SRI.K.N.SREEKUMAR,KOTTAYAM vs. THE ACIT, KOTTAYAM

Assessment Year 2006-07 2.1 The assessee did not file original return of income. In response to return u/s 153A, the assessee filed return declaring income of Rs.0.96 Lacs along with agricultural income. The assessee furnished cash flow statement. The sole issue that arises in this year is qua agricultural income. The assessee claimed to have earned agricultural income of Rs.1.02 Lacs from leasing of 39.5 cents of land at Ettumanoor and another 50.5 cents of land at Kanakkary. The assessee could not produce the cultivator from whom the agricultural rent was received and accordingly, the said sum was added u/s 68. 2.2 The Ld. CIT(A), considering assessee’s written submissions, held that the ownership of land was not in dispute. The Ld. AO did not render specific findings on lease agreement. Accordingly, the Ld. AO was directed to consider 50% of the income as agricultural income. Aggrieved, the assessee is in further appeal before us. 2.3 Considering the fact that the assessee could not discharge the onus of establishing the factum of receipt of agricultural rent and it could not produce the person who cultivated the land, the estimation made by Ld. CIT(A) is quite fair and reasonable which do not require any interference on our part. By confirming the same, we dismiss the appeal for AY 2006-07. This issue arises in AYs 2007-08 to 2012-13 also and the adjudication of Ld. CIT(A) is on similar lines which stand confirmed accordingly.

Assessment Year 2007-08 Another issue that arises in this year is brokerage income. The assessee reflected brokerage income for sale and purchase of vehicles for Rs.0.72 Lacs. However, in the funds flow statement, the assessee considered income of Rs.0.96 Lacs and accordingly, the differential of Rs.0.24 Lacs was added to the income of the assessee. The Ld. CIT(A) confirmed the same. We find that it is undisputed fact that the assessee reflected lesser amount in the return whereas it has taken higher amount while computing cash flows. Therefore, the adjudication of Ld. CIT(A) does not warrant any interference. This issue stand dismissed. The appeal for AY 2007-08 stand dismissed.

Assessment Year 2008-09 4.1 The additional issue that arises in this year is negative cash balance of Rs.3.78 Lacs. The Ld. AO arrived at negative cash balance after considering expenditure and investments made by the assessee. The assessee failed to controvert the same and accordingly, the addition was confirmed by Ld. CIT(A). Since the assessee has failed to controvert the working of Ld. AO, this issue stand dismissed. The appeal for AY 2008-09 stand dismissed. 4.2 The issue of negative cash balance arises in AYs 2009-10 and 2010-11 also wherein additions of Rs.3.06 Lacs and Rs.16.66 Lacs respectively has been made by Ld. AO. We are of the opinion that telescoping benefit should be given to the assessee since negative cash balance of AY 2008-09 would have cascading effect on subsequent years. Accordingly, Ld. AO is directed to re-work the same by giving telescoping benefit in subsequent years. This ground thus raised stands partly allowed for AYs 2009-2010 & 2010-11.

Assessment Year 2009-10 5.1 The additional issue that arise in this year is assessment of deemed rent. The assessee had 23.27 cents of land and a residential house measuring approx. 1500 Sq. Ft. at Ettumanoor purchased in the last phases of the previous assessment year. The property was not let out during the year and the property was claimed to be self-occupied property. However, the assessee’s residence was owned jointly with the wife. The Ld. AO estimated annual rental value of Rs.18000/- per annum and after granting statutory deduction of 30%, assessed rental income @Rs.12600/- for AYs 2009-10 to 2012-13. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 5.2 From the facts, it appears that the property was purchased in last phases of previous assessment year. There is no finding by Ld. AO that the property was ready to be let out. Further, the property appears to have never been let out in the past. Therefore, the deemed rental income could not be assessed for AYs 2009-10 to 2012-13. We order so. This ground stand allowed in all the years. The appeal stands partly allowed.

Assessment Year 2010-11 The assessee claimed to have received sum of Rs.7.56 Lacs on sale of wife’s jewellery. No supporting documents were filed and accordingly, the same was added u/s 68. We find that the additions have been made since the assessee could not substantiate the supporting documents. However, the possession and sale of jewellery is not under doubt. Therefore, the same, in our opinion, should be assessed under the head capital gains. We order so. The ground as well as the appeal stand partly allowed.

Assessment Year 2011-12 7.1 The assessee sold 49 cents of land at Eroor for Rs.196 Lacs. Thought the assessee considered the sale proceeds in the cash flow statement, but no capital gains were offered against the same. The Ld. AO, after granting purchase and development cost, assessed Short- Term Capital gain of Rs.143.05 Lacs. During appellate proceedings, the assessee submitted that the proceeds were invested in a hotel along with other partners. The assessee claimed that there was dispute with the partners and the entire investment was lost. However, the said pleading could not be substantiated. Accordingly, this issue was decided against the assessee. 7.2 We are of the opinion that subsequent loss of investments in a business venture could, otherwise be, not allowed to the assessee against Short-Term Capital Gain since the same would, at the most, be a business loss. The assessee could not even substantiate this loss. Undisputedly, the assessee has sold the property and considered the sale proceeds in the cash flow statement. Therefore, the income has rightly been assessed in the hands of the assessee. This issue is decided against the assessee. The appeal stands partly allowed.

Assessment Year 2012-13 8.1 The assessee sold 23.27 cents of land and a residential house measuring approx. 1500 Sq. Ft. at Ettumanoor. The gains were claimed exempt on the ground that it was an agricultural land. However, the assessee could not produce the farmers who had supposedly done cultivation. Accordingly, the sum of Rs.41.28 Lacs was brought to tax as Short-Term Capital Gains. 8.2 The assessee reflected receipt od Rs.44 Lacs on sale of 20 cents of land. The same was purchased for Rs.40 Lacs. However, no gains were reflected and accordingly, the sum of Rs.4 Lacs was brought to tax. 8.3 The Ld. CIT(A) confirmed both the additions against which the assessee is in further appeal before us. 8.4 The assessment of Short-Term Capital Gain of Rs.4 Lacs stand confirmed since the factual matrix remain uncontroverted before us. However, the issue of assessment of short-term capital gain of Rs.41.28 Lacs stand restored to Ld. AO for fresh adjudication at the risk and responsibility of the assessee to plead and prove the same. The grounds stand disposed-off accordingly. The appeal stands partly allowed.