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Income Tax Appellate Tribunal, HYDERABAD BENCHES
Before: SHRI D. MANMOHAN & SHRI B. RAMAKOTAIAH
IN THE INCOME TAX APPELLATE TRIBUNAL, HYDERABAD BENCHES CIRCUIT BENCH “A” AT TIRUPATI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA. Nos. 1754/Hyd/2016 (A.Y.2011-2012) V. Ramaswamy Naidu, Vs ACIT, 8-124, M.R. Palli Road, Circle-1(1), New Balaji Colony, Tirupati. Tirupati. PAN: AATPV 9826 E Appellant Respondent Assessee by Shri S. Rama Rao Revenue by Smt. Komali Krishna, DR Date of hearing 17.05.2018 Date of pronouncement 23.05.2018 ORDER PER D. MANMOHAN, VP: This appeal by the assessee is directed against the order passed by CIT (A), Tirupati and it pertains to A.Y. 2011-2012. Following grounds were urged before us:
“1. The Order of the Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in holding that there is any mistake in the assessment order which can be rectified u/s 154 of the I.T. Act. 3. The Ld. CIT(A) erred in confirming the action of the Assessing Officer in considering the agricultural income of Rs. 5,00,000/- of the HUF for the purpose of determining the tax payable of the individual. 4. The Ld. CIT(A) ought to have considered the fact that the agricultural income does not belong to the appellant and the same cannot be considered for the purpose of determining the tax in the assessment of the individual.” 2. Facts necessary for the disposal of the appeal are set out in brief. The assessee is a Civil contractor. For the year under consideration, he
has declared an income of Rs. 24,43,350/-. In the scrutiny assessment, the Assessing Officer made certain additions and completed the assessment on a total income of Rs. 27,15,210/-. Assessment was accordingly completed on 16.08.2013. However, the Assessing Officer sought to rectify the said order on the ground that the agricultural income shown by the assessee for tax calculation purposes was not offered to tax. The case of the Assessing Officer was that balance sheet as on 31.03.2011 shows that he was in possession of agricultural land at Kothakandriga Village, Ramachandrapuram Mandal and derived agricultural income of Rs. 5 lakhs during the year under consideration. In response to the show-cause notice, the assessee contended that the agricultural land belongs to the forefathers and hence it is the property of HUF and any income therefrom cannot be assed to tax in the individual capacity.
The Assessing Officer rejected the contention of the assessee mainly on the ground that the assessee “showed the agricultural land in his individual balance sheet”. Therefore, he has taken the agricultural income of Rs. 5 lakhs for rate purposes in the order passed u/s 154 of the Act.
Ld. CIT(A) having affirmed the order of the A.O., the assessee is in appeal before the Tribunal.
Learned Counsel for the Assessee adverted our attention to the balance sheet as on 31.03.2011 and capital account abstract to show that it was never treated as the individual asset of the assessee. Page 5 of the paper book shows that the agricultural income is stated to have been earned by HUF since it was categorically stated that the land in question is inherited from the forefathers and they belong to HUF, agricultural income therefrom cannot be clubbed in the hands of the
assessee for calculation of income tax. In this regard, he has filed Pattadar Pass Book etc., to prove that the land is ancestral in nature. For the A.Y. 2011-12 assessment was completed u/s 143(3) of the Act. Learned Counsel for the Assessee submits that in the absence of any proof that the land was owned by the assessee in his individual capacity, rectification of assessment made originally, merely on the basis of entry in the balance sheet, is not justified, particularly on account of the fact that there is no mistake apparent from the record.
We have also heard the Learned Departmental Representative in this regard and carefully perused the record. There is nothing on record to suggest that the agricultural land was owned by the assessee in his individual capacity. In fact even in page 5 of the paper book, which is the basis for making addition, assessee categorically stated that HUF earned agricultural income. All these papers are already available on record. Therefore, neither there is a mistake apparent from record nor there is a justification in taking the same income for rate purposes in the hands of individual. We therefore set aside the order passed u/s 154 of the of the Act.
In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 23rd May, 2018.
Sd/- Sd/- (B. RAMAKOTAIAH) (D. MANMOHAN) ACCOUNTAT MEMBER VICE PRESIDENT
Hyderabad , Dated: 23rd May, 2018. OKK, Sr.PS
Copy to 1. Sri S. Rama Rao, Advocate, Flat No.102, Shriya’s Elegance, 3-6-643, Street No. 9, Himayat Nagar, Hyderabad – 500 029. 2. Asst. Commissioner of Income Tax, Circle-1(1), Aayakar Bhavan, K.T. Road, Tirupati. 3. CIT(A), Tirupati. 4. Principal Commissioner of Income Tax, Tirupati. 5. DR, ITAT, Hyderabad. 6. Guard File.