Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH : CHENNAI
Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
These are appeals filed by the Department and assessee respectively for the impugned assessment years, directed against
ITA Nos.46/13 & 1399/16. :- 2 -: orders dated 22.08.2012 and 23.03.2016, of ld. Commissioner of Income Tax (Appeals)-XII, Chennai and Commissioner of Income Tax (Appeals)- Puducherry, respectively.
Appeal of the Department for the assessment year 2008- 2.
2009 is taken up first for disposal. Appeal filed by the Department is delayed by thirty six days. Condonation petition has been filed.
Reason shown for the delay seems to be justified. Ld. Authorised Representative did not raise any serious objection. Delay is condoned. Appeal is admitted.
Grounds taken by the Revenue assail the deletion of an addition of �87,15,391/- made by the ld. Assessing Officer. Though the ground mentions the addition as �87,15,391/-, actual addition made by the ld. Assessing Officer was �88,15,391/-
Facts apropos are that assessee running tea and cardamom 4. estates had filed return of income for the impugned assessment year disclosing income of �1,50,000/-. Assessee has also shown an agricultural income of �45,20,000/- which was claimed as exempt.
During the course of assessment proceedings, it was noted by the ld. Assessing Officer that this was the first year in which assessee had ITA Nos.46/13 & 1399/16. :- 3 -: filed a return of income. The balance sheet as on 31.03.2008, filed by the assessee, as per ld. Assessing Officer, reflected a capital of �88,15,391/-. Assessee was queried on this aspect. Explanation of the assessee was that she had taken cash advance from 47 persons who were buying cardamom from her. As per assessee she had received �1,00,000/- each from eight persons and �50,000/- each from thirty nine persons aggregating to �27.50 lakhs. Further, as per assessee she had received �10,00,000/- from her parents as marriage gift, another �10,00,000/- from her father-in-law and �15,00,000/- from her husband. Assessee was required by the ld. Assessing Officer to support the above by evidences. For this, she filed affidavits from her father-in-law, father and her husband. She also stated that she had agricultural income of �14 lakhs, �30 lakhs, �25 lakhs and �35 lakhs for financial years 2003-04, 2004-05, 2005-06 and 2006-2007 respectively.
Ld. Assessing Officer after considering all the above came to 5. a conclusion that assessee could not produce any evidence for capital contributed by her or for the machinery purchased using such capital. As per ld. Assessing Officer submission of the assessee that she was having two cardamom processing units running since 2003
ITA Nos.46/13 & 1399/16. :- 4 -: could not be believed. He held that the sum of �88,15,391/- as unexplained credit and made an addition.
Aggrieved, the assessee moved in appeal before ld. 6.
Commissioner of Income Tax (Appeals). Arguments taken by the assessee before ld Commissioner of Income Tax (Appeals) are summarized hereunder:- (i) She was an agriculturist and her only source of income was from tea and cardamom estates. (ii) The Income Tax return for impugned assessment year was filed since this was required for availing a bank loan. (iii) All the assets shown in balance sheet were opening balance and continuing since 1999. (iv) What was shown in the capital account was surplus of assets over bank loans.
(v) She was cultivating cardamom and others crops since very many years and had been doing so since 1994 when she purchased 52 acres of land in Mega Mallay, Kadamalagundu Villge, Andipatti Taluk, Tamil Nadu. (vi) She had taken an sale cum lease 51.18 acres of cardamom lands in Bodi hills, Kottagudi Village, Bodi Taluk, Theni Dist, Tamil Nadu. (vii) The land mentioned above came alongwith building, plant and machinery etc for a consideration of �1,31,00,000/- from one Shri. Sundaraj, Cellathai & Others. (viii) After acquiring the above land with building, plant and machinery, she had remodeled the machinery by spending a sum of �42,00,000/- in the year 2000 and later in the ITA Nos.46/13 & 1399/16. :- 5 -: year 2002 installed pollution control equipment for �2,25,600/-. (ix) In January, 2007, assessee had taken on lease 79 acres of land from one Smt. Rosamma Varghese for an annual rent of �3,95,000/-. (x) In January, 2007 she had also taken 32.39 acres of land on lease from Veeranan & Vellaichamy for an annual lease rent of �1,66,950/-. (xi) For acquiring the above lands, loan was sought from IDBI Bank and the Bank had insisted on filing of the Income Tax return.
In support of the above, assessee had filed before ld. 7.
Commissioner of Income Tax (Appeals) copies of the agreements for sale cum lease of the land and a revised Balance Sheet as on 31.03.2008.
Ld. Commissioner of Income Tax (Appeals) sought a remand 8. report from the ld. Assessing Officer since assessee had filed a fresh statement of affairs as on 31.03.2008 and certain additional evidence.
Ld. Assessing Officer in his remand report stated as under:-
"The assessee's representative has produced a 8 years lease / sale agreement which the assessee has entered with 4 persons. The said agreement has executed on 12.11.1999, which is an unregistered document. On perusal of agreement, it is noticed that the assessee had obtained lease of agricultural land, building, Plant and machinery for a total sum of �31,00,000/-, On the same, the assessee had paid a sum of Rs. 31, 00, 000/ - and the balance was payable
ITA Nos.46/13 & 1399/16. :- 6 -: wit years. The total cost of building was estimated at Rs. 95,00, 000/ -, Pant & Machinery- Rs.36,OO,000. The assessee did not produce any of the above persons with whom she has entered into a lease agreement for examination despite several reminders. Enquiries were made by the TRO, Pondicherry with the land owners with whom. the assessee had made the sale / lease agreement. Enquiry from smt. Chinnathauammal and Shri S. Kannan, reveals that the land situated at Theni Dist., Periyakulam R.O. Bodinakanur-SRO, Kotiakudi llillage, Pichanqarai - Patta. No. 177 - Sy. No. 917/1,917/2-41 Act and 98 cents is not owned by them and there were not in possession now and they have also not made any lease agreement with the assessee Smt. Chitra. Similarly, Shri S.A.C Subrarnania Raja (4'h party of/he above sale / lease agreement) was contacted over phone (as he was out of station) by the TRO and enquired about the ownership of the property situated at Theni Dist., Periuakulam. R.o., Bodinayakanur-SRO, Kotiakudi Village Kuranqani Pattaiuaru Kaanal - Patta No. 470, Sy. No.699 (27 acre and 38 cents), Sy. No. 700 (02 acre and 85 cents], Sy. No. 70Z (11 acre and 38 cents), Patta No. 124 - Sy. No. 702 (04 acre and 05 cents) and Sy. No. 703 (05 acre and 52 cents). He categorically denied the ownership of the above property. It was also confirmed from EC copy obtained from the Sub-Registrar Office, Bodinayakanur. In the year 2000, the assessee has stated that she had made expenditure of Rs.42 lakhs for repairs and remodelinq of existing plant. The assessee has produced only a receipt dated 02.1.1.2000 in evidence of the above expenses of Rs. 42 lakhs. No details regarding the payments made for the above purchase and any other evidence regarding the purchase and installation of the above plant and machinery has been submitted by the assessee. The assessee also declared that she had acquired a pollution control equipment for Rs.2,25,600/-.. But, there is no evidence to show that she had spent the above sum for acquiring the Pollution control equipment. The total cost by the fixed asset, Plant & Machinery arrived at Rs.17,30,00,000/-.
ITA Nos.46/13 & 1399/16. :- 7 -:
The assessee's representative has also stated that the assessee had to pay a sum of Rs.1 crore to the above persons as less amount, which is shown as sundry creditors in. the revised R/I.. The assessee has an OD account in SBT a sum of Rs.48,56,3021- was the balance outstanding as on 31.03.2008. The assessee's representative has also declared that the lease of land was not yet over and it is still in the possession of the assessee. The extent of land used [or cultivation was 41.98 + 51.18 = 93.16 Acres. The assessee has declared the lease hold properties as his own property and has claimed depreciation on the lease hold assets in the return of income.
Regarding the assessee's claim of having agricultural income from the F. Y. 1999-.2000 onwards, except for a VAO certificate, no other evidence in this regard has been submitted by the assessee.
The assessee has not cooperated during the assessment proceedings. She has not submitted any land holding details, sale proceeds or any bank AI c copies in support of her claim. Further, the assessee has not even cooperated or furnished any details for preparation of remand report after giving ample opportunities. Hence .. it is construed that the assessee's claim of investment made in the. earlier years cannot be accepted."
Ld. Commissioner of Income Tax (Appeals) after considering 9. the submissions of the assessee and remand report of the ld.
Assessing Officer was of the opinion that Sec. 68 of the Income
Tax Act, 1961 (in short ‘’the Act’’) could not be attracted to the capital account balance appearing in the balance sheet as on 31.03.2008. As per ld. Commissioner of Income Tax (Appeals) for attracting the said
ITA Nos.46/13 & 1399/16. :- 8 -: section, it was necessary that amounts were credited in the Books of accounts maintained by the assessee. Since assessee had not maintained any books of accounts, as per ld. Commissioner of Income Tax (Appeals) by virtue of judgment of Hon’ble Madhya
Pradesh High Court in the case of CIT vs. Shiv Shakti Timbers 229
ITR 505 an addition u/s.68 of the Act could not be made. Further as per ld. Commissioner of Income Tax (Appeals) corresponding assets against the capital shown by the assessee were acquired by the assessee in earlier years and therefore such capital was not introduced during the previous year relevant to the impugned assessment year. Again, as per ld. Commissioner of Income Tax
(Appeals) there was no variation in the movable assets on comparing the original and revised balance sheets filed by the assessee. Only difference as per ld. Commissioner of Income Tax
(Appeals), was due to exclusion of certain assets which were not used by the assessee in her business. Further, according to ld.
Commissioner of Income Tax (Appeals), agricultural income of �45,20,000/- was accepted by the ld. Assessing Officer for the impugned assessment year, from the very same agricultural property. Conclusion of the ld. CIT(A) was that ld. Assessing Officer could not have overlooked agricultural income that would have been earned by the assessee in the preceding
ITA Nos.46/13 & 1399/16. :- 9 -: assessment years. He held that addition of �88,15,391/- was not warranted and deleted the addition.
Now before us, ld. Departmental Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals) submitted that ld. Commissioner of Income Tax (Appeals) fell in error in accepting the submissions of the assessee. As per ld. Departmental Representative ld. Commissioner of Income Tax (Appeals) having found that the balance sheet as on 31.03.2008, originally filed by the assessee, substantially varied from the revised balance sheet filed during the course of hearing before him, ought not have accepted the latter. As per ld. Departmental Representative having filed a balance sheet which clearly reflected an opening capital balance and current year profit, assessee could not say that there was no books of accounts maintained by her. Even otherwise as per ld. Departmental Representative an assessee could not be allowed to show any amount as capital and say that in the absence of books of accounts no addition could be made.
Per contra, ld. Authorised Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) submitted that capital which was subject matter for addition was represented by assets acquired long back. Assessee had not introduced any such ITA Nos.46/13 & 1399/16. :- 10 -:
capital during the relevant previous year. As per ld. Authorised Representative, assessee had produced evidence to show ownership of the land and such evidence included certificates issued by the Village Administrative Officer and Tahsildar. In any case as per ld. Authorised Representative, ld. Assessing Officer having accepted agricultural income of �45,20,000/- returned by the assessee for impugned assessment year, could not have presumed that she would not have had any such income in the preceding years.
We have considered the rival contentions and perused the orders of the authorities below. The remand report of the ld. Assessing Officer has been reproduced by us in para 8 above. Claim of the assessee is that she had entered into lease /sale agreements with four persons. However, none of these were registered documents.
Though assessee filed a consolidated revised statement of affairs as on 31.03.2008, she could not produce any evidence in support of the expenditure claimed to have been incurred against the amount of capital shown by her. Unless and until this was produced, in our opinion a conclusion cannot be drawn as to the year in which the capital was introduced. Assessee also did not produce for examination any of the four persons with whom she claimed to have entered into lease agreement. Atleast, a few of such persons had ITA Nos.46/13 & 1399/16. :- 11 -: stated they had not leased any property to the assessee, when contacted by the Department Officers. Nevertheless, it is also a fact that assessee had produced certificate from Village Administrative Officer which interalia had stated that she had taken cardamom land in survey nos. 917/1,2, 699, 700, 701, 702, 703 Kottagudi Village, Bodinaickanur Taluk, Theni Dist on perpetual lease and sale agreement. It was also mentioned that she was cultivating cardamom since 1999 in the said land. Also available on record is a certificate issued by the Tehsildar, which mentions that areas covered in survey Nos.917/1 and 917/2 was 41.98 acre and areas covered in survey Nos.
699 to 703 was 51.18 acre. However, this certificate specifically states that the former owned by Shri. Sundararaj and family and latter was owned by SAC Subramaniaraja.
Ld. Commissioner of Income Tax (Appeals) had taken a view that assessee having not introduced money in its books of accounts, Section 68 of the Act could not attracted. However, by assessee’s own admission the capital was represented by building, plant and machinery. Hence, it can also be a case of unexplained expenditure.
Further, how the assessee earned agricultural income of �45,20,000/- during the impugned assessment year is also an aspect which required
ITA Nos.46/13 & 1399/16. :- 12 -: a verification and which obviously missed the eyes of the ld. Assessing Officer.
Considering all these aspects, we are of the opinion that matter requires a fresh look by the ld. Assessing Officer. We therefore set aside the orders of the lower authorities and remit the issue regarding source of capital introduced by the assessee and expenditure claimed by the assessee back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.
Now, we take up appeal of the assessee for assessment year 2009-2010. Grievance raised by the assessee is that ld. Commissioner of Income Tax (Appeals) had sustained an addition of �8,45,200/- out of a total addition of � 16,45,200/- made by the ld. Assessing Officer under the head ‘’income from other sources’’ disbelieving the agricultural claimed by the assessee.
Assessee had claimed agricultural income of �68,45,200/-.
When assessee was required to substantiate the same, she stated that she was cultivating cardamom in leasehold lands just as done in the preceding assessment year 2008-09. Ld. Assessing Officer estimated agricultural income at �52,00,000/-. According to him, assessee had ITA Nos.46/13 & 1399/16. :- 13 -: not maintained books of accounts for agricultural expenditure and income. An addition of �16,45,200/- being the difference was made under the head income from other sources.
In her appeal before ld. Commissioner of Income Tax (Appeals), argument of the assessee was that she was holding 52 acres of land at Bodinaickanur from which she earned �54,00,000/- and 112 acres of land in Theni alongwith with her husband, from where she earned �14,45,000/-. Ld. Commissioner of Income Tax (Appeals) was of the opinion that Tahsildar of Bodinacikanur having certified the income of assessee at �52,00,000/- from Bodinaickanur land, the claim to that extent could be allowed. In so far as, income earned from Theni lands was concerned, ld. Commissioner of Income Tax (Appeals) was of the opinion that said income was that of assessee’s husband and the basis on this such income was apportioned between assessee and assessee’s husband was not known. However, he held that assessee could have earned agricultural income of �60,00,000/- thereby giving a relief of �8,00,000/- to the assessee. The addition of �16,45,200/- was scaled down to �8,45,200/-.
Now before us, ld. Authorised Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals)
ITA Nos.46/13 & 1399/16. :- 14 -: submitted that ld. Commissioner of Income Tax (Appeals) ought to have deleted the addition in tanto. According to him, considering the agricultural holding of the assessee, the income of �68,45,200/- returned by her was on the lower side.
Per contra, ld. Departmental Representative strongly supported the orders of the authorities below.
We have considered the rival contentions and perused the orders of the authorities below. With respect to Department appeal for assessment year 2008-09, where one of the question which arose was that genuineness of the claim of holding of agricultural land, we have already remitted the issue back to the file of the ld. Assessing Officer for considering the evidence afresh. Accordingly, for the impugned assessment year also the question regarding earning of agricultural income and quantum thereof requires a fresh look by the ld. Assessing Officer. Unless assessee establishes the holding of land by her, there can be no question of earning any agricultural income. Especially so when no books of accounts were maintained and no supporting evidence were produced for the expenditure incurred on agricultural operations. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the Assessing Officer
ITA Nos.46/13 & 1399/16. :- 15 -: for consideration afresh in accordance with law.
In the result, appeal of the Revenue and assessee for the respective assessment years are allowed for statistical purpose.
Order pronounced on Friday, the 6th day of January, 2017, at Chennai.