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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) –I, Coimbatore, dated 12.11.2014 and pertains to assessment year 2007-08.
Shri A.M. Ubeidulla, the Ld. representative for the assessee, submitted that the first issue arises for consideration is disallowance of agricultural income to the extent of `1,90,000/-. According to the Ld. representative, the assessee claimed `1,90,000/- as agricultural income. However, the Assessing Officer disbelieved the claim of the assessee. On appeal by the assessee, the CIT(Appeals), however, determined the agricultural income to `1,00,000/- and sustained the disallowance of `90,000/-. According to the Ld. representative, when the assessee has filed details of land holding, the CIT(Appeals) ought to have allowed the entire claim of the assessee.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee has claimed agricultural income of `1,90,000/-, however, no evidence was produced either before the Assessing Officer or before the CIT(Appeals). The CIT(Appeals) on the presumption that the assessee was holding agricultural land, restricted the agricultural income to the extent of `1,00,000/- and disallowed the balance amount of `90,000/-. Since the CIT(Appeals) himself allowed the claim of the assessee without any material available on record, the assessee cannot have any grievance in restricting the agricultural income to `1,00,000/-.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee has claimed `1,90,000/- towards agricultural income. The CIT(Appeals) allowed to the extent of `1,00,000/-, however, disallowed the balance amount of `90,000/-.
The appeal of the assessee relates to the disallowance sustained by the CIT(Appeals) to the extent of `90,000/-. As rightly submitted by the Ld. D.R., the assessee has not produced any material with regard to land holding and crop cultivation. Unless the details of land holding and crop cultivation are available on record, it is very difficult to estimate the income from agriculture. As rightly submitted by the Ld. D.R., the CIT(Appeals) presumed that the assessee has inherited agricultural land belonging to his father and grandfather and also lease holding land. Without any material evidence, the CIT(Appeals) accepted the claim of the assessee and found that the assessee earned agricultural income of `1,00,000/-.
In the absence of any material, the CIT(Appeals) confirmed the disallowance to the extent of `90,000/- after taking into the land holding and nature of crop cultivation. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
The next ground of appeal is with regard to disallowance of unsecured loan to the extent of `9,76,400/-.
6. Shri A.M. Ubeidulla, the Ld. representative for the assessee, submitted that the assessee constructed a primary school in a small village called Nanjanad in Nilgiris district. The assessee, however, could not complete the construction due to lack of funds. Several villagers living in the village came forward to advance money so that the construction of school building could be completed. Many people advanced loan to the extent of `9,76,400/-, which was used for construction of school premises. The assessee has furnished a list of 67 individuals. The assessee has also returned back the loan received from them. The Assessing Officer doubted the genuineness of the claim to the extent of `9,76,400/- and made an addition to the total income. Referring to the assessment order, the Ld. representative submitted that the Assessing Officer himself admitted that the assessee has furnished names of the persons who lent the money, with door number. The Assessing Officer has not made any enquiry. Without making any investigation, the Assessing Officer found that the loan transactions are not genuine.
Referring to the assessment order, the Ld. representative submitted that one Shri Ramakrishnan and Shri M. Sekhar, who also advanced money among 67 persons, appeared before the Assessing Officer and admitted that they advanced loan to the assessee. Since no enquiry was conducted, according to the Ld. representative, the CIT(Appeals) is not justified in confirming the addition made by the Assessing Officer.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee has made investment to the extent of `19,61,566/- during the assessment year 2007-08.
After examining the material available on record, the Assessing Officer found that there was increase in housing loan to the extent of `2,23,029/-. Considering the undisclosed source of `9,76,400/- and the investment made in the earlier assessment year, the Assessing Officer found that the assessee has no explanation for balance amount of `7,62,137/-. According to the Ld. D.R., the assessee has disclosed the loan of `9,76,400/- from 169 persons from Nilgiris Distrist. Amount received from each person was less than `20,000/- in order to avoid the implications of Section 269SS of the Act. The assessee has furnished a list of 27 names from whom a sum of `12,88,500/- was said to be received. However, according to the Ld. D.R., in the balance sheet what was reflected is `9,76,400/-. In the absence of any details, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee was constructing school building in a remote village called Nanjanad in Nilgiris District. Due to paucity of funds, the assessee received loan from various persons in the locality. The assessee claims that the loan was received from 169 individuals. The assessee has furnished the names of 67 individuals along with their respective door number in which they are residing, before the Assessing Officer. In fact, Shri Ramakrishnan and Shri M. Sekhar confirmed the fact of advancing loan to the assessee. The Assessing Officer has not examined the other individuals who said to have advanced money to the assessee. When the assessee has furnished names and door numbers of the individuals, who are residing in the village, this Tribunal is of the considered opinion that the burden of proof was shifted on the shoulder of the Assessing Officer. The Assessing Officer ought to have examined the claim of the assessee before concluding that the transaction was not genuine. Unfortunately, no material is available on record to suggest that the transaction of loan is not genuine. In view of the fact that the assessee has furnished names of 67 individuals, who said to have advanced loan with respective door numbers in which they are residing, and the Assessing Officer has not taken any pain to examine the same, this Tribunal is of the considered opinion that the assessee has established the bona fide of loan transaction. Therefore, this Tribunal is unable to uphold the orders of the authorities below and the addition of `9,76,400 made towards unsecured loan is deleted.
The next ground of appeal is with regard to unexplained investment to the extent of `2,97,466/-.
10. Shri A.M. Ubeidulla, the Ld. representative for the assessee, submitted that the assessee constructed a house. On the basis of Departmental Valuation Officer’s report, the Assessing Officer made an addition of `2,97,466/-. Referring to the paper-book, more particularly, copies of the letter said to be addressed to the Income Tax Officer by the assessee’s mother, the Ld. representative for the assessee submitted that they are holding agricultural land and the assessee’s father was also a Government employee, who retired from service. The retirement benefit received by the assessee’s mother was said to be given to the assessee. Moreover, the assessee’s mother claims that the income from agricultural property was also given to the assessee which was used for construction.
When the assessee’s mother confirmed that the retirement benefit of the assessee’s father was given to him and agricultural income generated from agricultural land was also given to the assessee, the addition of `2,97,466/- is not justified.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee has made a cash flow.
On the basis of that cash flow, the Assessing Officer deleted the addition to the extent of `7,50,680/-. After considering the Departmental Valuation Officer’s report, the Assessing Officer found that there was difference of `2,97,466/- towards the cost of construction. This was confirmed by the CIT(Appeals) in the absence of any material.
We have considered the rival submissions on either side and perused the relevant material available on record. This Tribunal is of the considered opinion that the assessee’s father was a Government employee, who retired from service and the assessee’s mother claims that the retirement benefits were given to the assessee. Moreover, the income generated from agricultural property belongs to assessee’s mother, was also said to be given to the assessee. In those factual circumstances, this Tribunal is unable to uphold the addition made to the extent of `2,97,466/-. Accordingly, the orders of the authorities below are set aside and the addition of `2,97,466/- is deleted.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced on 21st October, 2016 at Chennai.