TMI Blog2011 (11) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for these assessment years wherein the assessee declared agricultural income as follows: A.Y. Agricultural Income declared (Rs.) 2002-03 38,260 2003-04 29,870 2004-05 60,900 2005-06 40,460 2006-07 24,900 2007-08 31,500 (Addl. ground) 4. The above income which has been declared by the assessee as agricultural income has been treated by the Assessing Officer as income from other sources. According to the learned counsel for the assessee, the assessee is owning the agricultural property which has been purchased on 16.3.2000 from one Mr. Mula Venkatesh Goud and others in the village of Pedda Mangalaram, Moinabad Mandal, Ranga Reddy District situated in Sy. No. 212, 213 and 214 admeasuring about 12 acres 14 guntas. According to the AR, agricultural operations have been carried out in these assessment years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said land. The Assessing Officer ought to have appreciated that the lands in question are much beyond the 8 km from the municipal limits and also being agricultural lands, the gain ought to have been treated as exempt from tax. . 5. The learned DR relied on the orders of the lower authorities. 6. We have heard both the parties and perused the material available on record. In the present case, though the assessee placed on record before the lower authorities regarding the purchase of property as agricultural land, no material has been placed to show actually carrying out of the agricultural operations. More so, the agricultural income is not supported by sale of agricultural produce. The assessee produced Pattadar Pass Book and certificated issued by the VRO which has been obtained in May, 2010 and it does not indicate on what basis the authorities have certified that agricultural operations were carried on in these assessment years in the impugned land and earned agricultural income. Further, as a matter of fact, the assessee has sub-divided the land into plots and sold to various parties. Though the assessee made a claim that the land was divided into plots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of trade, as distinguished from a capital investment. 8. The learned counsel for the assessee also relied on the following decisions: i) M.V. Chandrasekhar vs. DCIT [91 ITD 543 (Bang.)]. ii) CIT vs. Sohan Khan Mohan Khan [304 ITR 194 (Raj)]. iii) ITO vs. Anthony John Pereira [24 SOT 459 (Mum)]. iv) CIT vs. Suresh Chand Goyal [298 ITR 277 (163 Taxman 54) (MP)]. 9. On the other hand, the learned DR submitted that the assessee purchased the land in March, 2000 and immediately in the succeeding year he started selling the land dividing the same into small plots. According to him, the intention of the assessee is to sell plots and earn income that is nothing but business in real estate and earn income and under any stretch of imagination it cannot be considered as sale of agricultural land. 10. We have heard both the parties and perused the material on record. In this case assessee bought the land in March, 2000 about 12 acres by 3 different sale deeds and immediately in the succeeding year started selling the land dividing the same into small plots. Thus the intention of the assessee is to do business in real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not explained. Regarding the cash deposit in AYs 2005-06, 2006-07, 2007-08 (ITA Nos. 755 to 757/Hyd/2011), he directed the Assessing Officer to consider only peak credit and treat them as unexplained deposit. Against this the assessee is in appeal before us for these assessment years. 12. The learned counsel for the assessee submitted that the assessee is having enough income to deposit the same into the bank account and treating the deposit as income in addition to treating the agricultural income as non-agricultural income would amount to double addition of the same amount and the same should be avoided. 13. The learned DR relied on the orders of the lower authorities. 14. We have heard both the parties and perused the material available on record. For the assessment year 2006-0-7, the assessee could not explain the source of cheque deposit of ₹ 14,53,600. Being so, the unexplained deposit of cheques into bank account at ₹ 14,53,600 is to be considered as unexplained deposit. Similarly, for the assessment year 2007-08 the assessee could not explain the source of ₹ 7,60,000 and the same has to be considered as unexplained income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. As regards payment made for purchase of land dated 9.5.2005 amounting to ₹ 2,00,000 it was submitted by the DR that the contention of the assessee s counsel that the assessee has not made any payment for purchase of land at Kanakamamidi village and in fact, the entire activity of purchase of land at Kanakamamidi was taken over by Sri D. Mahesh Kumar is not correct. Apparently, there was another transaction showing payment of ₹ 20 lakhs for purchase for land at Kanakamamidi village and the assessee in course of the assessment proceedings had filed a confirmation letter from D. Mahesh Kumar. In the said letter addressed to DCIT, Central Circle-6, Hyderabad, Sri Mahesh Kumar (PAN: AKLPD9732H) had confirmed that he along with the assessee had proposed to buy agricultural land situated at Kanakamamidi village and paid some advance. Later on due to financial problems, the assessee had not arranged the required fund and all the cheques issued by him were bounced for lack of funds. He had taken over the entire land and paid to the respective farmers. The Assessing Officer has relied on this letter from Mr. Mahesh Kumar and no addition was made in respect of the pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items of ₹ 4,50,000, ₹ 2,00,000 and ₹ 1,00,000 identified at paras 3.2,3.3 and 3.5 of the assessment order for A.Y. 2005-06. The expenditure of ₹ 1,00,000 identified at para 3.2 is a double entry and is liable to be ignored. As regards the amounts of ₹ 2,00,000 and ₹ 4,50,000 it is submitted that the assessee proposed to purchase agricultural lands at Kanakamamidi village jointly with one Sri Mahesh Kumar. As per mutual understanding the assessee paid a sum of ₹ 20,00,000 by way of cheque which could not be honoured. Later the entire activity was taken over by Sri Mahesh Kumar. The impugned amounts mentioned above were also put up by Sri Mahesh Kumar. Based on the letter of Sri Mahesh Kumar before the Assessing Officer the Assessing Officer accepted the explanation of the assessee. The Assessing Officer having accepted the explanation of the assessee ought not to have rejected the explanation in respect of transactions pertaining to the same village jointly started with Sri Mahesh Kumar but taken over by him later on. The learned counsel for the assessee drawn attention of the Bench to the evidence at pages 2 to 6 of the Paper Book which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement of sale wherein Sri Mutyam Reddy along with others have entered into an agreement with the assessee for sale of property at Puppalaguda village for a consideration of ₹ 22.525 crores and the assessee in pursuance of the same, has paid ₹ 1 lakh by cash. However, as per the money receipt at page 13 to 16 of the said annexure, Sri Mutyam Reddy and others have received a total sum of ₹ 2,50,000 as part payment out of which ₹ 1.50 lakhs has been paid on 24.5.2004 and 25.11.2004 and the balance ₹ 1 lakh has been paid in the FY 2005- 06 relevant to the A.Y. 2006-07. The assessee does not dispute the payment as well but states that the said payment has been made from out of the income generated in earlier years. In the absence of any receipt and payment account, it is not possible to verify whether the assessee had sufficient cash balance to meet the payment made. Accordingly, the addition of ₹ 1.5 lakh made by the Assessing Officer is sustained. 26. As regards payment made for purchase of land dated 22.5.2004 and 6.12.2004 aggregating to ₹ 7.5 lakhs, the assessee contended that he has not made any payment for purchase of land a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1 lakh made as per para 3.2 of the assessment order at page No. 2 is also not duly explained and hence addition of the same is confirmed. 28. As regards payment of ₹ 10 lakhs to Mirza Iqbal Ahmed, the Assessing Officer has relied on page-75 of the seized document A/DSKR/SR/06. As per the same, the assessee has entered into an agreement of sale with Mirza Iqbal Ahmed and others for purchase of land admeasuring 5 acres 6 guntas in Narsingi village. Clause-2 of the agreement clearly shows that the assessee in pursuance of the agreement has paid ₹ 10 lakhs in cash as advance. The said agreement has been signed by the assessee as well as the vendors. During the course of first appellate proceedings the assessee submitted copy of the affidavits from Mirza Iqbal and others who denied to have received the same amount. The CIT(A) did not accept the affidavits as the same were not submitted during the course of assessment proceedings. The said affidavits are dated 17.5.2010. Further, the agreement of sale clearly shows that the assessee had paid the amount in cash and the vendors had received the same in cash. Therefore, the subsequent retraction is not believ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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