDITION IN AY. 2008-0 9 AND 2009- 10 IN THE COMMON ORDER BUT SUSTAINED THE AMOUNT IN AY. 2005-06 BY STATING AS UNDER: 3.4 TAKING INTO ACCOUNT ALL THESE FACTS, THE AO W AS FAIR ENOUGH TO ALLOW 50% OF THE PAYMENT I.E., RS. 5,75,0 00/- AS THE INCOME FROM AGRICULTURE FOR AY. 2005-06 WHICH WORKS OUT TO INCOME OF RS. 20,000/- PER ACRE. THE ACTION OF THE AO IS VERY REASONABLE. THEREFORE, THE DISALLOWANCE MADE BY AO OF RS. 5,75,000/- IS CONFIRMED. 4. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE ORDERS OF THE AUTHORITIES, I AM OF THE OPINION THAT NO AD DITION IS WARRANTED ON THE FACTS OF THE CASE. THERE IS NO DISPUTE THAT ASSESSEE HAS AGRICULTURAL LANDS WHICH ARE IRRIGATED A ND WAS GROWING PADDY AND MIRCHI ETC,. AO HIMSELF HAS ACCEPTE D AND GAVE CREDIT FOR THE INCOME OF RS. 5,75,000/- IN AY. 2005-0 6 ITSELF AND BASED ON THAT, LD. CIT(A) DELETED THE SMALL ADDITIONS MADE IN LATER YEARS. EVEN THOUGH, ASSESSEE MAY NOT HAVE AGRICULTURA L INCOME TO JUSTIFY RS. 11,50,000/- FEE IN THAT YEAR ENTIRELY, WHA T ONE CAN NOTICE IS THAT ASSESSEES HUF ITSELF OWNS 34 ACRES OF IRRIGATED LAND AND WAS ADMITTING AGRICULTURAL INCOMES IN EARLIER YE ARS. FOR THE DAUGHTERS EDUCATION, ASSESSEE MAY BE SOURCING THE FUN DS AND CAN USE THE EARLIER YEARS INCOMES. JUST BECAUSE ASSESS EE HAS PAID A I.T.A. NO. 92/HYD/2016 M. RAMACHANDER RAO :- 3 -: FEE OF RS. 11,50,000/- DURING THE YEAR, IT CANNOT BE CONSIDERED THAT ENTIRE AMOUNT IS UNEXPLAINED OR PART OF THE AMOUNT IS UN EXPLAINED WHEN ASSESSEE HAS A REGULAR SOURCES OF INCOME THROUG H AGRICULTURAL OPERATIONS. IN VIEW OF THAT, I AM OF TH E OPINION THAT ADDITION MADE BY THE AO IS NOT WARRANTED ON THE FACTS OF THE CASE. 5. BEFORE PARTING, I WOULD LIKE TO PLACE ON RECORD THA T ACTION OF THE AO CANNOT BE APPRECIATED IN THE SENSE THAT HE HAS I NVOKED THE PROVISIONS OF SECTION 69 WHEN THE CORRECT SECTION COULD BE SECTION 69C. EVEN OTHERWISE, ASSESSEE HAS HIS INDIVIDUAL S TATUS INCOMES AS WELL AS HUF INCOMES. IT IS ON RECORD THAT HUF IS A LSO FILING RETURNS. INSTEAD OF CORRELATING THE VARIOUS SOURCES OF FUNDS, AO GAVE CREDIT FOR THE HUF INCOME CONSIDERING THAT THE FEE PAID WAS IN THE INDIVIDUAL HANDS AND BROUGHT TO TAX 50% OF THE AMOU NT AS UNEXPLAINED. THIS ACTION OF THE AO CANNOT BE APPRE CIATED CONSIDERING THAT ASSESSEE COULD HAVE PAID THE FEE IN H UF STATUS FOR THE STUDY OF HIS DAUGHTER. 6. BE THAT AS IT MAY, LD. CIT(A) TREATS THE AMOUNT AS A DISALLOWANCE MADE BY THE AO WITHOUT CONSIDERING THAT ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE. THE ENTIRE ORDER OF THE CIT(A) IS ON THE UNDERSTANDING THAT AO DISALLOWED 50% OF THE PAY MENTS AND WHILE DELETING THE AMOUNTS IN AY. 2008-09 AND 2009-10, CONFIRMED THE DISALLOWANCE ( SIC ) MADE BY THE AO IN THE IMPUGNED ASSESSMENT YEAR. SINCE THERE IS NO DISALLOWANCE MADE BY THE AO A ND THE ADDITION IS MADE ON ENQUIRY OF THE SOURCES FOR PAYMEN T OF COLLEGE FEE, THE ORDER OF THE CIT(A) ALSO CANNOT BE APPRECIAT ED. SURPRISING THAT SENIOR OFFICER LIKE CIT(A) DID NOT APPLY THEIR MI ND WHILE CONFIRMING THE AMOUNT. AO IS DIRECTED TO ACCEPT ASSESS EE I.T.A. NO. 92/HYD/2016 M. RAMACHANDER RAO :- 4 -: EXPLANATION FOR THE SOURCE OF FUNDS. ASSESSEES GROU NDS ARE ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 30 TH JUNE, 2016 TNMM COPY TO : 1. M. RAMACHANDER RAO, NALGONDA. C/O. RAVINDRA CHENJI, ADVOCATE, C-308, AHUJA ESTATE, HYDERABAD. 2. INCOME TAX OFFICER, WARD-1(1), NALGONDA. 3. COMMISSIONER OF INCOME TAX(APPEALS)-3, HYDERABAD 4. THE PR. COMMISSIONER OF INCOME TAX-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.