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Income Tax Appellate Tribunal, BANGALORE BENCH “ B ”
Before: SHRI VIJAYPAL RAO & SHRI JASON P. BOAZ
Appellant By : Shri Farhat Hussain Qureshi, CIT (D.R) Respondent By : Shri B.S. Balachandran, Advocate. Date of Hearing : 18.6.2015. Date of Pronouncement : 17.7. 2015. O R D E R Per Shri Jason P. Boaz, A.M. : This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Mysore dt.31.1.2013 for Assessment Year 2007-08.
The facts of the case, briefly, are as under :- 2.1 The assessee's premises was searched under Section 132 of the Income Tax Act, 1961 (in short 'the Act') on 26.10.2007. Consequent thereto, proceedings were initiated under Section 153A of the Act by issue of notice there under and in response thereto, the assessee filed a return of income for Assessment Year 2007-08 on 6.10.2009 declaring income of Rs.28,66,790 and agricultural income of Rs.16,16,263. The assessment was Section 153A rws 143(3) of the Act vide order dt.31.12.2009 wherein the income of the assessee was determined at Rs.61,83,055 in view of the following additions/disallowances :- (i) Lease Rent Rs.2,00,000. (ii) Agricultural income of F.Y. 2005-06 : Rs.7,17,263. (iii) Excess claim of Agriculture for current year : Rs.3,99,000. (iv) Unproved cash gift : Rs.20,00,000. Agricultural income was estimated at Rs.5,00,000. 2.2 Aggrieved by the order of assessment for Assessment Year 2007-08 dt.31.12.2009, the assessee preferred an appeal before the CIT (Appeals), Mysore. The learned CIT (Appeals) disposed the appeal vide order dt.31.1.2013 allowing the assessee partial relief.
Aggrieved by the order of the CIT (Appeals), Mysore dt.31.1.2013 for Assessment Year 2008-09, Revenue has preferred this appeal raising the following grounds :- “
Ground No.1 : The learned CIT (Appeals) erred in law and in fact in deleting the addition of Rs.20 lakhs made on account of unexplained gift under Section 68 of the Income Tax Act. Ground No.2 : The learned CIT (Appeals) erred in law and in fact in deleting the addition of Rs.7,17,263 made on account of unexplained agricultural income in the capital account.”
4. Ground No.1 : Gift – Rs.20 lakhs. 4.1 In the course of assessment proceedings, the Assessing Officer observed that in the capital account filed, the assessee claimed to have received a cash gift of Rs. 20 lakhs Rami Reddy, S/o Eshwar Reddy, an agriculturist from Nandyal Taluk, Kurnool District, Andhra Pradesh. In this regard, the assessee filed a gift letter on a stamp paper ofRs.50 as per which cash gift of Rs.20 lakhs is claimed to have been made by Sri Rami Reddy to the assessee on 4.4.2006. On examination thereof, the Assessing Officer did not accept the gift as valid and genuine, since only the donor had signed the gift letter without either the donee i.e. the assessee accepting the alleged gift or there being any witnesses in the presence of whom the gift document was drawn up. The Assessing Officer was of the view that in these circumstances the genuineness of the gift deed was not established as even though the assessee had identified the donor, the genuineness of the gift transaction was not established. According to the Assessing Officer neither the credit worthiness of the donor nor the genuineness of the transaction could be established since the donor is an agriculturist and has not maintained any accounts to establish the earning of agricultural income as claimed for advancing the alleged gift of Rs.20 lakhs. In that view of the matter, the Assessing Officer held that the assessee had not established the genuineness of the alleged cash gift of Rs.20 lakhs, which appeared as a credit in his capital account, and brought the same to tax in the assessee's hands. 4.1 On appeal, the learned CIT (Appeals) deleted the addition of Rs.20lakhs observing that since the assessee has filed the confirmation in the form of gift deed, the onus cast upon the assessee stands discharged and that the Assessing Officer has held the gift as non-genuine without any finding to that effect.
4.2.1 We have heard the rival contentions of both the learned Departmental Representative for revenue assailing the non-speaking finding of the learned CIT (Appeals) and the learned Authorised Representative for the assessee in support of the finding of the learned CIT (Appeals) in holding the gift of Rs.20 lakhs to be genuine. The basic facts, not disputed are that the assessee’s capital account for the period under consideration reflected a credit of Rs.20 lakhs, which he claimed was a cash gift received by him from his uncle Sri Rami Reddy, an agriculturist of Kurnool District, Andhra Pradesh. In support of this, the assessee filed a copy of gift document on stamp paper of Rs.50, as per which a cash gift of Rs.20 lakhs has been claimed to have been received by the assessee on 4.4.2006, which is signed only by the donor and neither by the donee; i.e. the assessee nor was there any witness thereto. On examination of these details before him, we find that the Assessing Officer has rendered a clear finding that while the identity of the donor is established, the assessee has failed to establish both the credit worthiness of the donor, since the donor has not maintained any accounts in respect of alleged agricultural income and the gift was made in cash and also the genuineness of the transaction of the alleged gift donation. This is contrary to the observation of the learned CIT (Appeals) that the Assessing Officer had held the gift as non-genuine without rendering a finding to that effect and which we find is not in accordance with the facts on record. 4.2.2 We find from a perusal of the impugned order of the learned CIT (Appeals) that at para 3.7 thereof he has merely recorded the assessee's submissions and at para 3.8 Rs.20 lakhs credited in the capital account of the assessee, summarily, without himself rendering any clear finding as to how the credit worthiness of the donor was established and how the alleged cash gift transaction was genuine, by the mere filing of an incomplete gift deed. In our considered view, the genuineness of the credit of Rs.20 lakhs in the capital account of the assessee is to be explained by the assessee by establishing the identity of the donor, his credit worthiness and the genuineness of the transaction. In the case on hand, we find that apart from establishing the identity of the donor, the assessee has failed to establish both the credit worthiness of the donor and the genuineness of this transaction before the authorities below. In this view of the matter, we are of the considered opinion that the learned CIT (Appeals)’s order in directing the deletion of the addition of Rs.20 lakhs on account of the unexplained cash gift was not called for in the facts and circumstances of the case. Since the issue of the credit of cash of Rs.20 lakhs in the assessee's capital account in the year under consideration does not appear to have been examined thoroughly in all respects by the authorities below, we, in the interest of justice and equity, deem it appropriate to remand this matter back to the file of the Assessing Officer for re- examination and adjudication thereon after affording the assessee adequate opportunity of being heard and file details/submission required in this regard. It is ordered accordingly. Consequently, Ground No.1 of Revenue’s appeal is allowed for statistical purposes.
Ground No.2 : Agricultural Income – Rs.7,17,263. 5.1 In the course of assessment proceedings, the Assessing Officer on examination of the assessee's capital account as on 31.3.2007 observed that there was credit of total agricultural income of Rs.16,16,263, which included, Rs7,17,263 said to pertain to the immediately preceding year i.e. period relevant to Assessment Year 2006-07. The Assessing Officer, on examination of the assessee's return of income filed for Assessment Year 2006-07, observed that the assessee declared Nil agricultural income therein. On being queried in this regard, the assessee submitted that the agricultural produce of Assessment Year 2006-07 was sold in the current year and accordingly the income thereof was credited to his capital account for the year ending 31.3.2007, and it is for this reason that the agricultural income was declared at NIL in the year ending 31.3.2006. The Assessing Officer, however, was of the view that since the assessee had declared NIL agricultural income for Assessment Year 2006-07, the credit of Rs.7,17,263 in the assessee's capital account for the year ending 31.3.2007 as agricultural income was not tenable since the assessee had no documentary evidence to prove his claim. In that view of the matter, his claim the Assessing Officer held the said credit of Rs.7,17,263 in the assessee's capital account to be an unexplained credit and brought the same to tax in the assessee's hands. 5.2 On appeal, the assessee reiterated the submissions put forth before the Assessing Officer that the agricultural income for Assessment Year 2006-07 was declared at Nil since the agricultural produce of that year was sold in the current year and therefore the Rs.7,17,263 was credited to the capital account. The learned CIT (Appeals) was of the view that since the assessee had agricultural income from Assessment Year 2003-04 onwards, it was plausible that the assessee declared NIL income for Assessment Year 2006-07, since if the agricultural produce of that year had not been sold in that year it could have been sold in the current year. The learned CIT (Appeals), observing that the assessee himself had estimated his agricultural income for Assessment Year 2003-04 @ Rs.16,500 per acre, which he had found reasonable and accepted while disposing the appeal for that year, he was of the view that the agricultural income earned by the assessee in the year 2006-07 and declared in this year ought to also estimated at Rs.16,500 per acre and directed the Assessing Officer accordingly. 5.3.1 We have heard the rival submissions of both the learned Departmental Representative for revenue in support of the grounds raised for restoring the Assessing Officer’s finding in the matter of the unexplained credit of Rs.7,17,263 in the assessee's capital account for 31.3.2007 and the learned Authorised Representative for the assessee in support of the impugned order of the CIT (Appeals) in estimating the agricultural income @ Rs.16,500 per acre for the produce of Assessment Year 2006-07 as sold and credited in the capital account of the assessee for year ending 31.3.2007. It is not disputed that the assessee's capital account for the year ending 31.3.2007 had a credit of Rs.7,17,263 claimed to be in respect of the sale of agricultural produce pertaining to the Assessment Year 2006-07, in the current year. It is also a matter of record that the Assessing Officer rejected this claim of the assessee on the grounds that in the Assessment Year 2006-07, agricultural income was declared at NIL and also for the reason that the assessee did not have documentary proof of having earned such agricultural income as claimed. Accordingly, the same was treated as unexplained cash credit in the assessee's capital account. 5.3.2 In the impugned order, the learned CIT (Appeals) has stated that the assessee was having agricultural income as early as Assessment Year 2003-04, and in the appeal for that year, which is reportedly decided by the learned CIT (Appeals), the assessee had himself estimated his agricultural income at Rs.16,500 per acre which the learned CIT (Appeals) found to be reasonable in the facts and circumstances of the case. In this view of the matter, the learned CIT (Appeals) proceeded to estimate the agricultural income for Assessment Year 2006-07 also at Rs.16,500 per acre. On an appreciation of the facts as emanate from the record we find that the assessee was earning and declaring agricultural income atleast from Assessment Year 2003-04 onwards and has also declared agricultural income of Rs.16,16,263 for the year under consideration, viz. Assessment Year 2007-08. This establishes that the assessee has been earning agricultural income for the last many years. Therefore, we are of the opinion that, the assessee's constant claim before the authorities below that the agricultural income declared for Assessment Year 2006-07 was NIL since the produce was sold in the current year and the proceeds / income thereof was credited to the assessee's capital account for Assessment Year 2007- 08, is plausible in the facts and circumstances of the case. We also find that the estimation of agricultural income by the learned CIT (Appeals) at Rs.16,500 per acre, as Assessment Year 2003—04 to be reasonable in the factual matrix of the case. We, therefore, find no cause to interfere with the decision of the learned CIT (Appeals) in holding that the income arising out of the sale of agricultural produce of Assessment Year 2006-07 as credited in the assessee's capital account for the year ending 31.3.2007 be estimated at Rs.16,500 per acre. Consequently, the Ground at S.No.2 raised by Revenue is dismissed.
In the result, Revenue’s appeal for Assessment Year 2007-08 is partly allowed for statistical purposes. Order pronounced in the open court on 17th July, 2015.