Smt. Vallabhaneni Venkatasubbamma, Rep by:Sri Vallabhaneni Venkatramaiah, Vijayawada, Hyderabad V. The ACIT, Central Circle, Vijayawada

MA 50/VIZ/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4745 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2010
• Assessment Year: misc
• Appeal Filed On: 22-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO SHRI SUBRATA SA
• Keywords: Question of law
• Section: 68; 54

Judgement Text

PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER M.A. NO.50/VIZAG/2009 (ARISING OUT OF IT(SS)A NO.9/VIZAG/2008) BLOCK PERIOD 1-4-1996 TO 14-2-2003 SMT. VALLABHANENI VENKATASUBBAMMA (REP.BY VALLABHANENI VENKATARAMAIAH), VIJAYAWADA (PAN NO.ABBPV 5448 B) VS. ACIT, CENTRAL CIRCLE, VIJAYAWADA (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S. RAMA RAO, ADVOCATE RESPONDENT BY: SHRI SUBRATA SARKAR, DR ORDER PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS PETITION WITH THE PRAY ER FOR APPROPRIATE RELIEF WITH THE SUBMISSION THAT CERTAIN MISTAKES AP PARENT FROM RECORD HAVE CREPT IN, IN RESPECT OF THE FOLLOWING MATTERS, IN THE ORDER DATED 22- 12-2008 PASSED IN IT(SS) NO.04/VIZAG/2008 AND IT(SS )A NO.09/VIZAG/2008. A) ADDITION ON ACCOUNT OF CREDIT FOUND IN BANK A/C B) ADDITION ON ACCOUNT OF EXPENDITURE ON FISH CULTIVAT ION 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTED TO THE PETITION FILED BY THE ASSESSEE WITH THE CONTENTION THAT THE TRIBUNAL HAS NO POWER TO REVIEW OR RECALL ITS ORIGINAL ORDER AND REHEAR THE SAME. THUS ACCORDING TO LEARNED DEPARTMENTAL REPRESENTATIVE, T HE TRIBUNAL SHOULD NOT DISTURB THE QUANTUM ADDITIONS ALREADY CONFIRMED BY THE TRIBUNAL. IN THIS REGARD THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE PAGE 2 OF 11 ON THE FOLLOWING CASE LAW. WE HAVE EXTRACTED BELOW THE HEAD NOTES OF THE SAID CASE LAW FROM THE WRITTEN SUBMISSIONS FILE D BY THE LEARNED DEPARTMENTAL REPRESENTATIVE: 1) UPLAKSH METAL INDUSTRIES VS. CIT, REPORTED IN ( 309) (ITR 61) (P&H) (2009): WHEREIN IT WAS HELD THAT RECTIFICATION U/S 254 (2) REVIEW OR RECALL OF OR DER TRIBUNAL UPHELD THE ADDITIONS TOWARDS UNPROVED TRAD E CREDITS APPLICATION FOR RECTIFICATION U/S 254 (2) DISMISSED BY THE TRIBUNAL HOLDING THAT THE SAME WAS I THE NATU RE OF REVIEW WHICH WAS NOT PERMISSIBLE JUSTIFIED SCOP E OF RECTIFICATION IS CONFINED TO CORRECTION OF MISTAKE APPARENT ON THE FACE OF RECORD AND NOT A MISTAKE WITH REGARD TO DEBATABLE QUESTIONS, WHERE A CONSCIOUS DECISION HAS BEEN TAKEN MOREOVER, THE VIEW TAKEN BY THE TRIBUNAL ON MERITS HAS BEEN AFFIRMED IN FURTHER APPEAL NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATIO N 2) RAS BIHARI BANSAL VS. CIT, REPORTED IN (293) ITR 365)(DEL)/2008: WHEREIN IT HAS HELD THAT RECTIFICA TION U/S 254(2) SCOPE OVERSIGHT OF A FACT CANNOT CONSTIT UTE AN APPARENT MISTAKE RECTIFIABLE U/S 254(2) ALSO, ASS ESSEE CANNOT BE ALLOWED TO REOPEN AND REARGUE THE WHOLE MATTER IN THE GARB OF RECTIFICATION ASSESSEE FILE D AN APPLICATION U/S 254(2) CONTENDING THAT HIS CROSS OB JECTIONS RELATING TO ADDITION OF ESTIMATED GROSS PROFIT HAVE BEEN DISPOSED OFF BY THE TRIBUNAL WITHOUT GIVING ATTENTI ON TO THE EVIDENCE ADDUCED BY HIM HE WAS I FACT SEEKING TO REOPEN AND RE-ARGUE THE WHOLE MATTER IN THE GARB OF APPLICATION FOR RECTIFICATION WHICH IS BEYOND THE S COPE OF SEC.254(2) THEREFORE, TRIBUNAL WAS JUSTIFIED IN DISMISSING THE APPLICATION 3) ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD., REPORTED IN 219 CTR 90 (SC): WHEREIN IT HAS HELD TH AT RECTIFICATION U/S 254 (2) MISTAKE APPARENT AN ERROR APPARENT ON THE FACE OF THE RECORD MEANS AN ERROR W HICH STRIKES ON MERE LOOKING AND DOES NOT NEED LONG DRAW N OUT PROCESS OF REASONING ON POINTS WHERE THERE MAY CONCEIVABLY BE TWO OPINIONS IF THE VIEW ACCEPTED BY THE COURT IN THE ORIGINAL JUDGMENT IS ONE OF THE POSSIB LE VIEWS, THE CASE CANNOT BE SAID TO BE COVERED BY AN ERROR APPARENT ON THE FACE OF THE RECORD.. 4) BHARAT DRUG STORES VS. CIT & AMR, REPORT IN (295 ITR 120) (GAU) (HC): WHEREIN IT HAS HELD THAT RECTIFIC ATION U/S 254(2) SCOPE U/S 254 (2), THE TRIBUNAL CANN OT PAGE 3 OF 11 RECALL ITS ORIGINAL ORDER AND REHEAR THE SAME ON ME RITS NO SUBSTANTIAL QUESTION OF LAW ARISES .. 5) BIMAL BHATT VS. ACIT, REPORTED IN (18 SOT 315) I TAT, MUMBAI D BENCH: WHEREIN IT HAS HELD THAT RECTIFI CATION U/S 254(2) SCOPE TRIBUNAL, AFTER DELIBERATING I N DETAIL AND EXAMINING ALL ASPECTS OF ISSUE COULD NOT RECALL ITS ORDER AS A WHOLE IN THE GARB OF RECTIFICATION U/S 2 54 (2) AS IT WOULD AMOUNT TO REVIEW RE-APPRECIATION OF THE EVIDENCE PLACED BEFORE THE TRIBUNAL DURING THE COUR SE OF HEARING IS NOT PERMISSIBLE TO RE-ADJUDICATE THE ISS UE AFRESH UNDER THE GARB OF RECTIFICATION. 3. HOWEVER, THE LEARNED AUTHORISED REPRESENTATIVE D EFENDED THE PETITION BY SUBMITTING THAT THE MISTAKES POINTED OU T IN THE PETITION ARE ONLY ERRORS WHICH ARE APPARENT FROM THE RECORD. WE MAY MENTION HERE THAT WE ARE NOT OBLIVIOUS OF THE LEGAL PROPOSITIONS LAID DOWN BY HIGHER COURTS WITH REGARD TO THE POWERS VESTED WITH THE TR IBUNAL U/S 254(2) OF THE ACT. HENCE WE ARE UNABLE TO ACCEPT THE CONTENT ION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE QUANTUM ADDITI ONS CONFIRMED IN THE EARLIER ORDER OF THE TRIBUNAL SHOULD NOT BE DIS TURBED. IT IS WELL SETTLED LEGAL PROPOSITION THAT THE ARITHMETICAL ERRORS AND THE FINDINGS RECORDED UNDER MISAPPREHENSION OR MISCONCEPTION OF LAW AND F ACTS SQUARELY FALL UNDER THE CATEGORY OF ERRORS APPARENT FROM THE RECO RD WHICH CAN BE RECTIFIED BY AN ORDER PASSED U/S 254(2) OF THE ACT. THUS BY KEEPING IN MIND THE PROPOSITION OF LAW DISCUSSED ABOVE, WE NOW PROCEED TO DECIDE THE PETITION OF THE ASSESSEE ON MERITS. 4. THE FIRST ISSUE ON WHICH THE ASSESSEE POINTS OUT ERROR RELATES TO THE ADDITION OF RS.27,86,679/- PERTAINING TO THE AM OUNT RECEIVED BY WAY OF DEMAND DRAFTS AND FOUND DEPOSITED IN THE BANK AC COUNT OF THE ASSESSEE. THE SAID ISSUE IS DISCUSSED AT PARA NO.5 OF THE ORDER OF THE ITAT. WE NOTICE THAT THE TRIBUNAL HAS CONFIRMED TH E ADDITION MADE BY THE ASSESSING OFFICER UNDER THE VIEW THAT THE AMOUN TS FOUND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE ARE CASH CREDIT EN TRIES WHICH ARE LIABLE TO FALL WITHIN THE AMBIT OF THE PROVISIONS OF SECTI ON 68 OF THE ACT. THOUGH THE ASSESSEE CLAIMED THAT THE SAID RECEIPTS ARE PART OF SALE PAGE 4 OF 11 PROCEEDS OF FISHES SOLD BY HIM, THE ASSESSEE COULD PRODUCE ONLY PHOTOCOPY OF THE CHEQUES AND DRAFTS BEFORE THE ASSE SSING OFFICER. HENCE THE TRIBUNAL TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY RESPONSIBILITY PLACED UPON HI M U/S 68 OF THE ACT AND ACCORDINGLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4.1 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PROVISIO NS OF SEC.68 OF THE ACT ARE APPLICABLE ON THE FACTS OF THIS ISSUE. HE FURTH ER SUBMITTED THAT NO ARGUMENT TOOK PLACE ON THE APPLICABILITY OF SEC.68 ALSO DURING THE COURSE OF HEARING. HOWEVER, THE TRIBUNAL WHILE PASSING THE ORDER HAS HEAVILY PLACED RELIANCE ON THE PROVISIONS OF SEC.68 IN ORDE R TO CONFIRM THE SAID ADDITION. LEARNED AUTHORISED REPRESENTATIVE SUBMITT ED THAT THE PROVISIONS OF SEC.68 OF THE ACT ARE NOT APPLICABLE ON THIS ISSUE AS THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT AND TO THAT EXTENT THE TRIBUNAL HAS COMMITTED AN ERROR IN APPLYING THE PRO VISIONS OF SEC.68 TO THE FACTS OF THE ISSUE. 4.2 THE LEARNED AUTHORISED REPRESENTATIVE, BY ADVER TING OUT ATTENTION TO PAGES 7 AND 8 OF THE ASSESSMENT ORDER PASSED IN THE CASE OF SHRI VALLABHANENI VENKATARAMAIAH (HUF), SUBMITTED THAT T HERE IS NO DISPUTE WITH REGARD TO THE NATURE OF THE DEPOSITS. THAT IS THE ASSESSING OFFICER HAS ALREADY ACCEPTED THAT THE AMOUNTS SO DEPOSITED ARE PART OF SALE RECEIPTS ONLY. IN THIS REGARD, THE LEARNED AUTHORIS ED REPRESENTATIVE INVITED OUR ATTENTION TO QUESTION NO.32, WHICH IS E XTRACTED AT PAGE NO.8 OF THE ASSESSMENT ORDER RELATING TO VALLABHANENI VE NKATARAMAIAH. WE ALSO EXTRACT BELOW THE SAID QUESTION AND THE ANSWER THERE TO.: Q.NO.32. IT IS SEEN THAT FISH SALES CREDIT IS FOUND IN THE STATE BANK OF INDIA, PATAMATA BRANCH, WHAT IS THE RELATIONSHIP BETWEEN LOAN TAKEN FROM ANDHRA BANK AN D FISH SALES CREDITS IN SBI, PATAMATA BRANCH? ANS. IF WE DEPOSIT IN THE LOAN A/C OF ANDHRA BANK, T HEY WILL ADJUST IT TOWARDS LOAN REPAYMENT, SO WE HAVE DEPOSI TED IN THE SBI PATAMATA BRANCH. PAGE 5 OF 11 THUS ACCORDING TO LEARNED AUTHORISED REPRESENTATIVE THE TRIBUNAL HAS COMMITTED AN ERROR BY ASSUMING THAT THE ASSESSEE HA S NOT PLACED ANY MATERIAL TO PROVE THAT THE DEPOSITS MADE IN THE BAN K A/C REPRESENT SALE PROCEEDS OF THE FISHES AND THE SAID ASSUMPTION IS N OT BORNE OUT OF RECORDS. 4.3 ACCORDING TO THE LEARNED AUTHORISED REPRESENTAT IVE, THE QUANTUM OF DEPOSIT MADE IN THE BANK ACCOUNT WAS ALSO CORROB ORATED AGAINST THE SALE PROCEEDS OF FISHES AND THE SAME HAS ESCAPED TH E ATTENTION OF THE TRIBUNAL. THE LEARNED AUTHORISED REPRESENTATIVE SUB MITTED THAT ALL THE FAMILY MEMBERS OF THE ASSESSEE ARE IN THE BUSINESS OF FISH CULTIVATION. DURING THE COURSE OF SEARCH CERTAIN DISPATCH SLIPS WERE SEIZED AND ON THAT BASIS THE INCOME FROM FISHING ACTIVITY OF ALL THE FAMILY MEMBERS WERE ESTIMATED. AFTER GIVING DUE DEDUCTION FOR THE INCOM E ALREADY DISCLOSED BY ALL THE FAMILY MEMBERS, THE REMAINING INCOME WAS SU BJECTED TO TAX IN THE HANDS OF SHRI VALLABHANENI VENKATARAMAIAH IN IT (SS)A NO.5/VIZAG/2008. THE INCOME WAS ESTIMATED BY THE TR IBUNAL AT RS.17,39,010/- AND AFTER DEDUCTING A SUM OF RS.4,58 ,700/-, THAT IS THE AMOUNT ALREADY DISCLOSED BY THE FAMILY MEMBERS, THE NET UNDISCLOSED INCOME FROM FISH SALES WAS DETERMINED AT RS.12,80,0 00/-. THE LEARNED AUTHORISED REPRESENTATIVE POINTED OUT THAT THE NET INCOME OF RS.17,39,010/- HAS BEEN ARRIVED BY ESTIMATING THE G ROSS VALUE OF SALES AT RS.4,96,86,000/- AND FURTHER ESTIMATING THE NET PRO FIT AT 3.5%. THUS ACCORDING TO LEARNED AUTHORISED REPRESENTATIVE THE AMOUNT FOUND DEPOSITED IN THE BANK A/C OF THE ASSESSEE AND HIS F AMILY MEMBERS AGGREGATING TO RS.1,17,81,054/- IS VERY MUCH EXPLAI NED BY THE AMOUNT OF SALE PROCEEDS OF RS.4.96 CRORES CITED ABOVE. THU S ACCORDING TO LEARNED AUTHORISED REPRESENTATIVE THE QUANTUM OF DEPOSITS M ADE TO THE BANK A/C OF THE ASSESSEE ALSO STANDS EXPLAINED. BY NOT CONSI DERING THE VITAL FACTS OF SALES REALIZATION VIS--VIS BANK DEPOSITS THE TR IBUNAL HAS COMMITTED AN ERROR APPARENT FROM THE RECORD BY CONFIRMING THE AD DITION OF BANK DEPOSITS U/S 68 OF THE ACT. PAGE 6 OF 11 5. IT IS NOTICED FROM PARA NO.4 OF THE ORDER DATED 2 2-12-2008 PASSED BY THE TRIBUNAL, THAT THE ASSESSEE DOES NOT MAINTAI N ANY BOOKS OF ACCOUNT FOR HIS TRANSACTIONS. HOWEVER, THE TRIBUNAL WHILE RENDERING THE DECISIONS ON THIS ISSUE HAS CONSIDERED THE PROVISIO NS OF SEC.68 OF THE ACT, WHICH IS NOT APPLICABLE TO THE FACTS OF THE CASE. T HUS THE TRIBUNAL HAS COMMITTED AN ERROR ON APPLICATION OF SEC.68 OF THE ACT ON THIS ISSUE. SIMILARLY THE QUANTUM OF FISH SALES HAVE ALSO ESCAP ED THE ATTENTION OF THE TRIBUNAL AS THE TRIBUNAL WAS UNDER THE ASSUMPTION T HAT THERE WAS DISPUTE WITH REGARD TO THE CLAIM OF THE ASSESSEE TH AT THE IMPUGNED DEPOSIT REPRESENT SALE PROCEEDS OF FISHES. IN VIEW OF THE ABOVE A MISTAKE APPARENT FROM THE RECORD HAS CREPT IN ON TH IS ISSUE AND ACCORDINGLY WE SUBSTITUTE PARA NO.5 OF THE ORDER OF THE TRIBUNAL WITH THE FOLLOWING PARA. 5. THE COMMON ISSUE BOTH IN THE ASSESSEES AS WELL AS DEPARTMENTS APPEAL IS WITH REGARD TO THE UNEXPLAINED DEPOSIT FOUND CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. IN THE BANK ACCOUNT MAINTAINED WITH SBI, THE ASSESSING OFFICER NOTICED CERTAIN DEPOSITS AGGREGATING TO RS.27,78,679/- ON VARIOUS DATES FALLING IN TWO FINANCIAL YEARS. THE ASSESSEE EXPLAINED THAT THEY REPRESENT SALE PROCEED S OF FISH AND THE SAME WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSEE COULD NOT VALIDATE THIS CLAIM WITH ANY BOOKS OF ACCOUNT. LEARNED CIT (A) DELETED A SUM OF RS.24,50,000/- AND CONFIRMED THE BALANCE AMOUNT. HENCE BOTH THE PARTIES ARE IN APPEAL BEFORE US ON T HIS ISSUE. THE DECISION OF LEARNED CIT (APPEALS) IN THI S CONNECTION IS GIVEN AT PARA 6.2 OF THIS ORDER WHICH IS EXTRACTED BELOW: PAGE 7 OF 11 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND VARIOUS DETAILS. IN RESPECT OF F.Y 2002-03 THE ASSESSING OFFICER HAS NARRATED THE MODE OF PAYMENT AS BY CHEQUES OR BY DD AND FOR F.Y 1997-98 THE MODE OF PAYMENT NARRATED BY HER IS BY CHEQUES. ACCORDINGLY, THE DEPOSITS ARE NOT IN CASH. THE APPELLANT HAS FILED COPIES OF THE DEMAND DRAFTS RELATING TO F.Y 2002-03, WHICH SHOWS THAT THE DDS HAVE ORIGINATED FROM WEST BENGAL., THE DDS AND CHEQUES APPEARING IN BANK ACCOUNT ARE CLAIMED TO BE ON ACCOUNT OF SALE OF FISH. SINCE THE TRANSACTIONS ARE IN CHEQUES OR DD, THE SOURCE OF DEPOSITS IN BANK ACCOUNT CAN EASILY BE VERIFIED. ACCORDINGLY, IT IS NOT CORRECT TO SAY THAT DEPOSITS IN BANK ACCOUNTS ARE UNEXPLAINED OR NOT VERIFIABLE. ADMITTEDLY THE ASSESSEE IS ENGAGED IN FISH CULTIVATION AND FISH IS MOSTLY SOLD BY THE GROUP IN W EST BENGAL FROM WHERE DDS ARE RECEIVED. ACCORDINGLY, UNLESS INFORMATION TO THE CONTRARY IS AVAILABLE, THE CLAIM OF THE ASSESSEE THAT THE PROCEEDS ARE OUT OF SALE OF FISH HAS TO BE ACCEPTED. ACCORDINGLY, THE AMOUNT OF CREDITS IN BOTH THE YEARS AMOUNTING TO RS.27,86,679/- HAS TO BE CONSIDERED AS ON ACCOUNT OF SALE OF FISH HOWEVER, IN THE CASH FLOW STATEMENT FOR THE F.Y 2002-03, THE REALIZATION FROM FISH CULTURE HAS BEEN SHOWN AT RS.24,50,000/-. AS PER THE STATEMENT OF TOTAL INCOME FOR A.Y 2003-04, NO INCOME FROM FISH CULTURE HAS BEEN SHOWN BY THE ASSESSEE, WHEREAS FOR A.Y 1998-99 INCOME FROM FISH CULTIVATION HAS BEEN SHOWN AT RS.3,00,000/- . IN THE CASH FLOW STATEMENT FILED FOR VARIOUS YEARS CONSTITUTED IN THE BLOCK PERIOD, THE ASSESSEE HAS SHOW NET INCOME FROM FISH BUSINESS IN THE INFLOW SIDE OF THE CASH FLOW STATEMENT. ACCORDINGLY, THE CASH OUTFLOWS ON ACCOUNT OF EXPENDITURE ON FISH CULTIVATION DO NOT FIND A PLACE I THE CASH FLOW STATEMENT FOR VARIOUS YEARS 6.4. THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNT, HENCE THE GROSS RECEIPTS FIGURE IS NOT AVAILABLE. THE FIGURES AVAILABLE AS PER THE BANK STATEMENT AND COPIES OF DDS FILED EXPLAINS PART OF THE GROSS RECEIPTS AND THE ACTUAL GROSS RECEIPTS FIGURE IS NOT KNOWN EVEN THOUGH IT APPEARS TO BE HIGHER THAN RS.24,50,000/-, WHICH IS NET REALIZATION AS PER THE CASH FLOW STATEMENT. IN VIEW OF THE SAME, SINCE PAGE 8 OF 11 REALIZATION FROM FISH CULTURE IS RS.24,50,000/- AS SHOWN IN CASH FLOW STATEMENT, THE INCOME FROM FISH CULTIVATION FOR A.Y 2003-04 HAS TO BE TAKEN AT RS.24,50,000/-. ACCORDINGLY THE ADDITION OF RS.27,86,679/- IS RESTRICTED TO RS.24,50,000/-. THERE IS NO DISPUTE WITH REGARD TO THE FACT TH AT ALL THE FAMILY MEMBERS OF THE ASSESSEE ARE ENGAGED IN THE BUSINESS OF FISH FARMING AND INCOME OFFERED BY THEM HAVE BEEN ACCEPTED IN EARLIER YEARS. DURING THE COURSE OF SEARCH PROCEEDINGS THE DISPATCH SLIPS WERE FOUND OUT, WHICH REVEALED THAT THE DISPATCHES OF FISHES WERE MADE TO WEST BENGAL. THE DDS WHICH HAVE BEEN FOUND DEPOSITED IN THE BANK A/C OF THE ASSESSEE HAVE BEEN PURCHASED FROM THE STATE OF WEST BENGAL ONLY. BESIDES THIS THE GROSS SALE VALUE OF DISPATCHES MADE WERE DETERMINED AT RS.4,96,86,000/- AND THE NET PROFIT WAS DETERMINED AT RS.17,39,010/-. THE TOTAL AMOUNT OF INCOME FROM THIS SOURCE AS DISCLOSED BY THE FAMILY MEMBERS OF THE ASSESSEE STOOD AT RS.4,58,700/- AND HENCE THE UNDISCLOSED INCOME FROM THIS SOURCE WAS DETERMINED AT RS.12,80,310/-. SINCE THE PACKING SLIPS CONTAINED NAMES OF DIFFERENT CONCERNS, FOR TH E SAKE OF CONVENIENCE, THE SAID UNDISCLOSED INCOME WAS ASSESSED IN THE HANDS OF SHRI VALLABHANENI VENKATARAMAIAH. THUS IT CAN BE SEEN THAT HERE IS A CORRELATION BETWEEN THE SALE OF FISH AND RECEIPT OF DDS. IN THESE CIRCUMSTANCES AS OBSERVED BY THE LEARNED CIT (A), UNLESS THERE IS ANY INFORMATION CONTRARY TO THE CLAIM OF THE ASSESSEE, WE DO NOT FI ND ANY REASON TO REJECT THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED DEPOSITS REPRESENT SALES REALIZATION. IN THE INSTANT CASE, OUT OF THE TOTAL AMOUNT OF RS. 27,86,679/- ADDED BY THE ASSESSING OFFICER, A SUM PAGE 9 OF 11 OF RS.27,68,554/- HAVE BEEN DEPOSITED DURING THE PERIOD FROM SEPTEMBER, 2002 TO JANUARY, 2003. BESIDES, THE SALES AND THE CORRESPONDING INCOME RELATING TO UNDISCLOSED ITEMS HAVE BEEN ASSESSED IN THE HANDS OF SHRI VALLABHANENI VENKATARAMAIAH BY THE ASSESSING OFFICER ONLY FOR THE SAKE OF CONVENIENCE. HENCE, WE ARE OF THE VIEW THAT THE LEARNED CIT (A) IS NOT CORRECT TO PLACE RELIANCE ON THE CASH FLOW STATEMENT TO RESTRICT THE RELIEF TO RS.24,50,000/-. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE IMPUGNED DEPOSITS MADE INTO THE BANK ARE RELATABLE TO THE SALES REALIZATION. SINCE THE INCOME FROM FISH SALES HAVE ALREADY BEEN ASSESSED IN THE HANDS OF THE ASSESSEE AND HIS FAMILY MEMBERS, NO SEPARATE ADDITION IS WARRANTED IN RESPECT OF SALES REALIZATI ON. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFIC ER TO DELETE THE ENTIRE ADDITION OF RS.27,86,679/-. 6. THE NEXT ISSUE ON WHICH THE ASSESSEE POINTS OUT MISTAKE RELATES TO THE ADDITION OF RS.29,28,000/- WITH REGARD TO THE EXPEN DITURE ON FISH CULTIVATION. THE ASSESSEE CONTENDS THAT THERE IS A MISTAKE APPARENT FROM RECORD IN THE DECISION OF THE TRIBUNAL FOR THE FOLLOWING REASONS: A) THE TRIBUNAL HAS FAILED TO TAKE INTO ACCOUNT THE PR OPOSITION THAT WHEN THE INCOME IS ESTIMATED, NO SEPARATE ADDITION IS RE QUIRED TO BE MADE TOWARDS EXPENDITURE. B) THE TRIBUNAL HAS FAILED TO TAKE INTO ACCOUNT THE FA CT THAT THE SALES REALIZATION OF THE INITIAL YEAR WILL BE AVAILABLE W ITH THE ASSESSEE FOR MEETING THE EXPENDITURE IN THE SUCCEEDING YEAR. HEN CE THE ESTIMATION OF EXPENDITURE IN THE SUCCEEDING YEAR ON THE PRESUM PTION THAT THE ASSESSEE WOULD NOT BE HAVING SUFFICIENT FUND IS NOT CORRECT. PAGE 10 OF 11 C) THE ASSESSEE HAS OFFERED INCOME IN THE RETURN OF IN COME ON ESTIMATED BASIS AND THE SAME WAS ACCEPTED BY THE INCOME TAX AU THORITIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE THE FACT THAT FUNDS WERE AVAILABLE WITH THE ASSESSEE FOR MEETING THE EXPENDITURE FOR CULTIVATION OF FISH WAS ACCEPTED BY THE TAX AUTHORI TIES. HOWEVER, THE TRIBUNAL HAS FAILED TO TAKE NOTE OF THIS FACT WHILE RENDERING ITS DECISION. 7. HAVING HEARD THE CONTENTIONS OF BOTH THE PARTIES , WE ARE OF THE VIEW THAT THERE IS AN ERROR IN THE ORDER OF THE TRIBUNAL IN S O FAR AS IT RELATES TO THE ESTIMATION OF EXPENDITURE IN THE SUCCEEDING YEARS A S NOTED BY US IN PARA 7.2 OF THE ORDER DATED 22-12-2008. THE ASSESSING OFFICER H AS TREATED THE COST OF INITIAL DEVELOPMENT AND BREEDING EXPENSES AS UNEXPLAINED IN VESTMENT IN THE HANDS OF THE ASSESSEE. WHEN THE BUSINESS IS CARRIED ON CONTI NUOUSLY THE FUNDS GENERATED IN A YEAR IS NORMALLY AVAILABLE FOR MEETING THE EXP ENDITURE IN THE SUCCEEDING YEAR. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS COMMITTED AN ERROR IN NOT PROPERLY APPRECIATING THE FACTS OF THE ISSUE WHICH CALLS FOR RECTIFICATION. ACCORDINGLY WE SUBSTITUTE PARA NO.7. 3 OF THE ORDER OF THE TRIBUNAL DATED 22-12-2008 BY FOLLOWING PARA. 7.3 DURING THE COURSE OF ARGUMENT, IT WAS STATED B Y THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THERE ARE TWO SEASONS FOR FISH CATCH. THE ASSESSING OFFICER HAS T AKEN THE BOOK RESULTS OF THE GROUPS CONCERNED PERTAINING TO THE ASSESSMENT YEAR 2003-04 AND HAS APPLIED THE SAME FO R THE ASSESSMENT YEARS 1998-99, 2000-01 AND 2001-2002. AS STATED EARLIER THE SALE PROCEEDS OF FIRST YEAR SHAL L BE AVAILABLE FOR MEETING THE EXPENDITURE IN THE SUCCEEDING YEAR. HOWEVER, THE ASSESSING OFFICER HAS ESTIMATED THE CO ST OF INITIAL INVESTMENT ON DEVELOPMENT OF PONDS WITHOUT TAKING INTO ACCOUNT THE ABOVE SAID FACTS. HENCE WE ARE OF THE VIEW THAT THE ADDITION IF ANY SHOULD BE RESTRICTED ONLY TO THE INITIAL YEAR OF FISH CULTIVATION. WE ARE ALSO OF THE VIEW T HAT THE AMOUNT OF INITIAL INVESTMENT OF RS.47,500/- PER ACR E HAS PAGE 11 OF 11 BEEN TAKEN INTO BY THE ASSESSING OFFICER WITHOUT CO NSIDERING THE POSSIBILITY OF AVAILABILITY OF FUNDS WITH THE A SSESSEE. WE ARE OF THE VIEW THAT THE POSSIBILITY OF USING LOAN AMOUNTS AND ALSO AMOUNTS DRAWN FROM THE GROUP CONCERNS CANNOT B E DISCOUNTED WITH. CONSIDERING ALL THE ABOVE ASPECTS, IN OUR OPINION, THE ESTIMATION OF INITIATION CASH OUTFLOW TOWARDS EXPENDITURE TOWARDS FISH CULTIVATION SHOULD BE ESTI MATED AT RS.25,000/- PER ACRE FOR THE INITIAL YEAR OF FISH C ULTIVATION ONLY. ACCORDINGLY THE ADDITION ON THIS ACCOUNT IS R ESTRICTED TO RS.15,00,000/- CALCULATED AT THE RATE OF RS.25,000/ - PER ACRE FOR 60 ACRES IN THE FINANCIAL YEAR 1997-98. ACCORDI NGLY THE ORDER OF LEARNED CIT (A) ON THIS ISSUE STANDS MODIF IED. 8. ACCORDINGLY THE MISCELLANEOUS PETITION OF THE AS SESSEE IS DISPOSED OF. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF T HE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22/07/2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 22 ND JULY, 2010., COPY TO 1 SMT. VALLABHANENI VENKATASUBBAMMA (REP.BY VALLABH ANENI VENKATARAMAIAH), C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO.103, H.NO.3 -6-542/4, INDIRADEVI NILAYAM, ST.NO.7, HIMAYATHNAGAR, HYDERABAD 500029 2 THE A.C.T.I. CENTRAL CIRCLE, VIJAYAWADA 3 THE CIT (CENTRAL), HYDERABAD 4 THE CIT(APPEALS) (CENTRAL), HYDERABAD 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM