ACIT, Hyderabad V. Kasani Ghaneshwar, Hyderabad

ITSSA 45/HYD/2009

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8545 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-04-2011
• Assessment Year: misc
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS; V SRINIVAS
• Assessee Lawyers: K A SAI PRASAD; K V S BHASKARA RAO
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Unexplained expenditure; Capital asset; Business income; Search and seizure; Valuation report; Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL M EMBER ITA NO.526A/HYD/2005 : A SSESSMENT YEAR 2000-01 ITA NO.508/HYD/2007 : ASSESSMENT YEAR 2000-01 ITA NO.543/HYD/2006 : ASSESSMENT YEAR 2000-01 ITA NO.226/HYD/2007 : ASSESSMENT YEAR 2003-04 ITA NO.1407/HYD/2010 : A SSESSMENT YEAR 2004-05 IT(SS)A NO.44/HYD/2009 : BLOCK PERIOD FROM 19 89-90 TO 1999-2000 SHRI K.GNANESHWAR, HYDERABAD ( PAN - AAUPK 1302 K) V/S. DY./ ASST. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.641/HYD/2006 : ASSESSMENT YEAR 2000-01 IT(SS)A NO.45/HYD/2009 : BL OCK PERIOD FROM 1989-90 TO 1999-2000 DY./ ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(1), HYDERABAD V/S. SHRI K.GNANESHWAR, HYDERABAD ( PAN - AAUPK 1302 K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.V.S.BHASKARA RAO & SHRI K.A.SAI PRASAD DEPARTMENT BY : SH RI V.SRINIVAS & SMT. NIVEDITA BISWAS DATE OF HEARING 22.8.2012 DATE OF PRONOUNCEMENT 19.12.2012 ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 2 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THERE ARE EIGHT APPEALS IN ALL IN THIS BUNCH. SI X OF THEM ARE BY THE ASSESSEE AND THE REMAINING TWO ARE BY THE REVEN UE. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE BEING DISPOS ED OFF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. LET US FIRST TAKE UP THE APPEALS FOR THE ASSESS MENT YEAR 2000-01, WHICH ARE FOUR IN NUMBER, THREE BEING BY THE ASSESS EE AND THE REMAINING ONE BEING BY THE REVENUE. ASSESSEES APPEALS : ITA NO.526A/HYD/2005 : A SSESSMENT YEAR 2000-01 ITA NO.508/HYD/2007 : ASSESSMENT YEAR 2000-01 ITA NO.543/HYD/2006 : ASSESSMENT YEAR 2000-01 & REVENUES APPEAL ITA NO.641/HYD/2006 : ASSESSMENT YEAR 2000- 01 CROSS-APPEALS AGAINST ORIGINAL ASSESSMENT : 3. OUT OF THESE FOUR APPEALS FOR ASSESSMENT YEAR 2000-01 AGAIN, WE MAY TAKE UP FIRST FOR CONSIDERATION, THE CROSS APPE ALS ARISING OUT OF THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR 2000-01 , VIZ. ITA NO.543/HYD/2006 BY THE ASSESSEE AND ITA NO.641/HYD/ 2006 BY THE REVENUE WHICH ARE CROSS-APPEALS, DIRECTED AGAINST THE ORDER OF THE CIT(A) TIRUPATI, DATED 14.3.2006 ON THE APPEAL ARISING OUT OF THE AS SESSMENT UNDER S.143(3) OF THE ACT, FRAMED BY THE ASSESSING OFFICER DATED 2 4.3.2003. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 3 4. EFFECTIVE GRIEVANCE OF THE ASSESSEE IN ITS APPE AL ITA NO.543/HYD/2006 IS WITH REGARD TO NON-GRANT OF DEDU CTION ON ACCOUNT OF SELF- SUPERVISION, WHILE DETERMINING THE COST OF CONSTRUC TION OF A PROPERTY. EFFECTIVE GRIEVANCE OF THE REVENUE IN ITS APPEAL IT A NO.641/HYD.2006 IS AGAINST THE RELIEF GRANTED BY THE CIT(A) IN THE MAT TER OF COST OF CONSTRUCTION ADOPTED BY THE ASSESSING OFFICER TO ARRIVE AT THE U NEXPLAINED INVESTMENT OF THE ASSESSEE. 5. BRIEF FACTS OF THE CASE IN RELATION TO THIS ISS UE ARE THAT THE ASSESSEE CONSTRUCTED A HOUSE AT BACHUPALLI MANDAL A ND ALSO MADE INVESTMENT IN A PROPERTY NEAR ISNAPUR. THE ASSESSING OFFICER R EFERRED THE MATTER IN RESPECT OF ISNAPUR PROPERTY TO THE DEPARTMENTAL VAL UATION OFFICER (DVO) TO ASCERTAIN THE COST OR CONSTRUCTION. BASED ON THE V ALUATION REPORT FURNISHED BY THE DVO DETERMINING THE COST OF CONSTRUCTION AT RS.66.03 LAKHS, THE ASSESSING OFFICER ARRIVED AT THE TOTAL INVESTMENT I N THE PROPERTIES AT RS.71.03 LAKHS, COMPRISING OF RS.66.03 IN RESPECT OF ISNAPUR PROPERTY AND RS.5 LAKHS IN RESPECT OF PROPERTY IN BACHUPALLY MANDAL. ASSESSEE DISCLOSED THE TOTAL INVESTMENT IN THESE PROPERTIES AT RS.25.5 LAKHS. T HE ASSESSING OFFICER TREATED THE DIFFERENCE OF RS.41.03 LAKHS AS UNEXPLA INED INVESTMENT IN THE PROPERTIES IN QUESTION. ON APPEAL, THE CIT(A), EST IMATED THE TOTAL COST OF CONSTRUCTION AT RS.35 LAKHS, BRUSHING ASIDE THE REP ORT OF THE DVOS AND CONSIDERING THE VALUATION REPORT OF THE REGISTERED VALUER FURNISHED BY THE ASSESSEE, WHO DETERMINED THE VALUATIONS AT RS.28.1 LAKHS AS THE BASE AND INCREASED IT BY 25%, WHICH WORKED OUT TO RS.35 LAKH S. THE CIT(A) ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO SUSTA IN THE ADDITION OF RS. 10 LAKHS IN PLACE OF RS.41.03 LAKHS MADE BY HIM. AGAIN ST THIS FINDING OF THE CIT(A), BOTH THE ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 4 6. ACCORDING TO THE LEARNED AUTHORISED REPRESENTAT IVE, THE CONSTRUCTION OF PROPERTY IS INCOMPLETE AND THE PROP ERTY IS SITUATED IN MEDAK DISTRICT AND CENTRAL CPWD RATES FOLLOWED BY THE DVO CANNOT BE APPLIED STRAIGHT AWAY. HE PRAYED TO ACCEPT THE INVESTMENT R ETURNED BY THE ASSESSEE. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE SUBMITTED THAT THE CIT(A) REJECTED THE DVOS REPORT WITHOUT ASSIGNING ANY REASON, AND SINCE THE REPORT OF THE DVO IS IN ACCOR DANCE WITH THE CBDT GUIDELINES, THE CIT(A) OUGHT TO HAVE ADOPTED THE VA LUE DETERMINED BY THE DVO. 8. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED DEPA RTMENTAL REPRESENTATIVE THAT THE CIT(A) WAS NOT JUSTIFIED IN STRAIGHTWAY BR USHING ASIDE THE REPORT OF THE DVO, THAT TOO WITHOUT ASSIGNING ANY REASON. TH E CIT(A) IN THE NORMAL COURSE HAS TO TAKE THE COST DETERMINED BY THE DVO A S THE BASE, AS THE DVO IS THE AUTHORITY SPECIFIED IN THE ACT, TO WHOM REFE RENCE MAY BE MADE BY THE ASSESSING OFFICER FOR DETERMINING THE VALUE OF ANY CONSTRUCTION/PROPERTY, AND AS SUCH, REFERENCE TO THE DVO BY THE ASSESSING OFFI CER IS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THE ASSESSING OFFICER CO ULD HAVE MADE NECESSARY ADJUSTMENTS TO THE VALUE DETERMINED BY THE DVO AS T HE FACTS AND CIRCUMSTANCES OF THE CASE MAY WARRANT, TO ARRIVE A T THE ACTUAL COST OF CONSTRUCTION, AND WHEN THE ASSESSING OFFICER FAILED TO MAKE SUCH ADJUSTMENTS, THE CIT(A) COULD HAVE DONE SUCH ADJUST MENTS TO REDRESS THE GRIEVANCE OF THE ASSESSEE. IN THE CIRCUMSTANCES, W E ARE NOT INCLINED TO APPROVE THE ACTION OF THE CIT(A) IN STRAIGHT AWAY B RUSHING ASIDE THE REPORT OF THE DVO, AND PROCEEDING TO DETERMINE THE ESTIMATED COST OF CONSTRUCTION TAKING THE REPORT OF THE REGISTERED VALUER OF THE A SSESSEE AS THE BASE. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 5 9. FURTHER, IN THIS CASE, THE PROPERTY IS SITUATE D IN A REMOTE PLACE IN MADAK DISTRICT AND AS SUCH THE DELHI BASED CPWD RAT ES CANNOT BE STRAIGHT AWAY BE APPLIED WITHOUT MAKING SUITABLE ADJUSTMENTS TO ARRIVE AT THE RATES OF LOCAL PWD. AFTER THAT THE ASSESSEE HAS PLEADED THA T HE HAS PERSONALLY SUPERVISED THE CONSTRUCTION HIMSELF AND CARRIED ON THE CONSTRUCTION ACTIVITY. ON ACCOUNT OF THAT ALSO, CERTAIN DISCOUNT HAS TO BE GIVEN TOWARDS THE CONCESSIONS THAT THE ASSESSEE COULD GET ON ACCOUNT OF SELF SUPERVISION. HENCE, ON BOTH THE COUNTS, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN SIMILAR MATTERS FOLLOWING THE DECISIONS OF THE JURI SDICTIONAL TRIBUNAL IN THE CASE OF SALMA A. MEHDI, VISAKAHAPATNAM IN ITA NO.69 7 AND 698/HYD/93 AND G.PULLA REDDY V/S. JCIT VIDE ORDER DATED 29.10.2004 AND ACIT V/S. VINOD KUMAR AGARWAL (82 ITD 1), WE SET ASIDE THE IMPUGNE D ORDER OF THE CIT(A) DATED 14.3.2006, AND DIRECT THE ASSESSING OFFICER T O REDETERMINE THE COST OF CONSTRUCTIONS, BY GIVING A DISCOUNT OF 15% ON ACCOU NT OF RATE DIFFERENCE AND A FURTHER DISCOUNT OF 10% ON ACCOUNT OF SELF SUPERV ISION, FROM THE COST OF CONSTRUCTION DETERMINED BY THE DEPARTMENTAL VALUATI ON OFFICER, SUBJECT TO THE CONDITION THAT THE COST OF CONSTRUCTION THUS ARRIVE D AT ON THAT BASIS, TO BE ULTIMATELY ADOPTED BY THE ASSESSING OFFICER SHALL N OT BE LESS THAN THE COST OF CONSTRUCTION ADMITTED BY THE ASSESSEE HIMSELF. IN T HIS VIEW OF THE MATTER, THE GROUNDS OF THE ASSESSEE AS WELL AS THE REVENUE IN T HESE APPEALS ARE PARTLY ALLOWED. 10. IN THE RESULT, THESE CROSS-APPEALS -APPEAL OF THE ASSESSEE BEING ITA NO.543/HYD/2006 AND APPEAL OF THE REVENUE BEING 641/HYD/2006- ARE PARTLY ALLOWED. ASSESSEES APPEAL : ITA NO.526A/HYD/2005 : ASSESSMENT YEAR 20 00-01 11. NOW, WE MAY TAKE UP THE APPEAL OF THE ASSESSEE , BEING ITA NO.526A/HYD/2005 FOR CONSIDERATION. IT IS DIRECTED AGAINST THE ORDER OF THE ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 6 COMMISSIONER OF INCOME-TAX 2, HYDERABAD, DATED 24.3 .2005 PASSED UNDER S.263 OF HE ACT, WHEREBY THE COMMISSIONER OF INCOME -TAX HAS SET ASIDE THE ORIGINAL ASSESSMENT ORDER DATED 24.3.2003 PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2000-01 AND RESTORED THE MA TTER TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO CAUSE NECESSAR Y ENQUIRIES WITH REGARD TO AGRICULTURAL INCOME OF RS.11 LAKHS CLAIMED BY THE A SSESSEE, BEFORE ACCEPTING THE SAME. 12. BRIEF FACTS OF THE CASE RELEVANT TO THE ISSUE IN DISPUTE IN THIS APPEAL ARE THAT THE ASSESSING OFFICER, WHILE COMPLE TING THE ASSESSMENT UNDER S.143(3), VIDE ORDER DATED 24.3.2003, ACCEPTED THE AGRICULTURAL INCOME OF RS.11 LAKHS DECLARED BY THE ASSESSEE. ACCORDING TO THE COMMISSIONER OF INCOME-TAX, THE ASSESSING OFFICER HAS ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WITHOUT CAUSING ANY ENQUIR IES ABOUT THE AGRICULTURAL OPERATIONS CARRIED ON BY THE ASSESSEE. THE COMMISS IONER OF INCOME-TAX INVOKED THE PROVISIONS OF S.263 OF THE ACT AND PASS ED THE IMPUGNED ORDER ON THE REASON THAT MERE DISCLOSURE OF AGRICULTURAL INC OME DOES NOT TANTAMOUNT TO FULL DISCLOSURE OF THE ACTUAL SOURCE OF INCOME O F THE ASSESSEE AND THE ASSESSEE HAS TO PROVE THE NATURE OF THE INCOME TO T HE SATISFACTION OF THE ASSESSING OFFICER, MORE SO, WHEN THE ASSESSEE HAS A CTUALLY EARNED AGRICULTURAL INCOME AND CLAIMING IT AS EXEMPT FROM INCOME-TAX. THE ASSESSEE HAS CLAIMED THE AGRICULTURAL INCOME IN QUESTION EIT HER FROM THE LAND OWNED BY HIMSELF OR FROM OUT OF THE LANDS HELD BY HIM AS GPA HOLDER. ACCORDING TO THE COMMISSIONER OF INCOME-TAX, THE ASSESSMENT ORD ER UNDER S.143(3) DATED 24.3.2003, PASSED BY THE ASSESSING OFFICER AC CEPTING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE, WITHOUT CAUSING NE CESSARY ENQUIRIES TO ASCERTAIN THE CORRECTNESS OF THE NATURE OF THE INCO ME CLAIMED BY THE ASSESSEE, IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF REVENUE. HE ACCORDINGLY PASSED THE IMPUGNED ORDER WITH SUITABLE DIRECTIONS TO THE ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 7 ASSESSING OFFICER TO REFRAME THE ASSESSMENT ACCORDI NGLY. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME-TAX, ASSESSEE H AS PREFERRED THE PRESENT APPEAL, ITA NO.526A/HYD./2005, BEFORE US. 13. LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEE OWNING 379 ACRES OF AGRICULTURAL LAND, WHICH WAS ACTUALLY SUBJECTED TO AGRICULTURAL OPERATIONS. IT IS SUBMIT TED THAT THE ASSESSEE PURCHASED AGRICULTURAL LANDS OF 379 ACRES WHICH WER E ACTUALLY UNDER CULTIVATION. THEY ARE SUPPORTED BY PATTADAR PASS-BO OKS ETC. AND THE FACT THAT THE LANDS ARE UNDER CULTIVATION WAS NEVER DISPUTED BY THE ASSESSING OFFICER. THERE WAS A SEARCH AND SEIZURE OPERATION ON ASSESSE ES PREMISES ON 16.8.1999 AND IN THE BLOCK ASSESSMENT ORDER, THE VE RY SAME ASSESSING OFFICER WHILE DEALING WITH THE AGRICULTURAL INCOME CLEARLY ACCEPTED THE CLAIM OF THE ASSESSEE. THOUGH THE ASSESSING OFFICER ALLOWED AN ESTIMATED AGRICULTURAL INCOME OF RS.3,60,000 FROM 36 ACRES OWNED BY THE AS SESSEE, HE REFUSED TO ALLOW THE AGRICULTURAL INCOME DECLARED FOR SEVERAL ASSESSMENT YEARS IN THE BLOCK PERIOD ON THE GROUND THAT THE ASSESSEE HAD ON LY A GPA AND WAS NOT THE LEGAL OWNER OF THE LAND. ON APPEAL, THE CIT(A), O BSERVING THAT SINCE THERE WAS NO DISPUTE WITH REGARD TO THE AGRICULTURAL OPER ATIONS CARRIED ON THE LANDS IN QUESTION, THERE WAS NO REASON TO DISALLOW THE AG RICULTURAL INCOME DECLARED FROM THE OTHER 379 ACRES AND ALSO. SINCE THE VERY S AME ASSESSING OFFICER WAS CONTINUING, IN TUNE WITH THE VIEW TAKEN FOR THE BLO CK PERIOD, THE ASSESSING OFFICER ACCEPTED THE AGRICULTURAL INCOME OF RS.11 L AKHS IN THE ASSESSMENT FOR THEE ASSESSMENT YEAR 2000-01, WHICH WAS COMPLETED A FTER SCRUTINY ASSESSMENT UNDER S.143(3) ON 24.3.2003. LEARNED AU THORISED REPRESENTATIVE SUBMITTED THAT THIS WAS A CONSCIOUS DECISION OF THE ASSESSING OFFICER, WHICH CANNOT BE INTERFERED WITH BY THE COM MISSIONER INVOKING THE PROVISIONS OF S.263 OF THE ACT. HE FURTHER SUBMITT ED THAT AFTER PASSING THE ASSESSMENT ORDER DATED 31.3.2004 FOR THE ASSESSMEN T YEAR 2001-02, THE ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 8 ASSESSING OFFICER REOPENED THE ASSESSMENTS FOR ASSE SSMENT YEARS 1997-98 TO 1999-2000 AND DISALLOWED SUBSTANTIAL AGRICULTURA L INCOME IN EACH ASSESSMENT BY HIS ORDER DATED 31.12.2004. THE CIT (A) DELETED THE ADDITIONS BY WAY OF DISALLOWANCES OF AGRICULTURAL I NCOME AND ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FROM Y EAR TO YEAR. WHEN THE MATTER WAS CARRIED IN FURTHER APPEAL, THE TRIBUNAL UPHELD THE VIEW TAKEN BY THE CIT(A), AFTER DETAILED EXAMINATION OF THE MATTE R AND DISMISSED THE APPEALS OF THE DEPARTMENT. HE SUBMITTED THAT WHEN T HE TRIBUNAL HAS ACCEPTED THE AGRICULTURAL INCOME OF RS.12,00,000 DE CLARED BY THE ASSESSEE FOR ASSESSMENT YEAR 2001-02, IT CANNOT BE SAID THAT THE AGRICULTURAL INCOME OF RS.11 LAKSH DECLARED BY THE ASSESSMENT YEAR UNDE R CONSIDERATION IS UNREASONABLE OR THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ACCEPTING THE SAME AND ON THAT COUNT IT CANNOT BE SAID THAT THE O RDER OF ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF R EVENUE SO AS TO ENABLE THE COMMISSIONER OF INCOME-TAX TO INVOKE THE REVISIONAL JURISDICTION UNDER S.263 OF THE ACT. 14. IT WAS FURTHER POINTED OUT THAT THOUGH THE AS SESSING OFFICER DID NOT ACCEPT THE AGRICULTURAL INCOMES SHOWN BY THE A SSESSEE FOR VARIOUS ASSESSMENT YEARS FALLING IN THE BLOCK PERIOD, IN TH E BLOCK ASSESSMENT ORIGINALLY COMPLETED ON 31.10.2001, THE CIT(A) ACCE PTED THE SAME VIDE HIS ORDER DATED 25.6.2002. THOUGH THIS ORDER WAS REMI TTED BACK BY THE TRIBUNAL TWICE ON TECHNICAL GROUND FOR FRESH DISPOSAL , IN T HE MEANTIME, THE APPELLATE TRIBUNALS ORDER DATED 20.6.2008 WAS RECEIVED, AND BASED ON THE SAME, THE CIT(A) WHO TOOK UP THE RESTORED APPEAL LATER ON, HA S ACCEPTED THE AGRICULTURAL INCOMES IN HIS APPELLATE ORDER DATED 1 6.2.2009 AND PROBABLY, SINCE THE ACTION OF THE CIT(A) IS BASED ON THE DECI SION OF THE TRIBUNAL, THE REVENUE TOO IN ITS APPEAL FOR THE BLOCK PERIOD, VIZ . IT(SS)A NO.45/HYD/2009, HAS NOT RAISED ANY GROUND ON THIS APPEAL. IN THE C IRCUMSTANCES, LEARNED ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 9 AUTHORISED REPRESENTATIVE STRONGLY SUBMITTED THAT T HE ORDER OF ASSESSMENT ACCEPTING THE AGRICULTURAL INCOME OF RS.11 LAKHS DE CLARED BY THE ASSESSEE WHICH IS IN TUNE WITH THE AGRICULTURAL INCOMES DECL ARED FOR OTHER YEARS, IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF REVENUE, AND CONSEQUENTLY, THE IMPUGNED ORDER OF THE COMMISSIONE R OF INCOME-TAX PASSED UNDER S.263 IS LIABLE TO BE CANCELLED. 15. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE SUBMITTED THAT AS THE ASSESSING OFFICER HAS NOT CON DUCTED ANY ENQUIRY TO ASCERTAIN THE CORRECT NATURE OF THE INCOME CLAIMED BY THE ASSESSEE AS HAVING BEEN DERIVED FROM CARRYING ON AGRICULTURAL ACTIVITY , THE ASSESSMENT MADE WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE, AND THEREFORE, THE COMMISSIONER OF INCOME-TAX WAS PERFECTLY JUSTIFIED IN PASSING THE IMPUGNED ORDER INVOKING THE PROVISIONS OF S.263 OF THE ACT. 16. WE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE ASSESSEE H AS BEEN CLAIMING AGRICULTURAL INCOME YEAR AFTER YEAR AND THE SAME WA S ALSO BEING ACCEPTED BY THE REVENUE AUTHORITIES WHILE FRAMING THE ASSESSMEN TS IN THE ROUTINE COURSE. THE AMOUNTS OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FROM THE ASSESSMENT YEARS 1995-097 TO 1999-2000 ARE AS FOLLO WS- ASST YEAR AGRICULTURAL INCOME REMARKS 1995-96 8,50,000 ACCEPTED IN APPEAL BY CIT(A) AND HIS ORDER IS ACCEPTED BY DEPT 1996-97 12,00,000 ACCEPTED IN APPEAL BY CIT(A) AND HIS ORDER IS ACCEPTED BY THE DEPT 1997-98 15,00,000 ACCEPTED IN APPEAL BY ITAT 1998-99 16,00,000 ACCEPTED IN APPEAL BY ITAT 1999-00 16,00,000 ACCEPTED IN APPEAL BY ITAT 2000-01 11,00,000 UNDER DISPUTE 2001-02 12,00,000 ACCEPTED BY ITAT ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 10 THE AGRICULTURAL INCOME OF RS.11 LAKHS DECLARED BY THE ASSESSEE IS IN TUNE WITH SUCH INCOME DECLARED BY HIM FOR OTHER YEA RS NOTED ABOVE, AND THE ACTION OF THE ASSESSING OFFICER IN ACCEPTIN G THE AGRICULTURAL INCOME OF RS.11 LAKHS DECLARED BY THE ASSESSEE IS C ONSISTENT WITH THE VIEW TAKEN BY THE DEPARTMENT FOR EARLIER YEARS. IN THE CIRCUMSTANCES, THERE IS NOTHING ABNORMAL OR UNREASONABLE HIKE IN T HE QUANTUM OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR TH E YEAR UNDER APPEAL AND WHAT IS DECLARED IS WELL COMPARABLE WITH THAT O F THE OTHER YEARS NOTED ABOVE. IN THE ASSESSMENT YEAR 2001-02, THE TR IBUNAL ACCEPTED THE AGRICULTURAL INCOME OF RS.12 LAKHS DECLARED BY THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES, THE ACTION OF THE AS SESSING OFFICER IN ACCEPTING THE AGRICULTURAL INCOME OF RS.11 LAKHS DE CLARED BY THE ASSESSEE FOR THE YEAR UNDER APPEAL, CANNOT BE SAID TO BE EITHER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENU E. IN OUR OPINION, THEREFORE, THE COMMISSIONER OF INCOME-TAX IS NOT JU STIFIED IN INVOKING THE PROVISIONS OF S.263 OF THE ACT. WE ACCORDINGLY CANCEL THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME-TAX PASSED UNDE R S.263 OF THE ACT, ALLOWING THE GROUNDS OF THE ASSESSEE IN THIS A PPEAL. 17. IN THE RESULT, ASSESSEES APPEAL, ITA NO.526A/ HYD/2005, FOR ASSESSMENT YEAR 2000-01, IS ALLOWED. ASSESSEES APPOEAL: ITA NO.508/HYD/2007 18. THIS APPEAL OF THE ASSESSEE, ALSO FOR ASSESSME NT YEAR 2000-01 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) III, HYDER ABAD DATED 5.3.2007 ASSESSED IN THE CONTEXT OF THE APPEAL ARISING OUT O F THE ORDER OF ASSESSMENT FRAMED IN PURSUANCE OF THE DIRECTIONS OF THE COMMIS SIONER OF INCOME-TAX, UNDER S.143(3) READ WITH S.263 OF THE ACT. SINCE T HE ORDER OF THE COMMISSIONER OF INCOME- TAX PASSED UNDER S.263 OF THE ACT DATED 24.3.2005, IMPUGNED IN APPEAL ITA NO.526A/HYD/2005, HAS BEEN CANCELLED ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 11 BY US, FOR THE REASONS DISCUSSED IN PARA 16 HEREIN ABOVE, ALL THE PROCEEDINGS INITIATED IN PURSUANCE OF THE AID ORDER OF THE COMM ISSIONER OF INCOME-TAX NO LONGER SURVIVE AND CONSEQUENTLY, THE PRESENT APPEAL OF THE ASSESSEE HAS BECOME REDUNDANT. AS SUCH, THE PRESENT APPEAL OF T HE ASSESSEE, BEING INFRUCTUOUS, IS DISMISSED. 19. IN THE RESULT, THIS APPEAL OF THE ASSESSEE, BE IGN ITA NO.508/HYD/2007, BEING INFRUCTUOUS, IS DISMISSED. 20. NOW, WE SHALL DEAL WITH THE CROSS-APPEALS IT( SS)A NO.44/HYD/2009 OF THE ASSESSEE AND IT(SS) NO.45/HYD /2009 OF THE REVENUE- WHICH ARE DIRECTED AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERABAD DATED 16.2.2009 FOR THE BLOCK PERIOD COVERING ASSESSMENT YEARS 1989-90 TO 1999-2000, ASSESSEES APPEA L : IT(SS)A NO.44/HYD/2009 21. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPE AL, IT(SS)A NO.44/HYD/2998 ARE AS FOLLOWS- 1. THE APPELLATE ORDER DATED 16/02/2009 IN ITA NO.009 5/CIT(A)- III/07008 PASSED BY THE LEARNED. COMMISSIONER OF IN COME- TAX(APPEALS) III, HYDERABAD IS UNJUSTIFIED BOTH IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED. COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.9,36,500/0 MADE BY TH E ASSESSING OFFICER FOR THE ASSESSMENT YEAR 1995-96 IGNORING AFFIDAVIT FILED BY THE CONCERNED PERSON. 3. THE LEARNED. COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT CORRECT IN CONFIRMING THE ADDITIONS OF RS.22,00,000 MADE BY TH E ASSESSING OFFICER FOR THE ASSESSMENT YEAR 1996-97 REJECTING THE APPEL LANTS EXPLANATION AND ALSO THE SWORN STATEMENTS RECORDED FROM THE CON CERNED PERSON. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 12 22. BRIEF FACTS OF THE CASE, RELATING TO THE FIRST ISSUE INVOLVED IN THIS APPEAL, VIZ. ADDITION OF RS.9,36,500, ARE THAT THER E WAS SEARCH UNDER S.132 OF THE ACT CONDUCTED AT THE ASSESSEES PREMISES ON 14.10.199. AS PER THE SEIZED DOCUMENT AT PAGE NOS.90 TO 95 IN ANNEXURE A /KM/2, ASSESSEE HAS PAID A SUM OF RS.9,36,500/- TO TAKE POSSESSION OF T HE AGRICULTURAL LAND FROM SHRI YOUSUF KHAN AND OTHERS. SINCE THE SAID PAYMEN T/INVESTMENT WAS NOT REFLECTED IN THE STATEMENT OF AFFAIRS FILED, THE AS SESSING OFFICER TREATED THE SAME AS UNEXPLAINED INVESTMENT OF THE ASSESSEE OF A SSESSMENT YEAR 1995- 96. DURING THE APPELLATE PROCEEDINGS BEFORE THE CI T(A), ASSESSEE FILED AN AFFIDAVIT OF SHRI YOUSUF KHAN, STATING THAT THE ASS ESSEE PAID AN ADVANCE OF RS.1,30,000-/- AND ANOTHER INSTALMENT OF RS.8,06,50 0/- ON BEHALF OF ONE SHRI RAMANAPPA, AGAINST THE TOTAL SALE CONSIDERATION OF RS.9,36,500/-. HOWEVER, DUE TO DISPUTES AMONGST SHRI YOUSUF KHAN AND SHRI R AMANAPPA, THE FINAL SALE DEED COULD NOT BE EXECUTED IN FAVOUR OF SHRI R AMANAPPA AND THE ENTIRE ADVANCE WAS REFUNDED TO HIM. THE CIT(A) WAS OF THE OPINION THAT THE ASSESSEE PAID A SUM OF RS.8,02,500/- AND ENTERED IN TO AN AGREEMENT IN APRIL, 1994 VIDE AGREEMENT DATED 29.3.1994, AND PAID ANOTH ER SUM OF RS.1,34,000/- VIDE ANOTHER AGREEMENT DATED APRIL, 1 994. THESE TWO AGREEMENTS WERE ENTERED BY THE ASSESSEE IN HIS INDI VIDUAL CAPACITY AS VENDEE. THERE IS NO MENTION OF ANY NAME LIME, SR I RAMANAPPA, IN THE SAID AGREEMENTS. ACCORDING TO THE CIT(A) THE SUBSEQUENT AFFIDAVIT OF SHRI YOUSUF KHAN, CANNOT BE RELIED UPON, SINCE THE ASSESSEE FAI LED TO PRODUCE SHRI YOUSUF KHAN FOR EXAMINATION AND SHRI YOUSUF KHAN WAS NOT F OUND EXISTING ON THE ADDRESS GIVEN IN THE AFFIDAVIT. IN THE CIRCUMSTANCE S, THE ASSESSEE HAS FAILED TO PROVE THE AVERMENTS MADE IN THE AFFIDAVIT OF SHR I YOUSUF KHAN. THE CIT(A) ALSO NOTED THAT THERE IS NO EVIDENCE BROUGHT ON RE CORD BY THE ASSESSEE THAT THE AFORESAID WAS MADE BY SHRI RAMANAPPA EITHER FUL LY OR PARTLY, AND EVEN THE REFUND OF THE SAID AMOUNT WAS ALSO NOT PROVED B Y THE ASSESSEE. EVEN OTHERWISE, THE CIT(A) OBSERVED, THE REFUND, IF ANY, WOULD NOT MITIGATE THE ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 13 FACT OF UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE . FOR THESE REASONS, THE CIT(A) CONFIRMED THE ADDITION OF RS.9,36,000 MA DE BY THE ASSESSEE, REJECTING THE GROUNDS OF THE ASSESSEE ON THIS ISSUE . 23. WE HAVE HEARD BOTH THE PARTIES. IN THIS CASE , THERE IS AN AFFIDAVIT OF SHRI YOUSUF KHAN, FILED BY THE ASSESSEE BEFORE T HE REVENUE AUTHORITIES, TO CORROBORATE THE AVERMENTS OF THE ASSESSEE. THE SAID AFFIDAVIT WAS NOT ACCEPTED BY THE DEPARTMENT, AS THE DEPONENT, SHRI Y OUSUF KHAN, WAS NOT AVAILABLE FOR EXAMINATION. SHRI YOUSUF KHAN COULD N OT BE PRODUCED BY THE ASSESSEE, AND THE DEPARTMENT FOUND THAT HE WAS NOT AVAILABLE AT THE ADDRESS GIVEN IN THE AFFIDAVIT. THE SEIZED MATERIAL SHOWS THAT THE ASSESSEE PAID A SUM OF RS.9,36,500 TO TAKE POSSESSION OF THE PROPER TY IN QUESTION FROM SHRI YOUSUF KHAN AND OTHERS, WHEN IT IS SO, ASSESSEE IS DUTY BOUND TO PRODUCE SHRI YOUSUF KHAN TO PROVE THE MATTER FURTHER. ON THE CONTRARY, WE FIND THAT THE ASSESSEE IN SPITE OPPORTUNITY GIVEN TO THE ASSE SSEE, COULD NOT PRODUCE SHRI YOUSUF KHAN AND ON THE CONTRARY, VIDE LETTER D ATED 5.6.2002 EXPRESSED HIS INABILITY TO PRODUCE SHRI YOUSUF KHAN. FROM THI S ACT, IT IS CLEAR THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM BY PR ODUCING SHRI YOUSUF KHAN FOR EXAMINATION BY THE DEPARTMENT, CONSIDERING TH E TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE. WE ACCORDINGLY UPHOLD THE O RDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 24. THE NEXT ISSUE INVOLVED IN THIS APPEAL RELATE S TO AN ADDITION OF RS.22 LAKHS MADE ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE. 25. FACTS OF THE CASE IN RELATION TO THIS ISSUE, I N BRIEF, ARE THAT CERTAIN SAVINGS BANK PAY-IN-SLIPS REFLECTING DEPOSITS OF RS .6 LAKHS AND RS.16 LAKHS ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 14 INTO ASSESSEES SAVINGS ACCOUNT NOS.852 AND 855 WI TH SYNDICATE BANK, AMEERPET BRANCH HAVE BEEN SEIZED DURING THE SEARCH OPERATIONS UNDER S.132 OF THE ACT, VIDE PAGES NO.88 AND 89 OF ANNEXURE KG/ A/1. THE SAID AMOUNTS OF DEPOSITS WERE SUBSEQUENTLY WITHDRAWN IN CASH. I T WAS EXPLAINED BY THE ASSESSEE THAT THE AFORESAID AMOUNT OF RS.22 LAKHS W AS RECEIVED FORM M/S. MEENAKSHI CONSTRUCTION CO. AS ADVANCE AGAINST SALE OF LAND, AND SINCE THE SAID DEAL COULD NOT MATERIALIZE, THE MONEY WAS SUBS EQUENTLY RETURNED. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THIS EXPLA NATION OF THE ASSESSEE,. HENCE OBSERVING THAT THE ASSESSEE COULD NOT PROVE E ITHER THE IDENTITY OR THE CREDITWORTHINESS OF THE CREDITOR, M/S. MEENAKSHI CO NSTRUCTION CO. AND FURTHER OBSERVING THAT THE SAID BANK ACCOUNTS WERE OPERATED ONLY FOR THESE ISOLATED TRANSACTIONS AND THE WITHDRAWALS WERE MADE IN PIECE MEAL, MADE THE ADDITION OF RS.22 LAKHS TO THE UNDISCLOSED INCOME OF THE ASS ESSEE. 26. DURING THE APPELLATE PROCEEDINGS, AN AFFIDAVI T OF ONE SHRI C.S.R.PRASAD, MANAGING PARTNER OF M/S. MEENAKSHI CO NSTRUCTIONS STATING THAT HE PAID AN ADVANCE OF RS.22 LAKHS TO ACQUIRE SOME A GRICULTURAL LAND OF THE ASSESSEE AT BACHUPALLY VILLAGE, WAS FILED. IT WAS ALSO STATED THEREIN THAT DUE TO CERTAIN DISPUTES AMONGST THE PARTNERS AND WITH T HE PROPOSED PURCHASERS, THE PROJECT WAS GIVEN UP AND THE MONEY WAS REFUNDED IN INSTALMENTS BY THE ASSESSEE DIRECTLY TO THE PROPOSED PURCHASERS FROM WHOM IT WAS COLLECTED BY M/S. MENAKSHI CONSTRUCTIONS. TO VERIFY THE VERACIT Y OF THE AFORESAID AFFIDAVIT, SWORN STATEMENT OF SHRI PRASAD WAS RECORDED. IT WAS STATED IN THE SAID STATEMENT RECORDED BY THE CIT(A) THAT THE AMOUNT O F RS.22 LAKHS WAS NOT RECORDED IN THE ACCOUNT BOOKS OF M/S. MEENAKSHI CON STRUCTION, AS THEIR ROLE WAS LIMITED TO MEDIATE THE DEAL BETWEEN THE ASSOCIA TE PURCHASERS AND THE ASSESSEE. HOWEVER, HE COULD NOT REVEAL THE NAMES OF EVEN A SINGLE ASSOCIATE PURCHASER FOR WHOM THE DEPONENT WAS MEDIATING THE D EAL AND FROM WHOM THE SAID AMOUNTS WERE ALLEGEDLY COLLECTED. SHRI PR ASAD ALSO ADMITTED THAT ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 15 THERE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND M/S. MEENAKSHI CONSTRUCTIONS OR THE ASSOCIATED PURCHASERS. SHRI PR ASAD ALSO COULD NOT FURNISH ANY DETAIL WHATSOEVER IN RESPECT OF THE LAND PROPOS ED TO BE PURCHASED AND THE DATES AND THE AMOUNTS ALLEGEDLY PAID AND REFUND ED. HE ALSO COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE TH E CONTENTS OF HIS AFFIDAVIT. ON CONSIDERING ALL THESE ASPECTS OF THE MATTER, THE CIT(A) CONFIRMED THE ADDITION OF RS.22 LAKHS MADE BY THE A SSESSING OFFICER, WITH THE FOLLOWING OBSERVATIONS- 5.4 IT IS EVIDENT FROM THE AFORESAID FACTS THAT T HE APPELLANT COULD NOT PROVE THE SOURCE OF DEPOSITS OF RS.22 LAK HS MADE IN HIS BANK ACCOUNTS. THE EXPLANATION OF HAVING RECEIVED THE S AID AMOUNTS FROM MS/. MEENAKSHI CONSTRUCTION WAS NOT SUBSTANTIATED E ITHER BY THE APPELLANT OR BY M/S. MEENAKSHI CONSTRUCTION. THE TR ANSACTION WAS NOT RECORDED IN THE ACCOUNT BOOKS OF M/S. MEENAKSHI CON STRUCTION. THE CREDITWORTHINESS OF M/S. MEENAKSHI CONSTRUCTION WAS NOT ESTABLISHED BY THE APPELLANT, ONUS FOR WHICH ENTIRELY LAY ON HI M. IT IS ALSO PERTINENT TO MENTION THAT, WHILE ONE BANK ACCOUNT W AS OPENED IN THE NAME OF G.KASANI, THE OTHER ACCOUNT WAS OPENED IN THE NAME OF GNANESHWAR. THESE ACCOUNTS WERE OPENED ONLY FOR THE PURPOSE OF THIS TRANSACTION. THE SUM OF RS.16 LAKHS WAS WITHDR AWN IN INSTALMENTS FROM A/C. NO.852 DURING THE PERIOD FROM 04/07/1995 TO 28/02/1996. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, THE ADDITION OF RS.22 LAKHS MADE BY THE AO IS CONFIRMED. 27. AGGRIEVED BY THE ORDER OF THE CIT(A) ON THIS I SSUE, ASSESSEE IS IN APPEAL BEFORE US. 28. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) IS NOT JUSTIFIED, SINCE THE CLAIM OF THE ASS ESSEE HAVING RECEIVED THE AMOUNTS IN QUESTION FROM M/S. MEENAKSHI CONSTRUCTIO NS, IS CORROBORATED BY THE SWORN STATEMENT OF SHRI PRASAD. THE LEARNED DE PARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY RELIED O N THE ORDERS OF THE LOWER AUTHORITIES. THE DR RELIED ON THE ORDER OF CIT(A). ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 16 29. WE HEARD BOTH SIDES ON THIS ISSUE. THE ASSE SSEE HAS NOT EXPLAINED THE SOURCES FOR DEPOSITING MONEY INTO THI S BANK ACCOUNT. THE TRANSACTIONS IN QUESTION WERE NEITHER RECORDED NOR EXPLAINED SATISFACTORILY BY THE ASSESSEE. IN THE ABSENCE OF ANY EVIDENCE BROUG HT ON RECORD TO SUPPORT THE CLAIM OF THE ASSESSEE, WE ARE INCLINED TO CONFI RM THE ORDER OF THE CIT(A). WE DO SO ACCORDINGLY, AND REJECT THE GROUNDS OF THE ASSESSEE ON THIS ISSUE. 30, IN THE RESULT, ASSESSEES APPEAL, IT(SS)A NO.4 5/HYD/2009, IS DISMISSED. REVENUES APPEAL : IT(SS)A NO.45/HYD/2009 31. THE GROUNDS TAKEN BY THE REVENUE IN THIS APPEA L RELATE TO AN ADDITION OF RS.82.01 LAKHS MADE BY THE ASSESSING OF FICER, WHICH HAS BEEN DELETED BY THE CIT(A) BY THE IMPUGNED ORDER. 32. FACTS OF THE CASE IN BRIEF ARE THAT A DOCUMENT MARKED ANNEXURE KG/A/1 AT PAGE 93, MENTIONING CERTAIN FIGURES AGAI NST CERTAIN DATES FROM OCTOBER, 1996 TO APRIL, 1998, TOTALLING TO 82.01, W AS SEIZED. THE FIGURES MENTIONED AGAINST THE SPECIFIED DATES WERE DECIPHER ED BY THE ASSESSING OFFICER AS RS.82.01 LAKHS REPRESENTING EXPENDITURE INCURRED BY THE ASSESSEE ON THE RESPECTIVE DATES. ASSESSEE PLEADED IGNORANC E AS TO THE SIGNIFICANCE OF THE FIGURES WRITTEN IN THE SAID DOCUMENT. THE ASSES SING OFFICER ACCORDINGLY CONCLUDED THAT THE ENTRIES REPRESENTED THE UNEXPLAI NED EXPENDITURE MADE BY THE ASSESSEE DURING THE SAID PERIOD. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITIONS OF RS.37,51,000 IN ASSESSMENT YEAR 1997-9 8, OF RS.34,50,000/0 IN ASSESSMENT YEAR 1998-99; AND OF RS.,10,00,000 IN AS SESSMENT YEAR 1999- 2000 TOTALLING TO RS.82,01,000. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 17 33. ON APPEAL THE CIT(A), OBSERVING THAT THERE IS NO WORTHWHILE NARRATION WRITTEN AGAINST THE FIGURES FROM WHICH I T COULD BE INFERRED THAT THE FIGURES REPRESENTED UNEXPLAINED EXPENDITURE INCURRE D BY THE ASSESSEE IN LAKHS ON THE DATES AGAINST WHICH THE SAME WERE MENT IONED, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 34. AGGRIEVED BY THE ORDER OF THE CIT(A) ON THIS I SSUE, REVENUE IS IN APPEAL BEFORE US. 35. WE HEARD BOTH SIDES AND HAVE PERUSED THE SEIZE D MATERIAL FILED AT PAGE 59 OF THE PAPER-BOOK. THIS IS A SLIP OF PA PER, WHICH IS REPRODUCED HEREUNDER- ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 18 THE SEIZED MATERIAL REPRODUCED ABOVE IS A MERE LOOS E SLIP PAPER WHICH HAS NO AUTHENTICITY WHATSOEVER. THIS MATERIAL CANNOT BE R ELIED UPON IN THE ABSENCE OF CORROBORATIVE EVIDENCE BROUGHT ON RECORD BY THE REVENUE. WE ARE FORTIFIED IN THIS BEHALF BY THE ORDER OF HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF GNAN KUMAR AGRARWAL (IND) V/S. ACIT(60 DTR (HYD) 241). IN THE CIRCUMSTANCES, NO ADDITION CAN BE MADE SOLELY ON TH E BASIS OF SEIZED LOOSE PAPER, WHICH IS MERELY A DUMB DOCUMENT, WHICH IS N OT OWNED UP BY THE ASSESSEE, IN THE ABSENCE OF ANY CORROBORATIVE EVIDE NCE TO SHOW THAT THE SAID DOCUMENT INDEED RELATES TO THE ASSESSEE. IN THAT VI EW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A). W E ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUNDS OF THE REVENUE IN ITS A PPEAL. 36. IN THE RESULT, THE REVENUES APPEAL, IT(SS) A NO.45/HYD/2009, ARISING OUT OF THE BLOCK ASSESSM ENT IS ALSO DISMISSED. ASSESSEES APPEALS : ITA NO.226/HYD/2007 : ASSESSMENT YEAR 2003-04 ITA NO.1407/HYD/2010 : A SSESSMENT YEAR 2004-05 37. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) III, HYDERABAD DATED 11.1.2007 FOR TH E ASSESSMENT YEAR 2003- 04 AND DATED 30.8.2010 FOR THE ASSESSMENT YEAR 2004 -05. ISSUES INVOLVED IN THESE APPEALS ARE COMMON, EXCEPT FOR THE FACT THAT IN THE APPEAL FOR THE ASSESSMENT YEAR 2004-05, ASSESSEE ALSO CONTESTED TH E LEGALITY AND VALIDITY OF THE ACTION OF THE ASSESSING OFFICER IN REOPENING TH E ASSESSMENT. ITA NO.226/HYD/2007 : ASSESSMENT YEAR 200 3-04 38. THE FIRST GRIEVANCE OF THE ASSESSEE IS COVERED BY GROUND NO.2 OF THIS APPEAL, WHICH READS AS FOLLOWS- ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 19 THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT CORRECT IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN S UBSTITUTING SALE CONSIDERATION AT RS.10,59,96,75 IN PLACE OF RS.10,2 2,36,750 AS DISCLOSED BY THE APPELLANT. 39. AT THE TIME OF HEARING, LEARNED AUTHORISED REP RESENTATIVE FOR THE ASSESSEE DID NOT PRESS FOR THIS GROUND. IT IS ACCO RDINGLY DISMISSED AS NOT PRESSED. 40. GROUNDS NO.3 TO 6 OF THE ASSESSEE IN THIS APPE AL CONTEST THE ACTION OF THE REVENUE AUTHORITIES IN TREATING THE I NCOME ARISING OUT OF SALE OF LAND MADE DURING THE YEAR BY THE ASSESSEE AS BUSINE SS INCOME, AS AGAINST THE CLAIM OF THE ASSESSEE AS AGRICULTURAL INCOME. 41. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, SOLD 227.39 AC RES OF LAND SITUATED AT BACHUPALLY VILLAGE AND DECLARED THE INCOME ARISING FROM THE SALE OF THIS PROPERTY AS AGRICULTURAL INCOME IN ITS RETURN. THE ASSESSING OFFICER TREATED THE SAID INCOME AS LONG TERM CAPITAL GAINS. ON APPEAL, THE CIT(A) TREATED THE SAME AS INCOME FROM BUSINESS, ON THE GROUND THAT TH E ASSESSEE IS ENGAGED IN AN ADVENTURE IN THE NATURE OF TRADE. AGAINST TH E FINDING OF THE CIT(A) IN THIS BEHALF, ASSESSEE IS IN APPEAL BEFORE US ON THI S ISSUE. 42. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN OBSERVING THAT T HE ASSESSEE AS SELLING PLOTS OF LAND FOR THE LAST SEVERAL YEARS TO VARIOUS PERSO NS AND RECEIVING SUBSTANTIAL PROFITS/GAINS CONSEQUENT U-ON SUCH SALE OF LAND OVE R THE YEARS. HE SUBMITTED THAT THIS WAS A GROSS MISSTATEMENT OF FACT ASS THE ASSESSEE NEVER SOLD PLOTS OF LAND AND THE ASSESSEE NEVER INDULGED IN BUSINESS ACTIVITY. HE SUBMITTED THAT THE ASSESSEE IS BASICALLY AN AGRICULTURIST AND ACQUIRED LARGE EXTENT OF ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 20 LAND OVER A PERIOD OF 35 YEARS FROM 1961 TO 1995. BESIDES HE IS ENGAGED IN SOME POLITICAL ACTIVITY. AS HIS STATUS IMPROVED AS A LANDLORD HE ROSE FROM THE LEVEL OF VILLAGE POLITICS TO THE LEVEL OF CHAIRMAN OF THE ZILLA PARISHAD OF RANGA REDDY DSITRCIT AND HE HAS ALSO ESTABLISHED A POLITI CAL PARTY WHICH WAS MERGED WITH THE CONGRESS AND HE BECAME A MEMBER OF THE LEG ISLATIVE COUNCIL. THE ASSESSEE HAS ONLY POLITICAL ACTIVITY BUT NOT BUSINE SS ACTIVITY. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT EA RLIER THERE WAS ONLY ONE INSTANCE OF SALE OF THIRTEEN ACRES OF LAND TO ONE S HRI RAVINDER ON 14.2.1986 AND THIS FACT WAS CONSIDERED BY THE TRIBUNAL IN ITS ORDER DATED 25.5.2007, WHEREBY ALLOWING THE APPEAL OF THE ASSESSEE AGAINST THE ORDER UNDER S.263 OF THE ACT IN RESPECT OF BLOCK ASSESSMENT IN ITA NO.6 1/HYD/.2003, HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS ONLY AGRICULTURAL LAND. 43. IT IS FURTHER SUBMITTED THAT FOR THE PURPOSE OF ESTABLISHING HIS OWN POLITICAL PARTY AND HIS ELECTION TO THE LEGISLATIVE COUNCIL, ASSESSEE STARTED SELLING AGRICULTURAL LANDS, AND IN THAT PROCESS, DU RING THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2001-02, ASSESSEE SOLD 83 ACRES 35 GUNTAS OF LAND FOR A CONSIDERATION OF RS.3,94,21,250. THOUGH THE ASSESSING OFFICER DETERMINED THE LONG TERM CAPITAL GAINS ON SALE OF A GRICULTURAL LAND AT RS.3,91,24,535, THE MATTER TRAVELLED BEFORE THE HIG HER APPELLATE AUTHORITY AND THE ISSUE ULTIMATELY STOOD CONCLUDED IN FAVOUR OF THE ASSESSEE, BY VIRTUE OF THE LAND BEING HELD TO BE OF AGRICULTURAL NATURE . REFERRING TO THE OBSERVATIONS OF THE CIT(A) THAT EVEN IF THE ACTIVIT IES OF THE ASSESSEE OF PURCHASE AND SALE OF LAND COULD NOT BE CONSIDERED A S A FULL-FLEDGED BUSINESS OF THE ASSESSEE, THE SALE OF LANDS IN THE RELEVANT YEARS HAD TO BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE, HE SUBMITTE D THAT CONSIDERING THE PERIOD OF HOLDING AND VARIOUS OTHER FACTORS THE CI T(A) WAS NOT CORRECT IN CONCLUDING THAT THE SALE OF AGRICULTURAL LANDS BY T HE ASSESSEE GAVE RISE TO BUSINESS INCOME. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 21 44. REFERRING TO THE OBSERVATIONS OF THE CIT(A) IN PARA 11.12 THAT WHEN THE LANDS IN QUESTION ARE TREATED AS STOCK IN TRADE OF THE APPELLANTS BUSINESS ACTIVITY, IT BECOMES IMMATERIAL AS TO WHET HER THE CHARACTER OF THE LANDS SOLD IS OF AGRICULTURAL LAND OR NON-AGRICULTU RAL IN NAUTE SINCE THE PROFIT ARISING ON SALE OF LAND HAS TO BE ULTIMATELY TREATE D AS BUSINESS INCOME ARISING TO THE APPELLANT, LEARNED AUTHORISED REPRSENTATIVE FOR THE ASSESSEE SUBMITTED AS FOLLOWS- (A) THE HONBLE TRIBUNAL HAD ALREADY DECIDED FOR THE EA RLIER YEARS THAT THE LANDS IN QUESTION WERE AGRICULTURAL LANDS AND ACCORDINGLY UPHELD THE AGRICULTURAL INCOME DECLARED BY THE ASSE SSEE FOR VARIOUS YEARS; (B) AFTER ENJOYING THE AGRICULTURE INCOME FOR NEARLY 15 YEARS, ASSESSEE SOLD THE LAND; (C) IT WAS ONLY A CHANGE OF INVESTMENT; (D) THE ASSESSEE NEVER CHANGED THE CHARACTER OF THE LAN D BY APPROACHING THE CONCERNED AUTHORITIES, AS OBSERVED BY THE TRIBUNAL AT PAGE 14 OF THEIR CONSOLIDATED ORDER DAT ED 20.6.2008 REFERRED TO ABOVE. (E) THE ASSESSEE DID NOT DIVIDE THE LANDS INTO PLOTS (F) THE LANDS WERE SOLD IN ACRES AS OBSERVED BY THE TRI BUNAL. LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE POINT IN DISPUTE WAS ALREADY RAISED BY THE SAME CIT(A) FOR THE ASSES SMENT YEAR 2001-02 FOR WHICH MORE THAN 83 ACRES OF THE SAME LAND WAS SOLD BY THE ASSESSEE, BY ISSUING A SHOW-CAUSE NOTICE/NOTICE OF ENHANCEMENT. HOWEVER, CONSIDERING THE REPLY OF THE ASSESSEE AND AFTER MAKING DETAILED ENQUIRIES, THE PROPOSAL WAS DROPPED. AS SUCH FOR THE YEAR UNDER APPEAL, TH E CIT(A) IS NOT JUSTIFIED IN ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 22 TREATING THE AGRICULTURAL LANDS AS STOCKIN-TRADE HE POINTED OUT THAT THE CIT(A) IN THE ORDER IMPUGNED IN THIS APPEAL, THOUGH REFERRED TO THE APPELLATE ORDER DATED 28.2.2006 FOR THE ASSESSMENT YEAR 2001- 02, SIMPLY STATED THAT THE CIT(A) DID NOT CONSIDER THE QUESTION AS TO WHET HER THE AGRICULTURAL LANDS WERE STOCK IN TRADE AND WHETHER THE TRANSACTIONS OF SALE COULD BE CONSIDERED AS BUSINESS ACTIVITIES OR ADVENTURE IN THE NATURE O F TRADE, AND CLEVERLY AVOIDED MAKING ANY MENTION AS TO THE ISSUANCE OF S HOW CAUSE NOTICE AND THE MATERIAL GATHERED AFTER MAKING NECESSARY ENQUIRIES, AND THE ULTIMATE DECISION OF DROPPING THE PROPOSAL OF ENHANCEMENT. IT IS SUBMITTED THAT THE CIT(A) SIMPLY AND CONVENIENTLY IGNORED THE MATERIAL BROUGHT ON RECORD FOR THE ASSESSMENT YEAR 2001-02 SINCE IT IS IN FAVOUR O F THE ASSESSEE AND ULTIMATELY LED TO THE DROPPING THE PROPOSAL FOR ENH ANCEMENT MOOTED BY THE CIT(A). THE ACTION OF THE CIT(A) IN THIS BEHALF, A CCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE IS NOT C ORRECT OR JUSTIFIED. 45. RELIANCE AT THIS JUNCTURE IS PLACED ON THE DEC ISION OF THE CHENNAI BENCH OF THE TRIBUNAL DATED 26.4.2011 IN THE CASE O F ITO V/S. CHANDAR HUF, WHEREIN IT HAS BEEN HELD THAT EVEN AFTER FORMING LA Y OUT DIVIDING THE AGRICULTURAL LAND INTO PLOTS, ASSESSEE CARRIED ON A GRICULTURAL ACTIVITIES, AND DID NOT SOLD ANY OF THE PLOTS AND AS SUCH THE CHARACTER OF LAND DID NOT CHANGE. IT IS SUBMITTED THAT THIS DECISION OF THE MARAS BENCH OF THE TRIBUNAL CONSIDERING FACTS AND CIRCUMSTANCES, ALMOST SIMILAR TO THE ONES INVOLVED IN THE PRESENT CASE, CLEARLY APPLIES TO THE FACTS OF THE PRESENT C ASE. HE ALSO PLACED RELIANCE ON THE DECISIONS OF THE BOMBAY HIGH COURT IN THE CASE OF MANUBHAI A.SHETH V/S. NIRGUDKAR (128 ITR 87); AND OF THE APE X COURT IN THE CASE OF RAKESH KUMAR V/S. UNION OF INDIA(247 ITR 150), AND SUBMITTED THAT INCOME ARISING ON SALE OF AGRICULTURAL LAND HAS TO BE NECE SSARILY TREATED AS AGRICULTURAL INCOME, AND THE SAME IS CONSEQUENTLY E XEMPT FROM TAX EITHER UNDER THE HEAD CAPITAL GAIN OR UNDER THE HEAD BU SINESS INCOME ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 23 46. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, SUBMITTED THAT ACTUALLY THERE IS AN ORDER OF THE TR IBUNAL ON THIS ISSUE. HE ALSO SUBMITTED THAT THE ASSESSEE SOLD THE LAND IN A SYSTEMATIC MANNER. IT IS NOTHING BUT A BUSINESS ACTIVITY BY THE ASSESSEE, AN D THE ORDER OF THE CIT(A) THEREFORE, SHOULD BE SUSTAINED. 47. WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE DETAILED WRITTEN SUBM ISSIONS FILED BY THE ASSESSEE ON THIS ISSUE. THE ASSESSEE IN THE YEAR U NDER CONSIDERATION SOLD THE LAND AND RECEIVED SUBSTANTIAL CONSIDERATION. THI S ACTIVITY OF SELLING OF LAND HAS BEEN CARRIED ON BY THE ASSESSEE SINCE THE ASSES SMENT YEAR 1997-98, 1998-99, 1999-2000 AND 2001-02. THE CONTENTION OF T HE ASSESSEE IS THAT THE LANDS IN QUESTION ARE AGRICULTURAL LANDS AS PE R REVENUE RECORDS, AND THE LAND IS SUBJECT TO AGRICULTURAL OPERATIONS, THOUGH IN CERTAIN YEARS, DUE TO LACK OF WATER, AGRICULTURAL OPERATIONS HAVE NOT BEEN CAR RIED OUT BY THE ASSESSEE, IT IS ALSO SUBMITTED BEFORE US THAT SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ITA NO.530 TO 533/HYD/2006 FOR THE ASSE SSMENT YEAR 1997-98, 1999-2000, 1999-2000 AND 2001-02, AND THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT ASSESSEES LANDS CANNOT BE CONSIDERED AS CAPITAL ASSET IN ACCORDANCE WITH S.2(14) OF THE I.T. ACT AND HENC E THE SAME ARE NOT LIABLE TO TAX ON CAPITAL GAINS AND ACCEPTED THE AGRICULTUR AL INCOME DECLARED BY THE ASSESSEE. THE ASSESSEE HELD THE LAND ALWAYS AS INVE STMENT IN THE BOOKS AND HAS NOT AT ALL CONVERTED THE SAME INTO STOCK IN TRA DE. HE NEVER CHANGED THE CHARACTER OF LAND. THE TRIBUNAL ACCEPTED THE AGRIC ULTURAL INCOME DECLARED BY THE ASSESSEE IN EARLIER YEARS. BEING SO, IT HAS TO BE ACCEPTED AS SALE OF AGRICULTURAL LAND, WHICH IS NOT LIABLE TO BE BROUGH T TO TAX EITHER AS HAVING RESULTED, ON SALE, IN CAPITAL GAINS OR BUSINESS INC OME. IT IS ALSO SUBMITTED ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 24 THAT THE LAND WAS SOLD AFTER 15 YEARS OF ACQUISITIO N. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE CARRIED ON ACTIVIT IES OF BUYING AND SELLING OF LAND IN A SYSTEMATIC MANNER SO AS TO JUSTIFY THE AC TION OF THE REVENUE AUTHORITIES IN TREATING THE ACTIVITY OF THE ASSESSE E AS AN ADVENTURE IN THE NATURE OF TRADE. THE LAND WAS SOLD IN ACREAGE AN D NOT BY MAKING PLOTS. IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE S ALE OF LAND CANNOT BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE A ND INCOME DERIVED FROM SUCH SALE SHOULD BE TREATED AS AGRICULTURAL INCOME. FOR THESE REASONS, AND RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCHES OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEARS REFERRED TO ABOVE, WE ALLOW THE GROUNDS OF THE ASSESSEE ON THIS ISSUE, AND DIRECT T HE ASSESSING OFFICER TO TREAT THE INCOME DERIVED BY THE ASSESSEE ON SALE OF LAND DURING THE YEAR, AS INCOME FROM AGRICULTURE, IF ASSESSEE HAS BEEN ENJO YING THE AGRICULTURAL LAND FOR NEARLY 15 YEARS AND DERIVING INCOME FROM AGRIC ULTURE, IF THERE IS NO CHANGE IN THE CHARACTER OF THE LAND, AND CONSEQUENT LY NOT LIABLE TO TAX EITHER AS BUSINESS INCOME OR AS CAPITAL GAINS. 48, THE NEXT GROUND OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE OF COMMISSION OF RS.61,17,740. THE AS SESSING OFFICER, W3HILE COMPUTING THE CAPITAL GAINS TO BE TAXED ON THE SALE OF LAND, HAS DISALLOWED THE ASSESSEES CLAIM FOR DEDUCTION OF THE COMMISSIO N OF RS.61,17,740 ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH FULL DE TAILS, AND HAS NOT GIVEN EVEN THE ADDRESSES OF THE PERSONS TO WHOM THE COMMISSION IN QUESTION HAS BEEN PAID. ON APPEAL, THE CIT(A) CONFIRMED TEHE SAID D ISALLOWANCE MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE DISALLOWANCE O F COMMISSION SUSTAINED BY THE CIT(A), ASSESSEE IS IN APPEAL ON THIS ISSUE. 49. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITT ED BEFORE US THAT THE COMMISSION PAYMENTS IN QUESTION HAVE BEEN PAID BY CHEQUE AND ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 25 THEREFORE, THERE CANNOT BE ANY DOUBT ABOUT THE GENU INENESS OF THE PAYMENTS, AND AS SUCH, THE SAME HAVE TO BE ALLOWED AS DEDUCTION. 50. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE, RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND T HE CIT(A). 51. WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. IN VIEW OF OUR FINDING HEREINABOVE THAT TH E INCOME RECEIVED BY THE ASSESSEE ON THE SALE OF LANDS IN QUESTION, WHICH AR E HELD TO BE OF AGRICULTURAL NATURE, HAVE TO BE TREATED AS INCOME FROM AGRICULTU RE, AND CONSEQUENTLY THE SAME HAVE TO BE TREATED AS EXEMPT FROM TAX, THIS GR OUND OF THE ASSESSEE IS RENDERED ACADEMIC AND IS OF NO CONSEQUENCE. IT IS ACCORDINGLY REJECTED. 52. THE NEXT GROUND IN THIS APPEAL IS THAT THE CIT (A) WAS NOT JUSTIFIED IN FIXING THE AGRICULTURAL INCOME AT RS. 1 LAKH ONL Y AND CONFIRMING THE ASSESSMENT OF THE BALANCE AMOUNT OF AGRICULTURAL IN COME OF RS.2 LAKHS DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURC ES. 53. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSI ONS, WE FIND THAT THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA NOS. 530 TO 533/HYD/2006 FOR ASSESSMENT YEARS 197-98 TO 1999-2 000 AND 2001-02 IN ASSESSEES OWN CASE, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 20.6.2008, HAS WORKED OUT THE REASONABLE AGRICULTURAL INCOME O F THE ASSESSEE AT RS.3,614 PER ACRE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE FIND THAT THE AGRICULTURAL INCOME OF RS.3 LAKHS DECLARED BY THE ASSESSEE AS QUITE REASONABLE. WE AC CORDINGLY, DELETE THE DISALLOWANCE SUSTAINED BY THE CIT(A) AND ALLOW THIS GROUND OF THE ASSESSEE. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 26 54. THE NEXT GROUND BEING GROUND NO.9 IS WITH REGA RD TO ADDITION OF RS.2,01,632 MADE BY THE ASSESSING OFFICER, BY CLUBB ING THE INCOME OF THE ASSESSEES WIFE IN HIS HANDS IN TERMS OF S.64 OF TH E ACT. AT THE TIME OF HEARING, LEARNED AUTHORISED REPRESENTATIVE 2FOR THE ASSESSEE DID NOT PRESS THIS GROUND. IT IS ACCORDINGLY REJECTED. 55. IN THE RESULT, ASSESSEES APPEAL ITA NO.226/HY D/2007 FOR ASSESSMENT YEAR 2003-04 IS PARTLY ALLOWED., ITA NO.1407/HYD/2010 : ASSESSMENT YEAR 2004-05 56. THE MAIN ISSUE IN THIS APPEAL RELATES TO THE R EOPENING OF ASSESSMENT UNDER S.147 OF THE INCOME TAX ACT. IN THIS CASE, RE-OPENING OF ASSESSMENT WAS MADE TO BRING TO TAX THE INCOME RE CEIVED BY THE ASSESSEE ON SALE OF LAND, BY TREATING THE SAME AS INCOME A RISING FROM BUSINESS, AS AGAINST THE DISCLOSURE OF THE SAME BY THE ASSESSEE AS AGRICULTURAL INCOME EXEMPT FROM TAX, SINCE THE LANDS IN QUESTION ARE OF AGRICULTURAL NATURE. 57. AS WE HAVE IN THE EARLIER PART OF THIS ORDER, WHILE DEALING WITH THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 -04, HAVE HELD THAT THE NATURE OF LAND SOLD IS OF AGRICULTURAL NATURE, AND HENCE THE INCOME DERIVED ON THE SALE OF SUCH LAND HAVE TO BE TREATED AS AGRICUL TURAL INCOME EXEMPT UNDER S.10 OF THE ACT, WE FIND THAT THE REASON GIVEN BY T HE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT HAS TO BE HELD TO BE NOT VALID. CONSEQUENTLY, THE REOPENING OF THE ASSESSMENT HAS TO BE HELD TO BE N EITHER LEGAL NOR VALID AND ACCORDINGLY THE ASSESSMENT MADE UNDER S.144 READ W ITH S.148 OF THE ACT, GIVING RISE TO THE PRESENT APPELLATE PROCEEDINGS, H AS TO BE CANCELLED. WE DO SO ACCORDINGLY, AND ALLOW THE GROUNDS OF THE ASSESS EE ON THAT COUNT. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 27 58. IN THE RESULT, ASSESSEES APPEAL ITA NO.1407/H YD/2010 FOR ASSESSMENT YEAR 2004-05, IS ALLOWED. 59. TO SUM UP- (A) CROSS-APPEALS -APPEAL OF THE ASSESSEE BEING ITA NO.543/HYD/2006 AND APPEAL OF THE REVENUE BEING 641/HYD/2006- ARISING OUT OF ORIGINAL ASSESSMENT FO R THE ASSESSMENT YEAR 2000-01, ARE PARTLY ALLOWED. (B) ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSI ONER PASSED UNDER S.263 OF THE ACT, BEING ITA NO.526A/HYD/2005, FOR ASSESSMENT YEAR 2000-01, IS ALLOWED. (C) CONSEQUENT TO THE DECISION AT (B) ABOVE, ASSESSEE S APPEAL, ITA NO.508/HYD/2007, ARISING OUT OF THE PROCEEDINGS INI TIATED IN PURSUANCE OF DIRECTIONS OF THE COMMISSIONER UNDER S .263 OF THE ACT, FOR ASSESSMENT YEAR 2000-01, BEING INFRUCTUOUS , IS DISMISSED. (D) OUT OF THE CROSS-APPEALS ARISING OUT OF BLOCK ASSES SMENT, APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE, BEING IT(SS )A NOS.44 AND 45/HYD/2009, ARE DISMISSED. (E) ASSESSEES APPEAL ITA NO.226/HYD/2007 FOR ASSESSMEN T YEAR 2003-04 IS PARTLY ALLOWED., (F) ASSESSEES APPEAL ITA NO.1407/HYD/2010 FOR ASSESSME NT YEAR 2004-05, IS ALLOWED. ITA NO.543/HYD/06 & SEVEN OTHERS SH RI KASANI GNANESHWAR, HYDERABAD 28 ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER 2012 SD/- SD/- ( SAK TIJIT DEY) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 19TH OCTOBER, 2012 COPY FORWARDED TO: 1. SHRI K.GNANESHWAR, 7 - 1 - 414/1/B PLOT NO.9, SRINIVASA COLONY EAST, AMEERPET, HYDERABAD 2. 3. 4 INCOME - TAX OFFICER, WAR D - 2(1), HYDERABAD DY./ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(1), H YDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD 5. COMMISSIONER OF INCOME-TAX II HYDERABAD 6. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.