TMI Blog2012 (12) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.543/Hyd/2006 : Assessment year 2000-01 Revenue s 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 appeals 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 assessment under S.143(3) of the Act, framed by the assessing officer dated 24.3.2003. 4. Effective grievance of the assessee in its appeal ITA No.543/Hyd/2006 is with regard to non-grant of deduction on account of selfsupervision, while determining the cost of construction of a property. Effective grievance of the Revenue in its appeal ITA No.641/Hyd.2006 is against the relief granted by the CIT(A) in the matter of cost of construction adopted by the assessing officer to arrive at the unexplained investment of the assessee. 5. Brief facts of the case in relation to this issue are that the assessee const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determining the value of any construction/property, and as such, reference to the DVO by the assessing officer is in accordance with the provisions of the Act. The assessing officer could have made necessary adjustments to the value determined by the DVO as the facts and circumstances of the case may warrant, to arrive at the actual cost of construction, and when the assessing officer failed to make such adjustments, the CIT(A) could have done such adjustments to redress the grievance of the assessee. In the circumstances, we are not inclined to approve the action of the CIT(A) in straight away brushing aside the report of the DVO, and proceeding to determine the estimated cost of construction taking the report of the Registered Valuer of the assessee as the base. 9. Further, in this case, the property is situated in a remote place in Madak District and as such the Delhi based CPWD rates cannot be straight away be applied without making suitable adjustments to arrive at the rates of local PWD. After that the assessee has pleaded that he has personally supervised the construction himself and carried on the construction activity. On account of that also, certain discount has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the assessee. The Commissioner of Income-tax invoked the provisions of S.263 of the Act and passed the impugned order on the reason that mere disclosure of agricultural income does not tantamount to full disclosure of the actual source of income of the assessee and the assessee has to prove the nature of the income to the satisfaction of the assessing officer, more so, when the assessee has actually earned agricultural income and claiming it as exempt from income-tax. The assessee has claimed the agricultural income in question either 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 order under S.143(3) dated 24.3.2003, passed by the assessing officer accepting the agricultural income declared by the assessee, without causing necessary enquiries to ascertain the correctness of the nature of the income claimed by the assessee, is erroneous and prejudicial to the interests of Revenue. He accordingly passed the impugned order with suitable directions to the assessing officer to reframe the assessment accordingly. Aggrieved by the order of the Commissioner of Income-tax, assessee has pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed the appeals of the Department. He submitted that when the Tribunal has accepted the agricultural income of ₹ 12,00,000 declared by the assessee for assessment year 2001-02, it cannot be said that the agricultural income of ₹ 11 laksh declared by the assessment year under 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 order of assessing officer was erroneous and prejudicial to the interests of Revenue 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 assessing officer did not accept the agricultural incomes shown by the assessee for various assessment years falling in the block period, in the block assessment originally completed on 31.10.2001, the CIT(A) accepted the same vide his order dated 25.6.2002. Though this order was remitted back by the Tribunal twice on technical ground for fresh disposal , in the meantime, the Appellate Tribunal s order dated 20.6.2008 was received, and based on the same, the CIT(A) who took up the restored appeal later on, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,00,000 Accepted by ITAT The agricultural income of ₹ 11 lakhs declared by the assessee is in tune with such income declared by him for other years noted above, and the action of the assessing officer in accepting the agricultural income of ₹ 11 lakhs declared by the assessee is consistent with the view taken by the department for earlier years. In the circumstances, there is nothing abnormal or unreasonable hike in the quantum of agricultural income declared by the assessee for the year under appeal and what is declared is well comparable with that of the other years noted above. In the assessment year 2001-02, the Tribunal accepted the agricultural income of ₹ 12 lakhs declared by the assessee. In these facts and circumstances, the action of the assessing officer in accepting the agricultural income of ₹ 11 lakhs declared by the assessee for the year under appeal, cannot be said to be either erroneous or prejudicial to the interests of Revenue. In our opinion, therefore, the Commissioner of Income-tax is not justified in invoking the provisions of S.263 of the Act. We accordingly cancel the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. Brief facts of the case, relating to the first issue involved in this appeal, viz. addition of ₹ 9,36,500, are that there was search under S.132 of the Act conducted at the assessee s 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 ₹ 9,36,500/- to take possession of the agricultural land from Shri Yousuf Khan and others. Since the said payment/investment was not reflected in the statement of affairs filed, the assessing officer treated the same as unexplained investment of the assessee of assessment year 1995- 96. During the appellate proceedings before the CIT(A), assessee filed an affidavit of Shri Yousuf Khan, stating that the assessee paid an advance of ₹ 1,30,000-/- and another instalment of ₹ 8,06,500/- on behalf of one Shri Ramanappa, against the total sale consideration of ₹ 9,36,500/-. However, due to disputes amongst Shri Yousuf Khan and Shri Ramanappa, the final sale deed could not be executed in favour of Shri Ramanappa and the entire advance was refunded to him. The CIT(A) was of the opinion that the assessee paid a sum of ₹ 8,02,500/- and entered into an ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accordingly uphold the order of the CIT(A) and reject the grounds of the assessee on this issue. 24. The next issue involved in this appeal relates to an addition of ₹ 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, in brief, are that certain savings bank pay-in-slips reflecting deposits of ₹ 6 lakhs and ₹ 16 lakhs into assessee s savings account Nos.852 and 855 with 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. It was explained by the assessee that the aforesaid amount of ₹ 22 lakhs was received form M/s. Meenakshi Construction Co. as advance against sale of land, and since the said deal could not materialize, the money was subsequently returned. The assessing officer was not convinced with this explanation of the assessee,. Hence observing that the assessee could not prove either the identity or the creditworthiness of the creditor, M/s. Meenakshi Construction Co. and further observing that the said b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent to mention that, while one bank account was 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 ₹ 16 lakhs was withdrawn 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 ₹ 22 lakhs made by the AO is confirmed. 27. Aggrieved by the order of the CIT(A) on this issue, 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 assessee having received the amounts in question from M/s. Meenakshi Constructions, is corroborated by the sworn statement of Shri Prasad. The Learned Departmental Representative on the other hand, strongly relied on the orders of the lower authorities. The DR relied on the order of CIT(A). 29. We heard both sides on this issue. The assessee has not explained the sources for depositing money int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Gnan Kumar Agrarwal (Ind) V/s. ACIT(60 DTR (Hyd) 241). In the circumstances, no addition can be made solely on the basis of seized loose paper, which is merely a dumb document, which is not owned up by the assessee, in the absence of any corroborative evidence to show that the said document indeed relates to the assessee. In that view of the matter, we find no infirmity in the impugned order of the CIT(A). We accordingly uphold the same, rejecting the grounds of the Revenue in its appeal. 36. In the result, the Revenue s appeal, IT(SS) A No.45/Hyd/2009, arising out of the block assessment is also dismissed. Assessee s Appeals : ITA No.226/Hyd/2007 : Assessment year 2003-04 ITA No.1407/Hyd/2010 : Assessment 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 the 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 the legality and validity of the action of the assessing officer in reopening the assessment. ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Authorised Representative further submitted that earlier there was only one instance of sale of thirteen acres of land to one Shri 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.61/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, during the accounting year relevant to assessment year 2001-02, assessee sold 83 acres 35 guntas of land for a consideration of ₹ 3,94,21,250. Though the assessing officer determined the long term capital gains on sale of agricultural land at ₹ 3,91,24,535, the matter travelled before the higher 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 activities of the assessee of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness activities or adventure in the nature of trade, and cleverly avoided making any mention as to the issuance of show 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 of the assessee and ultimately led to the dropping the proposal for enhancement mooted by the CIT(A). The action of the CIT(A) in this behalf, according to the learned Authorised Representative for the assessee is not correct or justified. 45. Reliance at this juncture is placed on the decision of the Chennai Bench of the Tribunal dated 26.4.2011 in the case of ITO V/s. Chandar HUF, wherein it has been held that even after forming lay out dividing the agricultural land into plots, assessee carried on agricultural 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was sold after 15 years of acquisition. There is no material on record to show that the assessee carried on activities of buying and selling of land in a systematic manner so as to justify the action of the Revenue authorities in treating the activity of the assessee as an adventure in the nature of trade. The land was sold in acreage and not by making plots. In the circumstances, we are of the opinion that the sale of land cannot be considered as an adventure in the nature of trade and income derived from such sale should be treated as agricultural income. For these reasons, and respectfully following the decision of the coordinate Benches of the Tribunal in assessee s own case for the earlier years referred to above, we allow the grounds of the assessee on this issue, and direct the 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 enjoying the agricultural land for nearly 15 years and deriving income from agriculture, if there is no change in the character of the land, and consequently not liable to tax either as business income or as capital gains. 48, The next ground of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. 54. The next ground being ground No.9 is with regard to addition of ₹ 2,01,632 made by the assessing officer, by clubbing the income of the assessee s wife in his hands in terms of S.64 of the 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, assessee s appeal ITA No.226/Hyd/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 reopening 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 received by the assessee on sale of land, by treating the same as income arising 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
