DADI UMA MAHESWARI DEVI,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-3(1), VISAKHAPATNAM

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeal) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No. ITBA/NFAC/S/250/2022- 23/1051219457(1) dated 24.03.2023 arising out of the assessment order passed u/s 143(3) r.w.s.147 of the Income Tax Act, 1961 (in short “Act”) dated 30.12.2016 for the Assessment Year (A.Y.)2010-11. Dadi Uma Maheswari Devi, Visakhapatnam

Brief facts of the case are that the assessee, director of the company, M/s Gajuwaka Constructions Pvt. Ltd. engaged in construction of flats, filed her return of income for the A.Y.2010-11 on 11.10.2010, admitting a total income of Rs.2,56,700/-. A survey u/s 133A was conducted in the case of the above company on 26.08.2015 by the ADIT(Inv), Unit-III(3) and the survey report was forwarded to the Assessing Officer(AO). Based on the survey report, the AO issued a notice u/s 148 of the Act dated 22.01.2016. In response to the notice, the assessee filed her return of income on 30.05.2016, admitting income of Rs.2,56,700/- and agricultural income of Rs.3,10,000/-. Thereafter, notices u/s 143(2) and 142(1) were issued calling for further details. The assessee submitted that she had not maintained any books of account and that the income from the construction business was admitted on estimate basis. Based on the survey findings, the AO asked the assessee to explain the sources for Rs.5,00,000/- paid towards non-refundable advance to the land owner, Smt.S.Sarada while entering into a development agreement. In response to which, the assessee filed written submissions, stating that the assessee had been regular in filing the returns since 1997-98. The assessee is having agricultural lands at Visakhapatnam and Vizianagaram to an extent of Ac.27.50 cents, which Dadi Uma Maheswari Devi, Visakhapatnam were purchased by her parents long back and subsequently inherited by her. Cashew nut plantations and other agricultural produce are available on these agricultural lands and she produced the Certificate from the concerned MRO, certifying that there was an income of Rs.60,000/- per acre from cashew nut plantations. The assessee further submitted that the impugned amount invested towards irrevocable advance for development of site at Pedagantyada was met out of the accumulated savings, agricultural income of the HUF and also amounts from HUF. The assessee enclosed the details of land holdings along with pattadar passbooks, documents and MRO certificate for the agricultural income and the cash flow statement, from which the AO observed that the assessee is having only Ac.16.77 cts. The AO stated that the assessee did not produce any evidence in support of agricultural produce or the agricultural income and the accumulated savings. Hence, the AO estimated the agricultural income at Rs.10,000/- per acre for the land holdings of Ac.16.77 cts at Rs.1,67,000/-. The AO set off the agricultural income so estimated against the impugned investment of Rs.5,00,000/- towards development of pedagantyada site (Radha Madhav Towers) and brought the difference amount of Rs.3,33,000/- to tax, treating it as unexplained expenditure u/s 68 of the Act.

Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee.

Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.

Ground No.2 is related to sustaining the addition of Rs.3,30,000/- towards unexplained advance paid to land owner for development of the land. The Ld.AR submitted that the assessee invested impugned amount towards irrevocable advance for development of site at Pedagantyada out of the accumulated savings, agricultural income of the HUF and also amounts from HUF. The Ld.AR submitted that she had not maintained Dadi Uma Maheswari Devi, Visakhapatnam any books of account and that the income from the construction business was admitted on estimate basis. The assessee is having agricultural lands at Visakhapatnam and Vizianagaram to an extent of Ac.27.50 cents which were purchased by her parents long back and subsequently inherited by her. Cashew nut plantations and other agricultural produce are available on these agricultural lands and she produced the Certificate from the concerned MRO, certifying that there was an income of Rs.60,000/- per acre from cashew nut plantations. The assessee produced the details of land holdings along with pattadar passbooks, documents and MRO certificate for the agricultural income and the cash flow statement and stated that the assessee has source as elaborated above for advancing Rs.5,00,000/- to Smt.S.Sarada while entering into a development agreement. The Ld.AR, therefore pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee.

Per contra, the Ld.DR relied on the order of the Ld.CIT(A) and pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.

I have heard both the parties and perused the material available on record. It is apparent that the assessee had advanced an amount of Dadi Uma Maheswari Devi, Visakhapatnam Rs.5,00,000/- towards development of site at Pedagantyada and the source being agricultural income from Ac.27.50 cents. However, the AO found that the assessee is having only Ac.16.77 cents and accordingly estimated the agricultural income of Rs.1,67,000/- @Rs.10,000/- per acre and brought the difference amount of Rs.3,33,000/- to tax as unexplained expenditure u/s 68 of the Act, which was upheld by the Ld.CIT(A). It is observed that the assessee has not furnished any supporting evidences for substantiating her claim that the advance is given out of her past accumulated savings, agricultural income and income received from HUF, either before the revenue authorities or before me. When the assessee claims to admit the source, the onus is on the assessee to prove the source with cogent evidence. In the absence of any proper documentary evidence, I have no reason to interfere with the orders passed by the lower authorities and hence, dismiss the appeal of the assessee on this ground.

Ground No.3 is related to sustaining the addition of Rs.1,33,000/- as unexplained agricultural income. The Ld.AR submitted that the assessee is having Ac.27.50 cts of land and produced certificate issued by the Village Revenue Officer, endorsed by Tahsildar and Mandal Revenue Inspector. The Ld.AR submitted that the assessee had admitted Dadi Uma Maheswari Devi, Visakhapatnam agricultural income of Rs.3,10,000/- in her return of income and the AO is not justified in estimating the agricultural income at Rs.1,67,000/-. He pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee on this ground.

Per contra, the Ld.DR submitted that the Ld.CIT(A) is justified in upholding the addition made by the AO, estimating the agricultural income @Rs.10,000/- per acre for 16.77 acres as against 27.50 acres claimed to have been held by the assessee. 11. I have heard both the parties and perused the material available on record. It is apparent from the records that the assessee is holding 16.77 acres only, as against 27.50 acres claimed to have been held by the assessee. It is also observed that the assessee filed original ITR for the A.Y.2010-11, admitting income of Rs.2,56,700/- on 11.10.2010 without showing any agricultural income. However, after survey u/s 133A, when the evidence of undeclared advance of Rs.5,00,000/- made by the assessee was unearthed, the assessee filed ITR admitting agricultural income of Rs.3,10,000/- in response to notice u/s 148 on 30.05.2016, which appears to be an afterthought to explain the source of advance of Rs.5,00,000/- subsequent to the survey conducted by the department. It is observed from the receipts and payment account that the agricultural Dadi Uma Maheswari Devi, Visakhapatnam income of Rs.3,00,000/- was credited on account of transfer from HUF against the agricultural income of Rs.3,10,000/- as shown in the ITR filed by the assessee in response to notice u/s 148. This discrepancy was not explained by the assessee and moreover, no supporting evidences have been filed to support the claims of receipt on account of transfer from HUF in the receipts and payment account. In view of the foregoing facts and circumstances of the case, I have no reason to interfere with the order passed by the lower authorities, hence, dismiss the appeal filed by the assessee on this ground. 12. In the result, appeal of the assessee is dismissed.