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Income Tax Appellate Tribunal, SMC BENCH , COCHIN
Before: Shri George George K
This appeal at the instance of the assessee is directed against the CIT(A)’s order dated 27.02.2018. The relevant assessment year is 2010-2011.
The grounds raised read as follows:-
“1. The assessing officer and the CIT(A) went wrong in disallowing the claim of agricultural income by the assessee and has made an addition of Rs.11,28,024 to the income returned. The CIT(A) also has rejected the new evidence produced by the assessee ignoring his submissions.
The fact that the assessee was not fully aware of the provisions of the act during the year was ignored by the officer.
Any other grounds that may be allowed.”
The brief facts of the case reads as follows:-
ITA No.174/Coch/2018. 2 Smt.Laiji George. The assessee is a housewife and owning agricultural land. She is also having income from share trading during the previous year relevant to the assessment year 2010-2011. For the assessment year 2010-2011, the return of income was filed on 17.07.2010 declaring a total income of Rs.1,21,600. The return was processed u/s 143(1) of the I.T.Act and intimation was duly served on the assessee. Subsequently, the assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act. The scrutiny assessment u/s 143(3) was completed vide order dated 21.12.2012 on a total income of Rs.12,49,627. The Assessing Officer has made an addition of unexplained investments u/s 69 amounting to Rs.11,28,024. The addition was made for the reason that the assessee had credits to the tune of Rs.17,08,024 in her South Indian bank account held along with her husband. The deposits made in the bank was sought to be explained as follows:-
(i) Gold loan from South Indian Bank credited on 11.05.2009 Rs.1,25,000
(ii) Gold loan from South Indian Bank on 25.08.2009 Rs.2,00,000
(iii) Cash deposited out of her Agricultural Income Rs.6,00,000 (approx.)
(iv) Cash deposited out of her husband’s Agricultural Income Rs.8,00,000 (approx.)
3.1 The Assessing Officer, out of the above accepted explanation for a sum of Rs.3,25,000 being gold loan from South Indian Bank credited on 11.05.2009 and 25.08.2009.
ITA No.174/Coch/2018. 3 Smt.Laiji George. Further, a sum of Rs.2,55,000 as agricultural income of assessee’s husband since he had disclosed the said sum in his return of income. The balance amount of Rs.11,28,024 (17,08,024 – 5,80,000) was assessed u/s 69 as unexplained investments.
Aggrieved by the order of the assessment in making an addition of Rs.11,28,024, the assessee preferred an appeal to the first appellate authority. Before the first appellate authority, the assessee filed an agreement dated 02.04.2009 entered between the assessee and Sri.Appukuttan, whereby the assessee had sold 200 rubber trees, 18 number of teak treas, 10 number of Anjili trees for a total consideration of Rs.11,00,000. As per the terms of the agreement, a sum of Rs.2,25,000 was received as advance on 02.04.2009 Rs.1,30,000 on 26.08.2009, Rs.3,60,000 on 02.10.2009 and Rs.3,60,000 on 05.10.2009. The CIT(A) called for a remand report from the Assessing Officer. The remand report was furnished by the Assessing Officer vide his letter dated 26.02.2018. However, the agreement dated 02.04.2009 was not taken on record for the reason, assessee could not state the reasons coming within the exceptions under Rule 46A of the I.T.Rules, 1963. The CIT(A) confirmed the additions made by the Assessing Officer and dismissed the appeal of the assessee.
Aggrieved by the CIT(A)’s order, the assessee has filed the present appeal before the Tribunal. The learned AR submitted that credit of Rs.17,08,024 in South Indian Bank belongs to
ITA No.174/Coch/2018. 4 Smt.Laiji George. the assessee as well as her husband. Therefore, it was submitted only 50% of the unexplained investment should have been added in the hands of the assessee and balance in the hands of her husband. Copy of the bank account opened in the name of the assessee and her husband in South Indian Bank is on record. The learned AR further submitted that the assessee is having agricultural land in Ramapuram Village of Meenachil Taluk and Vandamedu village in Udumpumchola Taluk. This fact is also borne out from the assessment order, which is not in dispute. It was stated that the assessee did not declared agricultural income in her return of income since she was having income liable to Income-tax below the taxable limit. In this case since the income was below the minimum taxable limit no agricultural income was disclosed in the return of income for rate purpose under a bonafide mistaken belief, such declaration was not necessary, since it does not affect taxation for rate purpose. However, it was submitted that non-declaration of agricultural income in the return of income does not mean that the assessee has not earned income from cultivation in 8.50 acres of land owned by the assessee. It was further submitted that the agreement entered between Sri.Appukuttan and the assessee on 02.04.2009 is not an additional evidence. It was submitted that the assessee was under the bonafide belief that the assessee’s claim of agricultural income of Rs.6 lakh would be accepted as a source in respect of assessee’s share of deposit in the bank. It was stated that since the Assessing Officer declined to accept the agricultural income as the source of deposit in the assessment order without giving sufficient opportunity to the
ITA No.174/Coch/2018. 5 Smt.Laiji George. assessee to explain the availability of agricultural income for making bank deposits, the assessee had no choice other than to furnish further evidence before the CIT(A) to strength her claim for having received agricultural income. It was contended that the rejection of evidence by treating it as additional evidence under Rule 46A of the I.T.Rules, 1963 is not in order, since this case come within the exception mentioned in clause (b) and (d) of Rule 46A of the I.T.Rules.
The learned Departmental Representative, on the other hand, strongly supported the orders passed by the Assessing Officer and the CIT(A).
I have heard the rival submissions and perused the material on record. The bank account in South Indian Bank, wherein the credit of Rs.17,08,024 is standing in the name of the assessee and her husband. Copy of the bank account is on record and on perusal of the same, it operated by the assessee or her husband (either or the survivor). Therefore, the addition of Rs.11,28,024 as unexplained cash deposit in the bank account ought to have been treated as unexplained, both in the hands of the assessee and her husband. Therefore, I direct only 50% of Rs.11,28,024 alone can be brought to tax in the hands of the assessee, i.e., Rs.5,64,012.
7.1 Further, admittedly, the assessee is the owner of agricultural land of about 8.5 acres in Ramapuram Village of Meenachil Taluk and Vandamedu village in Udumpumchola Taluk. The details are as follows:-
ITA No.174/Coch/2018. 6 Smt.Laiji George. Survey No. Extent of land in Village Acres 327/3 86.00 Ramapuram 327/3-1 21.00 Ramapuram 327/1 146.00 Ramapuram 111/1 90.24 Vandamedu
7.2 The total income of the assessee for the relevant assessment year is only Rs.1,21,600. The taxable minimum during the relevant assessment year was Rs.1,90,000. Therefore, for all likelihood, the assessee may have missed out on declaring the agricultural income on a bonafide belief that agricultural income need not be disclosed for the Central income tax purpose as it does effect for rate purpose. Moreover, item 12 of Schedule Part B-T1 of the return of income where the computation of total income is entered requires to enter net agricultural income “for rate purpose”. Since the total income of the assessee did not exceed non- taxable maximum of the year, it is not required to show net agricultural income in Schedule PartB-T1 of the return “for rate purpose” as the agriculture income did not make any impact in relation to the rate of tax (zero in this case) to be applied on total income. The non-declaration of agricultural income in the return of income does not lead to a conclusion that the assessee had not earned any agricultural income from cultivation of land of 8.50 acre owned by her. It is an admitted fact that the assessee is owner of 8.50 acres of land. In all probabilities, the assessee would have earned agricultural income. The assessee has produced agreement dated 02.04.2009 to support the claim of receipt of
ITA No.174/Coch/2018. 7 Smt.Laiji George. agricultural income. By virtue of this agreement, the assessee was in receipt of Rs.11,00,000. The agreement dated 02.04.2009 was not accepted by the CIT(A) since the assessee had not made out a case for exception to Rule 46A of the I.T.Rules, 1963. However, taking into the totality of circumstances of the case and that the assessee is the owner of the land to the extent of 8.50 acres, which is having rubber, coconut, pineapple plantation, cardamom plantation etc., the receipt of agricultural income cannot be totally ruled out. Therefore, on a fair estimation of agricultural income out of 8.50 acres of land, there could be receipt of agricultural income to the tune of Rs.2 lakh. Accordingly, I direct the Assessing Officer to grant further reduction of Rs.2 lakh out of Rs.5,64,012 and balance Rs.3,64,012 alone should be brought to tax as an unexplained deposit in the hands of the assessee. It is ordered accordingly.
In the result, assessee’s appeal is partly allowed.
Order pronounced on this 30th day of January, 2019.
Sd/- (George George K) JUDICIAL MEMBER
Cochin ; Dated : 30th January, 2019. Devdas*
ITA No.174/Coch/2018. 8 Smt.Laiji George.
Copy of the Order forwarded to : 1. The Applicant. 2. The Respondent. 3. The CIT (A), Kottayam 4. The CIT, Kottayam. 5. DR, ITAT, Cochin 6. Guard file.
BY ORDER,
(Asstt. Registrar) ITAT, Cochin