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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri R.K. Panda, Vice- & Shri K. Narasimha Chary
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri R.K. Panda, Vice-President AND Shri K. Narasimha Chary, Judicial Member Assessment Year:2007-08 Shri Byrraju Ramalinga Vs. A.C.I.T Raju, Hyderabad Central Circle 3(1) PAN:ACVPB8311J Hyderabad (Appellant) (Respondent) Assessee by: Shri K.C. Devdas, CA Revenue by: Shri Shakeer Ahmed, DR Date of hearing: 25/07/2023 Date of pronouncement: 27/07/2023 ORDER
Per R.K. Panda, Vice-President
This appeal filed by the assessee is directed against the order dated 14.2.2022 of the learned CIT (A)-3, Visakhapatnam relating to A.Y.2007-08.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) in confirming the addition of Rs.11,44,900/- being interest income and Rs.1,80,862/- being agricultural income made by the Assessing Officer.
Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 31.07.2007 declaring total income of Rs.1,26,75,860/- from salary & other sources. The return was processed u/s 143(1) and subsequently, the case was selected for scrutiny. Statutory notices u/s 143(2) and 142(1) were issued and served on the assessee to which the AR of the assessee appeared before the Assessing Officer and submitted that there was a search proceeding conducted against M/s. Satyam Computers Services Ltd and other related concerns and books of account and other documents were seized by various investigating agencies and therefore, it was not possible for them to furnish the requisite information.
During the course of assessement proceedings, the Assessing Officer noticed that the assessee claimed credit of TDS of Rs.8,99,716/- as TDS made on the interest received infixed Deposits in the Bank. While computing the total taxable income, an amount of Rs.77,99,386/- was shown as interest income received from Fixed Deposits under the head “income from other sources”. The Assessing Officer noted that the TDS was made on the interest received from fixed deposits @ 10.2% which shows that the actual interest income received from the TDS made of Rs.8,99,716/- was Rs.88,20,745/-. However, the assessee has offered an amount of Rs.77,99,386/- for taxation. On being asked by the Assessing Officer to reconcile such discrepancy, the assessee expressed his inability on the ground that all the records were seized by the Investigating Agencies and therefore, it is not possible to reconcile the income offered by the assessee with actual interest income received from the fixed deposits. However, it was submitted that such interest income on FDR is offered regularly for taxation on accrual basis.
However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs.11,44,900/- by making the following calculations: a) Amount of TDS made on the FDRs Rs. 8,99,716 b) Rate at which TDS was made 10.2% c) Thus the interest income received on Rs.88,20,745 the FDRs d) Interest income from savings bank Rs. 1,23,541 accounts e) Total interest income (c+d) Rs.89,44,286 f) Additional interest income now brought Rs.11,44,900 to taxation (e-f)
The Assessing Officer similarly made addition of Rs.1,80,862/- on the ground that the assessee could not furnish details of agricultural income which it has claimed as exempt by furnishing particulars such as extent of land in possession, crops grown, expenditure incurred and receipts thereon etc.,
In appeal, the learned CIT (A) confirmed both the additions. So far as the addition of interest income of Rs.11,44,900/-, he upheld the same by observing as under:
7. I have considered the grounds of appeal, gone through the submissions of the appellant and seen the order of the A0. During the appeal proceedings, the appellant has not substantiated the amount of income already offered on accrual basis in the earlier years and how much income is now offered with respect to TDS credit claimed. The AO has returned a categorical finding that during the assessment proceedings he noticed that TDS was made on interest received from fixed deposit at 10.2% which revealed that actual Interest income received from the TDS made of Rs.8,99,716/- was Rs.88, 20,745/- as against the income offered for taxation of RS.77,99,386/-, Since a TDS of Rs.8,99,716/- was made @ 10.2% the income was Rs.88,20,745/- as rightly held by the AO considering the rate on which the TDS was made on the total income. In this regard, the appellant has not brought any material on record in carrying out necessary re-conciliation in explaining the above difference. Considering the above facts as well as the TDS made the addition made by the AO is confirmed and this ground of appeal is dismissed.”
So far as the agricultural income is concerned, he also upheld the same by observing as under:
“10. I have considered the grounds of appeal, gone through the submission of the appellant and seen the order of the AO. I am in agreement with the views of the Assessing Officer that in support of agricultural income the appellant ought to have furnished the particulars of extent of land in possession of the appellant, crops grown, expenditure incurred and receipts thereon. The AO has rightly pointed out that if any rent was received from any agricultural land the tenant ought to have been clearly along with the details of identified payments and possession of importantly as further held by the AO, mere the agricultural land is not sufficient to claim agricultural income. During appeal I observe that such facts and requirements for claiming agricultural income as highlighted by the AO in his order has not been brought on record by the appellant. Accordingly, this ground of appeal is dismissed.”
Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee submitted that the interest on savings account is not liable for TDS. Further, the assessee was regularly showing the interest income from Fixed Deposits on accrual basis and therefore, given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the Assessing Officer by reconciling the interest income that has been offered to tax. So far as the agricultural income is concerned, he also submitted given an opportunity the assessee is in a position to substantiate with evidence to the satisfaction of the Assessing Officer regarding the earning of agricultural income which he claimed to be exempt.
The learned DR, on the other hand, heavily relied on the order of the Assessing Officer and the learned CIT (A). He submitted that when the assessee failed to reconcile the interest income and substantiate the agricultural income which it claimed to be exempt, the learned CIT (A) is fully justified in upholding the order of the Assessing Officer.
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We find the AO in the instant case made addition of Rs.11,44,900/- on the ground that the assessee could not reconcile the interest income FDR- wise by clearly showing how much interest income was earned in the year and earlier years and how much TDS on such interest income is claimed. We find the learned CIT (A) upheld the action of the Assessing Officer, the reasons of which has already been reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee since the interest income is being offered on accrual basis on year-to-year basis and the savings bank interest income is not subject to TDS and therefore, given an opportunity, the assessee is in a position to reconcile the same to the satisfaction of the Assessing Officer. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate with evidence to his satisfaction by giving the interest income FDR-wise and to show how much interest income has already been offered to tax in the preceding years and how much interest income is liable to tax during the year.
Similarly, the Assessing Officer is also directed to give an opportunity to the assessee to substantiate with evidence to his satisfaction regarding the earning of agricultural income of Rs.1,80,862/- which the assessee has claimed to be exempt. The Assessing Officer shall decide the issue as per fact and law after Page 5 of 6 giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.