M/s. Canaan Gardens (P) Ltd., Vellore v. ITO, CHENNAI

CO 176/CHNY/2013 | 2009-2010
Pronouncement Date: 18-11-2014 | Result: Dismissed

Appeal Details

RSA Number 17621723 RSA 2013
Assessee PAN AAGPD5496F
Bench Chennai
Appeal Number CO 176/CHNY/2013
Duration Of Justice 11 month(s) 23 day(s)
Appellant M/s. Canaan Gardens (P) Ltd., Vellore
Respondent ITO, CHENNAI
Appeal Type Cross Objection
Pronouncement Date 18-11-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-11-2014
Date Of Final Hearing 13-11-2014
Next Hearing Date 13-11-2014
Assessment Year 2009-2010
Appeal Filed On 25-11-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHE NNAI . . . ! ' # $ BEFORE DR. O.K. NARAYANAN VICE PRESIDENT & SHRI VIKAS AWASTHY JUDICIAL MEMBER I.T.A / C.O. NO. ASSESSMENT YEAR APPELLANT RESPONDENT 1492/MDS/2013 2004-05 THE DY. COMMISSIONER OF INCOME TAX SALARY CIRCLE-I CHENNAI SHRI JUSTICE P.D.DINAKARAN J-81 NEW NO.2 FIRST MAIN ROAD ANNA NAGAR EAST CHENNAI-600 102 PAN: AAGPD 5496 F C.O.NO.149/MDS/ 2013 (IN ITA NO. 1492/MDS/2013) 2004-05 SHRI JUSTICE P.D.DINAKARAN J-81 NEW NO.2 FIRST MAIN ROAD ANNA NAGAR EAST CHENNAI-600 102 PAN: AAGPD 5496 F THE DY. COMMISSIONER OF INCOME TAX SALARY CIRCLE-I CHENNAI 1857/MDS/2013 2007-08 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N C.O.NO.174/MDS/ 2013 (IN ITA NO. 1857/MDS/2013) 2007-08 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1858/MDS/2013 2008-09 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N C.O.NO.175/MDS/ 2013 (IN ITA NO. 1858/MDS/2013) 2008-09 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 2 1859/MDS/2013 2009-10 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N C.O.NO.176/MDS/ 2013 (IN ITA NO. 1859/MDS/2013) 2009-10 M/S.CANAAN GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCC 8593 N INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1860/MDS/2013 2007-08 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E C.O.NO.177/MDS/ 2013 (IN ITA NO. 1860/MDS/2013) 2007-08 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1861/MDS/2013 2008-09 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E C.O.NO.178/MDS/ 2013 (IN ITA NO. 1861/MDS/2013) 2008-09 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1862/MDS/2013 2009-10 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 3 C.O.NO.179/MDS/ 2013 (IN ITA NO. 1862/MDS/2013) 2009-10 M/S.AMUDHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7139 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1863/MDS/2013 2007-08 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D C.O.NO.180/MDS/ 2013 (IN ITA NO. 1863/MDS/2013) 2007-08 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1864/MDS/2013 2008-09 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D C.O.NO.181/MDS/ 2013 (IN ITA NO. 1864/MDS/2013) 2008-09 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1865/MDS/2013 2009-10 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D C.O.NO.182/MDS/ 2013 (IN ITA NO. 1865/MDS/2013) 2009-10 M/S.AMIRTHAM GARDENS (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AADCA 7140 D INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 4 1866/MDS/2013 2007-08 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E C.O.NO.183/MDS/ 2013 (IN ITA NO. 1866/MDS/2013) 2007-08 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1867/MDS/2013 2008-09 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E C.O.NO.184/MDS/ 2013 (IN ITA NO. 1867/MDS/2013) 2008-09 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1868/MDS/2013 2009-10 INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E C.O.NO.185/MDS/ 2013 (IN ITA NO. 1868/MDS/2013) 2009-10 M/S.DEAR LANDS (INDIA) (P) LTD. NO.49 KAMARAJA STREET C.N.A.ROAD PUDUR VANIYAMBADI-635 751 VELLORE DISTRICT PAN: AABCD 5342 E INCOME TAX OFFICER COMPANY WARD-I(1) CHENNAI-600 034 1971/MDS/2013 2004-05 THE DY. COMMISSIONER OF INCOME TAX BUSINESS CIRCLE-II CHENNAI SMT.DR.K.M. VINODINI DINAKARAN J-81 FIRST MAIN ROAD ANNA NAGAR CHENNAI PAN: ACDPV 6530 F ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 5 1972/MDS/2013 2005-06 THE DY. COMMISSIONER OF INCOME TAX BUSINESS CIRCLE-II CHENNAI SMT.DR.K.M. VINODINI DINAKARAN J-81 FIRST MAIN ROAD ANNA NAGAR CHENNAI PAN: ACDPV 6530 F 1973/MDS/2013 2006-07 THE DY. COMMISSIONER OF INCOME TAX BUSINESS CIRCLE-II CHENNAI SMT.DR.K.M. VINODINI DINAKARAN J-81 FIRST MAIN ROAD ANNA NAGAR CHENNAI PAN: ACDPV 6530 F 1974/MDS/2013 2007-08 THE DY. COMMISSIONER OF INCOME TAX BUSINESS CIRCLE-II CHENNAI SMT.DR.K.M. VINODINI DINAKARAN J-81 FIRST MAIN ROAD ANNA NAGAR CHENNAI PAN: ACDPV 6530 F 1975/MDS/2013 2009-10 THE DY. COMMISSIONER OF INCOME TAX BUSINESS CIRCLE-II CHENNAI SMT.DR.K.M. VINODINI DINAKARAN J-81 FIRST MAIN ROAD ANNA NAGAR CHENNAI PAN: ACDPV 6530 F REVENUE BY ASSESSEE BY : : SHRI T.R.SENTHIL KUMAR ADVOCATE SR.STANDING COUNSEL FOR THE DEPARTMENT SHRI B.RAMAKRISHNAN C.A. / DATE OF HEARING : 13-11-2014 /DATE OF PRONOUNCEMENT : 18-11-2014 #% / O R D E R PER VIKAS AWASTHY J.M: THESE EIGHTEEN APPEALS HAVE BEEN FILED BY THE REV ENUE IN THE CASE OF FIVE ASSESSES FOR THE ASSESSMENT YEARS (AYS) 2004- 05 TO AY. 2009-10. THE ASSESSEES HAVE ALSO FILED CR OSS-OBJECTIONS IN THE APPEALS OF THE REVENUE IMPUGNING THE FINDIN GS OF CIT(APPEALS) UPHOLDING THE VALIDITY OF RE-ASSESSME NT ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 6 PROCEEDINGS. ITA NO.1492/2013 RELEVANT TO THE AY.20 04-05 HAS BEEN FILED IN THE CASE OF SHRI P.D.DINAKARAN J. ITA NOS.1857 TO 1859/2013 FOR THE AYS.2007-08 TO 2009-10 HAVE BEEN FILED BY THE REVENUE IN THE CASE OF CANAAN GARDENS PVT. LTD. IT A NOS.1860 TO 1862/2013 FOR THE AYS.2007-08 TO 2009-10 HAVE BE EN FILED BY THE REVENUE IN THE CASE OF AMUDHAM GARDENS PVT. LTD . ITA NOS.1863 TO 1865/2013 FOR THE AYS.2007-08 TO 2009-1 0 HAVE BEEN FILED BY THE REVENUE IN THE CASE OF AMIRTHAM GARDEN S PVT. LTD. AND ITA NOS.1866 TO 1868/2013 FOR THE AYS.2007-08 T O 2009-10 HAVE BEEN FILED BY THE REVENUE IN THE CASE OF M/S.D EAR LANDS INDIA PVT. LTD. ITA NO.1971 TO 1975/2013 FOR THE A YS.2004-05 TO 2009-10 HAVE BEEN FILED BY THE REVENUE IN THE CASE OF DR.K.M.VINODINI DINAKARAN W/O. SHRI P.D.DINAKARAN. IT IS ALLEGED THAT IN ALL THE AFORESAID COMPANIES SHRI P.D.DINAKA RAN J. & HIS FAMILY MEMBERS ARE INTERESTED. SINCE IN ALL THE APPEALS COMMON AND INTER-RELATE D ISSUES ARE INVOLVED ALL THE APPEALS OF REVENUE AND THE CR OSS-OBJECTIONS BY THE ASSESSEES ARE TAKEN UP TOGETHER FOR ADJUDICA TION. AS THE FACTS IN ALL THE APPEALS ARE SIMILAR FOR THE SAKE OF CONVENIENCE THE SAME ARE TAKEN FROM ITA NO.1492/2013. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 7 2. THE ASSESSEE SHRI P.D.DINAKARAN FILED HIS RET URN OF INCOME FOR THE AY.2004-05 ON 02-08-2004 DECLARING I NCOME OF ` 6 97 370/- INCLUDING AGRICULTURAL INCOME OF ` 2 13 930/-. ALL OTHER ASSESSEES HEREIN FILED THEIR RESPECTIVE RETURNS FOR THE AYS UNDER CONSIDERATION WITHIN DUE DATE AS SPECIFIED U/S.139( 1) OF THE ACT. THE RETURN OF INCOME OF THE ASSESSEES WERE PROCESSE D U/S.143(1) OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THEREAFTER RE-ASSESSMENT PROCEEDINGS WERE INITIATE D AGAINST THE ASSESSEES AND NOTICE U/S.148 WERE ISSUED TO THE ASS ESSEES ON THE BASIS OF INFORMATION COLLECTED BY THE JUDGES ENQUIR Y COMMITTEE (JIC). A JUDGES INQUIRY COMMITTEE (JIC) WAS CONSTITUTED O N 15-01-2010 TO INVESTIGATE INTO THE ALLEGATIONS LEVE LED AGAINST SHRI P.D.DINAKARAN J. WHEN HE WAS HOLDING THE POSITION O F A JUDGE OF HON'BLE KARNATAKA HIGH COURT. DURING THE PENDENCY O F INVESTIGATION BY JIC THE ASSESSEE DEMITTED THE OFF ICE OF A JUDGE. THE JIC HAD TO DROP ITS PROCEEDINGS WITHOUT GIVING ANY INTERIM/FINAL FINDINGS OR REPORT. THE JIC WAS LATER WOUNDUP ON 2 3-09-2011. HOWEVER ONE SHRI J.V.MAHAPATRA IRS WHO AT THAT TI ME WAS HOLDING THE POSITION OF JOINT SECRETARY RAJYA SABH A FORWARDED THE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 8 INFORMATION COLLECTED BY JIC TO THE ASSESSING OFFIC ER OF THE ASSESSEE. 3. ON THE BASIS OF INFORMATION RECEIVED RE-ASSESSM ENT PROCEEDINGS WERE INITIATED AGAINST ALL THE ASSESSEE S/APPELLANTS HEREIN. THE ASSESSING OFFICER INCLUDED INCOME OF S OME OF THE RELATIVES OF SHRI P.D.DINAKARAN IN HIS HANDS ON TH E GROUND THAT THE RELATIVES OF THE ASSESSEE WERE HOLDING LANDS OF THE ASSESSEE IN THEIR NAMES. THE LANDS WERE LATER TRANSFERRED TO T HE COMPANIES IN WHICH SHRI P.D.DINAKARAN AND HIS FAMILY MEMBERS HAV E SUBSTANTIAL INTEREST. TO UNDERSTAND THE FACTUAL MA TRIX OF THE CASE IT IS ESSENTIAL TO KNOW THE NAMES AND RELATIONS OF THE PERSONS WHOSE INCOMES HAVE BEEN ADDED IN THE INCOME OF THE ASSESSEE OR OTHERWISE THEIR NAMES FIGURE IN THE GAMUT OF ASSESS MENT: NAMES OF THE RELATIVES - RELATION MR.JAMES KUPPUSAMY (FATHER-IN-LAW); MRS.M.G.PARIPOORNAM (MOTHER-IN-LAW); DR.MRS.K.M.VINODINI DINAKARAN (WIFE); SMT.P.VIMALA (SISTER); MR.JACOB WILLIAMS (HUSBAND OF SMT.P.VIMALA); MS.AMUDA DINAKARAN (DAUGHTER -I); ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 9 MS.AMRITHA DINAKARAN (DAUGHTER II); M.RAJA RABIDEV (BROTHER OF DR.VINODINI DINAKARAN) ; MS.S.SANGAMITRA (SISTER OF DR.VINODINI DINAKARAN); THE EXTENT OF LAND HELD BY ABOVE MENTIONED PERSONS ARE AS UNDER: LAND OWNER (SHRI/SMT) EXTENT OF LAND LOCATION SHRI P.D.DINAKARAN 48.38 ACRES KAVERIRAJAPURAM DR. VINODINI DINAKARAN 25.02 ACRES KAVERIRAJAPURAM SMT. M.G.PARIPOORNAM 50.36 ACRES KAVERIRAJAPURAM SHRI RAJA RABIDEV 52.75 ACRES KAVERIRAJAPURAM SHRI JACOB WILLIAMS 55.82 ACRES KAVERIRAJAPURAM SMT. P.VIMALA 4. THE COMPANIES IN WHICH THE ASSESSEE AND HIS FAMI LY MEMBERS WERE ALLEGED TO HAVE SUBSTANTIAL INTEREST A RE AS UNDER: I. M/S.CANAAN GARDEN PVT. LTD. II. M/S.AMUDAM GARDEN PVT. LTD. III. M/S.AMIRTHAM GARDEN PVT. LTD. IV. M/S.DEARLAND PVT. LTD. THE AFORESAID COMPANIES WERE INCORPORATED IN THE YE AR 2005. SOME OF THE ABOVE MENTIONED INDIVIDUALS WHO WERE HA VING LAND- HOLDINGS TRANSFERRED THEIR AGRICULTURAL LANDS TO T HE AFORESAID COMPANIES. IN CONSIDERATION OF TRANSFER OF LAND T HE SHARES OF THE COMPANIES WERE ALLOTTED TO THE RESPECTIVE INDIVIDUA LS IN PROPORTION TO THEIR CONTRIBUTION OF LAND. ALL THE COMPANIES (E XCEPT M/S.AMIRTHAM GARDEN PVT. LTD.) LEASED OUT THEIR LAN DS TO ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 10 SHRI JACOB WILLIAMS SMT. M.G.PARIPOORNAM AND SHRI RAJA RABIDEV. THE AGRICULTURE INCOME FROM THE LANDS WER E SHARED BETWEEN THE COMPANIES AND THE LESSEES IN THE RATIO OF 1/3 RD AND 2/3 RD . 5. ON THE BASIS OF THE INFORMATION RECEIVED FROM TH E JOINT SECRETARY RAJYA SABHA ASSESSMENT IN RESPECT OF AL L THE ASSESSEES WERE RE-OPENED. THE ASSESSING OFFICER MA DE ADDITIONS/DIS-ALLOWANCES IN THE INCOME RETURNED BY THE ASSESSEES ON VARIOUS COUNTS VIZ: I. TREATING PART OF AGRICULTURE INCOME AS INCOME F ROM OTHER SOURCES. II. DIS-ALLOWING GIFTS RECEIVED BY ASSESSEE FROM RE LATIVES AND ADDITING THE SAME AS INCOME FROM OTHER SOURCES IN THE HANDS OF ASSESSEE. III. CLUBBING OF INCOME & GIFTS RECEIVED BY FAMILY MEMBERS IN THE INCOME OF ONE ASSESSEE. IV. ADDITION OF AGRICULTURE INCOME OF THE RELATIV ES OF THE ASSESSEE IN THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDERS IN THE RESPECTI VE CASES THE ASSESSEES PREFERRED APPEALS BEFORE THE CIT(APPE ALS) ASSAILING ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 11 RE-ASSESSMENT PROCEEDINGS U/S.147 AS WELL AS ADDIT IONS/DIS- ALLOWANCES MADE BY THE ASSESSING OFFICER IN THE EAC H CASE. THE CIT(APPEALS) IN FIRST APPELLATE PROCEEDINGS UPHELD THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS BUT ALLOWED THE APPEALS O F THE ASSESSEES ON MERITS. 6. NOW THE REVENUE HAS COME IN APPEAL ASSAILING TH E FINDINGS OF THE CIT(APPEALS) IN DELETING THE ADDITIONS/DIS-A LLOWANCES MADE IN THE RESPECTIVE CASES. THE ASSESSEES HAVE FILED CROSS- OBJECTIONS AGAINST THE FINDINGS OF CIT(APPEALS) UPH OLDING THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS. 7. SHRI B.RAMAKRISHNAN APPEARING ON BEHALF OF THE ASSESSEES SUBMITTED THAT INITIALLY ASSESSMENTS WERE COMPLETE D U/S.143(1) IN CASE OF ALL THE ASSESSEES. IT WAS ON THE BASIS OF INFORMATION COLLECTED DURING JIC PROCEEDINGS THAT THE RE-ASSESS MENT PROCEEDINGS WERE INITIATED AGAINST ALL THE ASSESSEE S. THE LD.AR SUBMITTED THAT THE INFORMATION WAS FORWARDED BY JOI NT SECRETARY RAJYA SABHA TO THE ASSESSING OFFICER OF THE ASSESSE E. FROM THE INFORMATION COLLECTED UNDER THE RIGHT TO INFORMATIO N ACT IT TRANSPIRED THAT SHRI J.B.MAHAPATRA JOINED RAJYA SA BHA ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 12 SECRETARIAT ON DEPUTATION ON 09-08-2010 AND WAS REL IEVED FROM THE SECRETARIAT OF RAJYA SABHA ON 10-10-2011. DURI NG HIS TENURE IN THE RAJYA SABHA SECRETARIAT HE WAS NEVER ENTRUS TED WITH THE TASK OF DEALING WITH JIC IN THE CASE OF JUSTICE P.D .DINAKARAN. THUS SHRI MAHAPATRA WAS NOT THE COMPETENT AUTHORIT Y TO TRANSMIT THE INFORMATION TO THE ASSESSING OFFICER. THE LD.A R ARGUED THAT JIC PROCEEDINGS WERE DROPPED IN BETWEEN AS JUSTICE P.D.DINAKARAN HAD DEMITTED HIS OFFICE. THE JIC WAS WOUND UP WITHOUT GIVING ANY INTERIM OR FINAL REPORT. IN SUC H CIRCUMSTANCES THE ASSESSING OFFICER SHOULD NOT HAVE TAKEN COGNIZA NCE OF INFORMATION FORWARDED TO HIM. THE ASSESSING OFFICE R ACTED BEYOND HIS JURISDICTION IN INITIATING RE-ASSESSMENT PROCEE DINGS. THE ASSESSING OFFICER WITHOUT HAVING ANY REASONS TO BE LIEVE CANNOT INVOKE THE PROVISIONS OF SECTION 147 EVEN IF ORIGIN AL ASSESSMENT IS DONE U/S.143(1). IN ORDER TO SUPPORT HIS SUBMISSIO NS THE LD.AR PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD. REPORTED AS 354 ITR 536 (DELHI). CONTROVERTING THE SUBMISSIONS MADE BY THE LD.AR ON THE ISSUE OF RE-OPENING THE SENIOR STANDING COUNSEL RE PRESENTING THE DEPARTMENT SUBMITTED THAT SOURCE OF INFORMATION IS NOT THE CRITERIA ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 13 FOR QUESTIONING THE VALIDITY OF RE-OPENING ASSESSME NT. THE ASSESSING OFFICER HAS POWER TO QUESTION ASSESSEE ON THE BASIS OF INFORMATION RECEIVED FROM ANY QUARTER. THE LD.COUN SEL FOR THE REVENUE IN ORDER TO SUPPORT HIS CONTENTIONS THAT TH E ASSESSING OFFICER CAN INITIATE ACTION AGAINST ASSESSEE ON THE BASIS OF INFORMATION GATHERED FROM ANY PRIVATE SOURCE AND TH AT THE PROVISIONS OF THE EVIDENCE ACT 1872 ARE NOT APPLIC ABLE UNDER INCOME TAX PROCEEDINGS PLACED RELIANCE ON THE FOLL OWING JUDGMENTS OF THE HONBLE APEX COURT: I. VASANTILAL (C) AND CO. VS. CIT REPORTED AS 45 ITR 206 (SC) II. CHUHARMAL VS. CIT REPORTED AS 172 ITR 250 (SC) III. DHAKESWARI COTTON MILLS LTD. VS. CIT REPORTED AS 26 ITR 775 (SC) . HE FURTHER SUBMITTED THAT IN ALL THE CASES THE RET URN FILED BY THE ASSESSEES WERE PROCESSED U/S.143(1). IN NONE OF TH E CASES THE ASSESSING OFFICER FORMED ANY OPINION ON THE ISSUES RAISED IN RE- ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER DID NOT GET OPPORTUNITY TO GO BEHIND THE TRANSACTIONS. SINCE N O OPINION WAS FORMED THERE IS NO QUESTION OF CHANGE OF OPINION. IN ORDER TO GIVE STRENGTH TO HIS SUBMISSION THE LD.COUNSEL FOR THE REVENUE DRAWS ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 14 SUPPORT FROM THE JUDGMENT OF THE HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF RAYALA CORPORATION (P) LTD. VS. ACIT REPORTED AS 264 CTR 282 (MAD). 8. ON MERITS THE LD.COUNSEL FOR THE REVENUE SUBMIT TED THAT THE CIT(APPEALS) HAS ERRED IN DELETING THE ADDITIONS MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF ASSESSING THE INCOM E OF OTHER PERSONS IN THE HANDS OF THE ASSESSEES. THE LD. STA NDING COUNSEL ARGUED THAT THE INCOME SHOULD BE ASSESSED IN THE HA NDS OF THE RIGHT PERSON. IN THE PRESENT CASE THE RIGHT PERSO N IS SHRI P.D.DINAKARAN. THEREFORE THE ASSESSING OFFICER HA S RIGHTLY ADDED INCOME OF HIS RELATIVES IN THE INCOME RETURNED BY S HRI P.D.DINAKARAN. THE NEXT QUESTION RAISED BY THE REVENUE IS; WHETHE R THE ENTIRE AGRICULTURE INCOME DISCLOSED BY THE ASSESSEE S IS INDEED AGRICULTURE INCOME? THE LD.COUNSEL FOR THE REVENUE SUBMITTED THAT SHRI P.D.DINAKARAN (ASSESSEE) WAS NOT HAVING INCOME FRO M AGRICULTURE OPERATIONS. THE LAND ALLEGEDLY OWNED BY THE ASSESS EE AND HIS RELATIVES IS NOT CULTIVABLE IN THE PERIOD RELEVANT TO THE AYS UNDER CONSIDERATION. THE QUANTUM OF AGRICULTURE INCOME DE CLARED IN THE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 15 RETURN OF INCOME IS MUCH HIGHER THAN THE ACTUAL INC OME. IT IS NOT DISPUTED THAT THE LAND WAS PURCHASED IN 1990S I.E. PRIOR TO ASSESSEES ELEVATION AS HIGH COURT JUDGE. IT IS AL SO NOT DISPUTED THAT CERTAIN PARCELS OF LAND WERE INHERITED BY SHRI P.D.DINAKARAN AND OTHER ASSESSEES. HOWEVER THE INCOME FROM LAND EARNED BY OTHER ASSESSEES TRAVELLED TO THE FAMILY MEMBERS OF SHRI P.D.DINAKARAN IN THE FORM OF GIFTS. THE LD.COUNSEL FOR THE REVENUE REFERRED TO PAGE NO.134 OF THE PAPER BOOK F ILED BY THE DEPARTMENT CONTAINING SWORN STATEMENT OF SHRI RAJA RABIDEV WHEREIN HE HAS STATED THAT THE ACCOUNTS ARE MAINTAI NED BY THE FAMILY AUDITOR MR.PARI. HE REFERRED TO THE STATEM ENTS MADE BY THE OTHER ASSESSEES WHERE THEY HAVE STATED THAT THE AC COUNTS RELATING TO THE INCOME FROM AGRICULTURE ARE MAINTAINED BY TH EIR AUDITOR MR.PARI. THEREAFTER LD.COUNSEL FOR THE REVENUE RE FERRED TO THE STATEMENT MADE BY MR.PARI CHARTERED ACCOUNTANT BEF ORE THE JIC. THE STATEMENT OF MR.PARI IS PLACED AT PAGE NOS.232 TO 259 OF THE PAPER BOOK. THE LD.COUNSEL FOR THE REVENUE CONTEND ED THAT A PERUSAL OF THE STATEMENT CLEARLY SHOWS THAT SHRI P. D.DINAKARAN WAS CONTROLLING THE AFFAIRS OF ALL THE COMPANIES. ALL ACCOUNTS AND DETAILS CONCERNING AGRICULTURAL OPERATIONS AND INCO ME FROM THE LANDS HELD BY THE INDIVIDUALS AND THE COMPANIES WER E MAINTAINED ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 16 UNDER THE INSTRUCTIONS FROM SHRI P.D.DINAKARAN. TH E CHARTERED ACCOUNTANT HAS CATEGORICALLY STATED THAT HIGH COURT STAFF WAS USED BY SHRI P.D.DINAKARAN J. FOR MANAGING THE AFFAIRS O F THE COMPANY. THE LD.COUNSEL POINTED THAT SHRI P.D.DINAKARAN J. N EVER REBUTTED THE STATEMENTS MADE BY OTHER ASSESSEES NOR DID HE BRING ANY EVIDENCE TO CONTROVERT THE STAND OF REVENUE. THE A SSESSEES HAVE FAILED TO SHOW THAT DURING THE PERIOD UNDER CONSIDE RATION ANY AGRICULTURE ACTIVITY WAS UNDERTAKEN BY THEM. THERE IS NOTHING ON RECORD TO SHOW THAT THE LAND WAS DEVELOPED OR THE A SSESSEES WERE CARRYING ON ANY AGRICULTURE OPERATIONS. THERE IS N O RECORD OF SECONDARY OR INTER-CROP. THE LD. STANDING COUNSEL ARGUED THAT THE ASSESSEES MADE GIFTS TO THE FAMILY MEMBERS OF SHRI P.D.DINAKARAN I N ALL THE AYS UNDER CONSIDERATION WITHOUT ANY OCCASION. HE FURT HER STATED THAT THE SEQUENCE OF EVENTS SHOW THAT THE GIFTS WERE ONE WAY I.E. FROM THE PERSONS HOLDING LANDS IN A PARTICULAR AREA TO T HE FAMILY MEMBERS OF SHRI P.D.DINAKARAN. THE GIFTS WERE NOTH ING BUT MODE OF PAYMENT OF AGRICULTURE PRODUCE. THUS THE GIFTS WERE SHAM. IN ORDER TO SUPPORT HIS ARGUMENTS THE LD.STANDING COU NSEL PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE SUPREME COUR T OF INDIA IN ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 17 THE CASE OF CIT VS. NOORJAHAN (P.K) REPORTED AS 237 ITR 570 (SC). THE LD.STANDING COUNSEL FINALLY ARGUED THAT THE ASS ESSEES HAVE TAKEN LOAN. A PERUSAL OF THE RECORDS WOULD SH OW THAT THE LOANS WERE REPAID IN A FAST MODE. WHEREAS THE SOUR CE OF FUNDS FOR RE-PAYMENT OF THE LOANS WERE NEVER EXPLAINED. THE LD.COUNSEL VEHEMENTLY SUPPORTED THE ASSESSMENT ORDERS AND PRAY ED FOR SETTING ASIDE OF THE IMPUGNED ORDERS PASSED BY CIT( APPEALS). 9. THE LD.AR CONTROVERTING THE SUBMISSIONS MADE BY THE LD. STANDING COUNSEL FOR THE REVENUE SUBMITTED THAT THE ASSESSING OFFICER INITIATED RE-ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION COLLECTED DURING JIC PROCEEDINGS. THE ASSESSING OFFICER DID NOT MAKE ANY INDEPENDENT INQUIRY AND WA S CARRIED AWAY BY THE STATEMENTS MADE BY THE ASSESSEES DURING THE PROCEEDINGS OF INQUIRY COMMISSION. NO ASSESSEE WAS EXAMINED BY THE ASSESSING OFFICER. THE ALLEGATIONS LEVELED AGAINST SHRI P.D.DINAKARAN J. WERE NOT SUPPORTED BY ANY COGENT EVIDENCE. THE LD.AR SUBMITTED THAT IN THE PAPER BOOK FILED BY THE REVENUE THERE IS A REPORT OF DISTRICT COLLECTOR AT PAGE NO. 52 TO 128 WHICH SHOWS THAT THERE WAS CULTIVATION OF SECONDARY/INTER -CROPS AND THERE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 18 WERE FRUIT TREES STANDING ON THE LAND SINCE 1996 AN D EVEN PRIOR TO THAT. THE LD.AR FURTHER SUBMITTED THAT A PERUSAL O F COLLECTORS REPORT MAKE IT CLEAR THAT THE LANDS OWNED BY THE AS SESSEES WERE CULTIVABLE. ON THE BASIS OF INFORMATION COMPILED I N COLLECTORS REPORT IT CAN BE SAFELY CONSTRUCTED THAT THE LANDS OF THE ASSESSEES CAN EASILY YIELD ` 9 000/- TO ` 10 000/- PER ACRE. WHEREAS THE ASSESSEES HAVE CLAIMED INCOME OF ` 4 000/- TO ` 5 000/- PER ACRE ONLY. THIS ITSELF SHOWS THAT THE ASSESSEES HAVE RE TURNED INCOME FROM AGRICULTURE LESS THAN THE COLLECTORS ESTIMATE . THE LAND WAS ACQUIRED BY SHRI P.D.DINAKARAN WAY BACK IN THE YEAR 1989 AND HE WAS ELEVATED AS HIGH COURT JUDGE IN THE YEAR 1996. ALL OTHER INDIVIDUAL ASSESSEES HAVE BEEN OWNING LAND SINCE LO NG AND HAVE BEEN SHOWING INCOME FROM AGRICULTURE IN THEIR RESPE CTIVE RETURNS SINCE EARLY 1990S. THE ASSESSING OFFICER HAS BEEN TAKING INCONSISTENT VIEWS IN RESPECT OF DIFFERENT ASSESSEES. IN THE CASE OF MR. JACOB WILLIAMS THE AO HAS ACCEPTED THE QUANTUM WITHOUT ANY ADDITIO N OR DIS- ALLOWANCE. IN CASE OF MR.RAJA RABIDEV AND MRS.PARIP OORNAM THE ASSESSING OFFICER HAS ACCEPTED AGRICULTURE INCOME. WHEREAS IN THE CASE OF DR.VINODINI DINAKARAN THE ASSESSING OF FICER HAS ACCEPTED AGRICULTURE INCOME IN SOME OF THE YEARS AN D IN SOME ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 19 OTHER YEARS HE HAS DECLINED. IN LATER YEARS THE ASSESSING OFFICER HAS ACCEPTED AGRICULTURE INCOME PARTLY. THE LAND O F ALL THE ASSESSEES ARE LOCATED AT SAME PLACE AND ARE CONTIGU OUS. THUS THE ASSESSING OFFICER IS INCONSISTENT WITH HIS FIND INGS. THE ASSESSEE HAS BEEN RECEIVING INCOME FROM SALE OF MAN GOES BY WAY OF CHEQUE. SOME OF THE VENDEES WERE EXAMINED B UT THEIR STATEMENTS WERE NOT PLACED ON RECORD BY ASSESSING O FFICER. THIS FACT HAS BEEN MENTIONED BY THE CIT(APPEALS) IN HIS ORDER. THUS THE ASSESSING OFFICER WAS NOT FAIR IN GIVING HIS FI NDINGS. THE LD.AR SUBMITTED THAT THE COMPANIES WERE FLOATED IN THE FINANCIAL YEAR (FY) 2005-06 TO TAKE THE BENEFIT OF HORTICULTURE LOAN SCHEME FLOATED BY THE GOVERNMENT. THE INDIVID UALS TRANSFERRED THEIR LANDS TO THE COMPANIES. THE LAND OWNERS WERE ALLOTTED SHARES IN THE COMPANY IN PROPORTION OF THE IR CONTRIBUTION OF LAND. THE COMPANIES THERE AFTER LEASED THE SAME LA ND TO THE ASSESSEES. AS FAR AS THE ISSUE OF GIFTS IS CONCERN ED SHRI JACOB WILLIAMS HAS NO CHILDREN OF HIS OWN. THEREFORE HE MADE GIFTS TO THE DAUGHTERS OF JUSTICE P.D.DINAKARAN AND DR.VINOD INI DINAKARAN. TO ASCERTAIN THE GENUINENESS OF GIFTS THREE CONDIT IONS ARE REQUIRED TO BE SATISFIED; VIZ: ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 20 I. CREDITWORTHINESS OF THE DONOR; II. IDENTITY OF THE DONOR; AND III. GENUINENESS OF THE GIFT/TRANSACTION IN THE INSTANT CASE ALL THESE CONDITIONS ARE SATIS FIED. THE LD.AR OF THE ASSESSEE STRONGLY SUPPORTED THE FINDINGS OF THE CIT(APPEALS) ON MERITS AND PRAYED FOR DISMISSING THE APPEALS OF THE REVENUE. 10. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AT LENGTH AND HAV E PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONS IDERED THE EXTRACTS OF THE PAPER BOOK REFERRED TO AS WELL AS THE JUDGMENTS RELIED ON BY BOTH THE SIDES. FOR THE SAKE OF BREVI TY THE FACTS NARRATED HEREIN ABOVE ARE NOT REPEATED AGAIN. BEF ORE PROCEEDING WITH THE MERITS OF THE APPEALS WE TAKE UP THE OBJE CTIONS RAISED BY THE ASSESSEES WITH REGARD TO RE-OPENING OF ASSESSME NT. THE ONLY OBJECTION RAISED BY THE ASSESSEE IN RESPECT OF RE-O PENING IS THAT PROCEEDINGS U/S.147 HAVE BEEN INITIATED ON THE BASI S OF INFORMATION NOT PROCURED FROM AUTHORIZED SOURCE. RE-ASSESSMENT PROCEEDINGS ARE BAD IN LAW AS THERE ARE NO REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 21 11. WE DO NOT FIND FORCE IN THE ARGUMENT OF THE LD. AR. IT IS A WELL SETTLED LAW THAT FOR INITIATING RE-ASSESSMENT PROCE EDINGS THE SOURCE OF INFORMATION IS NOT RELEVANT. IT IS THE I NFORMATION AND ITS AUTHENTICITY THAT MATTERS. IF THE ASSESSING OFFICE R HAS RELIABLE INFORMATION AND ON THE BASIS OF SAID INFORMATION HE HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT TH E ASSESSING OFFICER IS WELL WITHIN HIS JURISDICTION TO INITIATE RE-ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE ORIGINAL ASSESSMENT IN RESPECT OF ALL THE ASSESSEES WERE COMPLETED U/S.143(1). THE ASSESSING OFFICER HAD NO OCCASION TO ANALYSE THE TRANSACTIONS AND FORM AN Y OPINION. IT WAS ONLY AFTER THE RECEIPT OF INFORMATION IN THE FO RM OF DATA COLLECTED BY JIC THAT THE ASSESSING OFFICER INITIAT ED RE-ASSESSMENT PROCEEDINGS. AFTER EXAMINING THE INFORMATION RECEI VED THE ASSESSING OFFICER MIGHT HAVE REASONS TO BELIEVE THA T INCOME HAS ESCAPED ASSESSMENT. THE HON'BLE MADRAS HIGH COURT I N THE CASE OF RAYALA CORPORATION PVT. LTD. (SUPRA) HAS HELD: 47. IN TERMS OF SUB SECTION (1D) INSERTED IN SECTI ON 143 BY FINANCE ACT 2012 W.E.F. 01.07.2012 NOTWITHSTANDI NG ANYTHING IN SUB SECTION (1) OF SECTION 143 OF THE I .T. ACT PROCESSING OF RETURN SHALL NOT BE NECESSARY WHERE A NOTICE IS ISSUED UNDER SECTION 143(2) OF THE I.T. ACT. IT IS ONLY UNDER ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 22 SECTION 143(2) OF THE I.T. ACT THE ROLE OF THE ASS ESSING OFFICER COMES IN. THE INTIMATION GIVEN UNDER SECTION 143(1) (A) OF THE I.T. ACT IS WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 143(2) OF THE I.T. ACT AND THOUGH THE INTIMATION IS DEEMED TO BE A DEMAND IT DOES NOT FORECLOSE THE RIGHT OF THE ASSE SSING OFFICER TO PROCEED UNDER SECTION 143(2) OF THE I.T. ACT. IT IS TO BE NOTED THAT THE WORD ASSESSING OFFICER IS CONSPIC UOUSLY ABSENT IN SECTION 143(1) OF THE I.T.ACT. THE RESULT ANT POSITION IS MADE CLEAR WHEN WE READ SECTION 143(3) OF THE I .T. ACT. THUS THE PROCESS OF ASSESSMENT IN THE REAL SENSE OF THE TERM COMMENCES ONLY WHEN NOTICE IS ISSUED UNDER SECTION 143(2) OF THE I.T. ACT. HERE TOO NOTICE HAS TO BE SERVED O N THE ASSESSEE WITHIN THE PERIOD OF ONE YEAR FROM THE END OF THE MONTH IN WHICH THE RETURN IS FURNISHED. THUS IF N O NOTICE IS SERVED WITHIN THE STIPULATED PERIOD OF TWELVE MONTH S THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 OF THE I.T . ACT COME TO AN END. THUS THOUGH TECHNICALLY THERE IS N O ASSESSMENT FRAMED IN SUCH A CASE YET THE PROCEEDIN GS AS FAR AS SECTION 143 OF THE I.T.ACT IS CONCERNED THE SAM E STAND TERMINATED. THOUGH THE PROCEDURE OF CENTRALISED PRO CESSING UNDER SUB SECTION 1A OF SECTION 143(1) OF THE I.T. ACT FINDS PLACE UNDER THE HEADING 'ASSESSMENT' UNDER SECTION 143 OF THE I.T. ACT THERE APPEARS TO BE A CLEAR DISTINCTI ON AND DICHOTOMY IN PROCEDURE. BETWEEN APRIL 1 1998 AND MAY 31 1999 SENDING OF AN INTIMATION UNDER SECTION 143(1) (A) OF THE I.T. ACT WAS MANDATORY. 48. WHILE MAKING AN ASSESSMENT THE ASSESSING OFFIC ER IS FREE TO MAKE ANY ADDITION AFTER GRANT OF OPPORTUNITY TO THE ASSESSEE BY MAKING ADJUSTMENTS UNDER THE FIRST PROVISO TO SE CTION 143(1)(A) OF THE I.T. ACT NO ADDITION WHICH IS IMP ERMISSIBLE BY ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 23 THE INFORMATION GIVEN IN THE RETURN COULD BE MADE B Y THE ASSESSING OFFICER. THIS IS SO BECAUSE NO OPPORTUNIT Y IS AFFORDED TO THE ASSESSEE UNDER SECTION 143(1)(A) OF THE I.T. ACT AND THE ASSESSING OFFICER MERELY PROCEEDS TO A CCEPT THE RETURN AND MAKING PERMISSIBLE ADJUSTMENTS ONLY. THU S AN ASSESSMENT UNDER SECTION 143(3) OF THE I.T. ACT IS BASED ON A DIFFERENT METHODOLOGY WHICH HAS TO BE BORNE IN MIND WHILE CONSIDERING THE SCOPE PURPOSE AMBIT AND IMPORT OF SECTION 147 OF THE I.T. ACT. 49. AS HELD BY THE HON'BLE SUPREME COURT THE ACKNOWLEDGMENT IS NOT DONE BY ANY ASSESSING OFFICER BUT MOSTLY BY MINISTERIAL STAFF AND IT CAN HARDLY BE SA ID THAT ANY ASSESSMENT IS DONE THEREIN BY THEM. THEREFORE AS P ER THE SCHEME UNDER SECTION 143(1)(A) OF THE I.T. ACT THE SAME CANNOT BE TREATED AS AN ORDER OF ASSESSMENT IN THE TRUE SENSE OF ITS TERM IT BEING A SUMMARY PROCEDURE. THE INTIM ATION UNDER SECTION 143(1)(A) OF THE I.T. ACT IS DEEMED TO BE A NOTICE OF DEMAND UNDER SECTION 156 OF THE I.T. ACT FOR THE P URPOSE OF FACILITATING THE MACHINERY PROVISIONS RELATING TO R ECOVERY OF TAX. THUS THE PURPOSE OF SUCH INTIMATION IS ONLY FOR RE COVERY OF THE TAX AND NO OTHER EXPANSIVE MEANING CAN BE GIVEN TO SUCH DEEMING PROVISION. THEREFORE THE HON'BLE SUPREME C OURT HELD THAT THERE BEING NO ASSESSMENT UNDER SECTION 1 43(1)(A) OF THE I.T. ACT THE QUESTION OF CHANGE OF OPINION AS CONTENDED DOES NOT ARISE. 50. THE DIVISION BENCH OF THIS COURT IN THE CASES O F WCI (MADRAS) (P) LTD. V. ASSISTANT COMMISSIONER OF INCO ME-TAX REPORTED IN [2010] 324 ITR 181(MAD) AND COMMISSION ER OF INCOME-TAX V. RAVINDRAN PRABHAKAR REPORTED IN [2010 ] 326 ITR ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 24 363 HELD THAT THERE WAS ONLY PROCESSING UNDER SECT ION 143(1) OF THE I.T. ACT SUCH INTIMATION CANNOT BE TREATED AS ASSESSMENT ORDER AND REASSESSMENT WAS HELD TO BE VA LID IN SUCH CASES AND HENCE THE ARGUMENT OF CHANGE OF OPIN ION WOULD NOT APPLY. AS HELD BY THE HON'BLE SUPREME COU RT IN THE CASE OF ASST. CIT V. RAJESH JHAVERI STOCK BROKERS P . LTD. [2007] 291 ITR 500(SC) THE LEGISLATIVE INTENT IS V ERY CLEAR FROM THE USE OF THE WORD INTIMATION AS SUBSTITUTED FOR ASSESSMENT THAT TWO DIFFERENT CONCEPTS EMERGED. 12. THE LD.AR ON THE OTHER HAND HAS PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT (SUPRA). THE HON'BLE HIGH COURT IN THE PECULIAR FACTS OF THAT CASE OBSERVED THAT REASONS TO BELIEVE CA NNOT HAVE TWO MEANINGS ONE APPLICABLE IN ASSESSMENT MADE U/S.143( 3) AND ANOTHER APPLICABLE U/S.143(1). IN ORIENT CRAFT NOT ICE U/S.148 OF THE ACT WAS ISSUED FOR REOPENING ASSESSMENT ON THE GROU ND THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEMNT. WHILE RECORDING THE REASONS FOR REOPENING THE ASSESSING OFFICER STATED THAT ON GOING THROUGH THE RETURN OF INCOME IT REVEALED THAT WHILE DEDUCTING 90% OF OTHER INCOME FROM THE PROFITS OF T HE BUSINESS PREMIUM ON SALE OF QUOTA INCLUDED IN THE SALE WAS NOT CONSIDERED. THE HONBLE COURT AFTER DISCUSSION VARIOUS JUDGMENT S RENDERED BY THE HON'BLE SUPREME COURT OF INDIA HELD THAT THE RE ASON DISCLOSED ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 25 BY THE ASSESSING OFFICER STATING ON GOING THROUGH THE RETURN OF INCOME DOES NOT SATISFY THE EXPRESSION REASON TO BELIEV E. THUS IN THE SAID CASE RE-ASSESSMENT PROCEEDINGS WERE IN ITIATED ON THE BASIS OF INFORMATION GIVEN IN THE RETURN NO TANGIB LE MATERIAL CAME TO THE POSSESSION OF THE ASSESSING OFFICER AFTER TH E ISSUE OF INTIMATION U/S.143(1). WHEREAS IN THE PRESENT CASE ORIGINAL ASSESSMENT W AS MADE U/S.143(1). THE PROVISIONS OF SECTION 147 FOR RE-OPENING WERE INVOKED AFTER THE INFORMATION COLLECTED BY JIC WAS PASSED ON TO THE ASSESSING OFFICER OF THE ASSESSEE. THE ASSE SSING OFFICER HAD SUBSTANTIAL MATERIAL TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN THIS BACKGROUND WE ARE OF CONSIDER ED VIEW THAT THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT CANNOT BE APPLIED IN THE CASE OF ASSESSEE. IN VIEW OF THE WELL SETTLED LAW AND THE FACTS OF THE CASE THE CROSS-OBJECTIONS FILED BY THE ASSE SSEE ARE DISMISSED AND THE RE-OPENING OF ASSESSMENT IS HELD TO BE JUSTIFIED. 13. ITA NO.1492/MDS/2013 : THE ASSESSING OFFICER IN RE-ASSESSMENT PROCEEDINGS MADE ADDITION OF ` 43.26 LAKHS IN THE INCOME RETURNED BY THE ASSESSEE. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 26 THE ORIGINAL LIST OF ADDITIONS MADE BY THE ASSESSIN G OFFICER IS AS UNDER: I. ASSESSEES CLAIM OF AGRICULTURE INCOME WAS DIS- ALLOWED AND AGRICULTURAL RECEIPTS OF ` 2 77 310/- WERE TREATED AS INCOME FROM OTHER SOURCES; II. GIFTS FROM SHRI JACOB WILLIAMS ` 1 05 000/- DIS-ALLOWED AND TREATED AS INCOME FROM OTHER SOURCES; III. AGRICULTURAL INCOME OF WIFE OF THE ASSESSEE ` 2 82 750/- ADDED IN THE TOTAL INCOME OF THE ASSESSEE; IV. GIFTS RECEIVED BY ASSESSEES WIFE FROM HER BROT HER ` 15 00 000/- ADDED IN THE INCOME OF THE ASSESSEE; V. CASH DEPOSITS IN THE ACCOUNT OF ASSESSEES WIFE ` 8 42 000/- ADDED IN THE INCOME OF THE ASSESSEE; VI. CASH DEPOSITS IN THE ACCOUNTS OF ASSESSEES DAU GHTERS ( ` 2 25 000 AND ` 3 50 600/-) ADDED IN THE INCOME OF THE ASSESSEE; VII. AGRICULTURE INCOME OF ASSESSEES BROTHER-IN-L AW ` 3 60 820/- MOTHER-IN-LAW ` 3 18 750/- AND ASSESSEES SISTERS HUSBAND ` 49 330/- WERE ADDED IN THE INCOME OF THE ASSESSEE; ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 27 IN FIRST APPEAL BY ASSESSEE THE CIT(APPEALS) DELET ED ALL THE ADDITIONS. NOW THE REVENUE HAS ASSAILED THE FINDIN GS OF CIT(APPEALS) IN ITS APPEAL BEFORE THE TRIBUNAL. 13.1 THE FIRST ISSUE RAISED IN THE APPEAL IS WITH R EGARD TO AGRICULTURE INCOME. THE REVENUE HAS TREATED THE AG RICULTURE INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCE S. THE LD.STANDING COUNSEL FOR THE REVENUE HAS CONTENDED T HAT THE LAND OWNED BY THE ASSESSEE IS NOT CULTIVABLE AND THUS C OULD NOT PRODUCE HUGE YIELD AS CLAIMED BY THE ASSESSEE. IT IS NOT DISPUTED THAT THE ASSESSEE OWNS LAND MEASURING 48.38 ACRES. AS PER REVENUE RECORDS MAJORITY OF LANDS ARE WET LANDS. THE REVENUE HAS PLACED ON RECORD DISTRICT COLLECTORS REPORT AT PAGE 52 TO 128 OF THE PAPER BOOK. AS PER THE REPORT THE LAND OF THE ASSESSEE IS CULTIVABLE IRRIGATED HAVE HIGH YIELDING FRUIT BEA RING TREES AND THUS HAVE POTENTIAL OF GENERATING INCOME ` 9 000/- TO ` 10 000/- PER ACRE. A FURTHER PERUSAL OF COLLECTORS REPORT SHOWS THAT MANGO AMLA SAPOTA AND GUAVA TREES ARE STANDING ON THE LAND OWN ED BY THE ASSESSEE. THE COLLECTOR IN HIS REPORT HAS FURTHER CONFIRMED INTER- CROP CULTIVATION. THUS THE STAND OF THE ASSESSEE THAT HE IS GETTING AGRICULTURE YIELD OF ` 4 000 TO ` 5 000/- PER ACRE IS JUSTIFIED. THE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 28 LD.STANDING COUNSEL FOR THE REVENUE HAS NOT BEEN AB LE TO CONTROVERT THE OBSERVATIONS GIVEN IN THE SURVEY REP ORT WHICH HAS BEEN PLACED ON RECORD IN THE FORM OF PAPER BOOK BY REVENUE ITSELF. THE CIT(APPEALS) WHILE GIVING WELL REASONE D FINDINGS ON THE ISSUE HAS HELD THAT THE ASSESSING OFFICERS CONCLUS IONS ARE ONLY PRESUMPTIONS AND ARE NOT BASED ON ANY MATERIAL FACT S. WE SEE NO REASON TO DIFFER WITH THE FINDINGS OF CIT(APPEALS). THIS GROUND OF APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 13.2 THE NEXT ISSUE IN APPEAL IS WITH REGARD TO GIF T OF ` 1 05 000/- FROM MR.JACOB WILLIAMS. MR. WILLIAMS HAS CONFIRMED THE FACT OF MAKING GIFT. IT IS UNDISPUTED THAT THE DONAR AND T HE ASSESSEE ARE CLOSELY RELATED. THE GIFT HAS BEEN MADE BY WAY OF DEMAND DRAFT. THE DONOR HAS BEEN ABLE TO SHOW THE SOURCE OF INCOM E FOR MAKING THE GIFTS. SINCE THE ASSESSEE HAS BEEN ABLE TO SHOW THE SOURCE OF GIFT AND THE CREDITWORTHINESS OF THE DONOR HAS A LSO BEEN ESTABLISHED THE ASSESSING OFFICER HAS ACTED IN AN ARBITRARY MANNER & WITHOUT ANY JUSTIFICATION IN MAKING THE AD DITION OF GIFT AMOUNT AS INCOME FROM OTHER SOURCES. WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE CIT(APPEALS) ON THIS ISSUE. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 29 13.3 THE NEXT ISSUE IN APPEAL IS WITH REGARD TO ADD ITION OF AGRICULTURE INCOME OF DR.VINODINI DINAKARAN WIFE O F ASSESSEE IN THE INCOME OF ASSESSEE. THE ASSESSING OFFICER HAS INCLUDED THE INCOME OF DR.VINODINI DINAKARAN IN THE HANDS OF AS SESSEE ON THE GROUND THAT DR.VINODINI DINAKARAN DOES NOT HAVE IND EPENDENT SOURCE OF INCOME AS SHE HAILS FROM MODEST FAMILY. THE REVENUE HAS FAILED TO TAKE INTO CONSIDERATION THE FACT THAT DR.VINODINI DINAKARAN IS A QUALIFIED MEDICAL PRACTITIONER AND I S WORKING WITH CSI KALYANI HOSPITAL. THUS SHE IS HAVING INDEPEND ENT SOURCE OF INCOME. IT IS ALSO AN ADMITTED FACT THAT DR.VINODI NI DINAKARAN IS HAVING MORE THAN 29 ACRES OF AGRICULTURE LAND IN HE R NAME. THE SAID LAND IS CULTIVABLE AND SHE IS CARRYING ON AGRI CULTURE OPERATION THEREON. SHE IS HAVING MANGO ORCHED WITH 296 MANGO TREES OF HIGH YIELDING VARIETIES. THE CIT(APPEALS) IN HIS O RDER HAS CATEGORICALLY HELD THAT DR.VINODINI DINAKARAN IS HA VING INDEPENDENT SOURCE OF INCOME FROM HER PROFESSION AS WELL AS AGRICULTURE INCOME. THE LD.COUNSEL FOR THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF CIT(APPEALS). T HUS IN VIEW OF THE UNREBUTTED FINDINGS THE ARGUMENTS RAISED BY TH E LD. STANDING COUNSEL THAT THE WIFE OF ASSESSEE IS NOT HAVING IND EPENDENT SOURCE OF INCOME DOES NOT HOLD GROUND. THE CIT(APP EALS) HAS ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 30 RIGHTLY HELD THAT THE ASSESSING OFFICERS ACTION OF ASSESSING DR.VINODINI DINAKARANS AGRICULTURE INCOME IN THE H ANDS OF THE ASSESSEE IS ONLY ON PRESUMPTIONS AND NOT BASED ON A NY MATERIAL FACTS AND EVIDENCES. WE CONFIRM THE FINDINGS OF CI T(APPEALS) ON THE ISSUE. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13.4 THE NEXT GROUND ON WHICH THE REVENUE HAS ASSAI LED THE FINDINGS OF CIT(APPEALS) IS WITH REGARD TO GIFTS RE CEIVED BY WIFE OF THE ASSESSEE FROM HER BROTHER SHRI RAJA RABIDEV. T HE ASSESSING OFFICER MADE ADDITION OF ` 15 00 000/- IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF GIFTS RECEIVED BY HIS WIFE FROM HER B ROTHER. THE WIFE OF THE ASSESSEE IS AN INDEPENDENT ASSESSEE HAVING S EPARATE PERMANENT ACCOUNT NUMBER (PAN) AND HAS BEEN FILING HER SEPARATE RETURN OF INCOME. SHE IS INDEPENDENTLY AS SESSED TO TAX. THE TOTAL SUM OF ` 15 00 000/- HAS BEEN GIFTED BY HER BROTHER RAJA RABIDEV ON DIFFERENT DATES I.E. ` 7 00 000/- ON 07-01-2004 ` 3 00 000/- ON 16-03-2004 AND ` 5 00 000/- ON 08-01-2004. HE IS A CLOSE BLOOD RELATIVE OF DR.VINODINI DINAKARAN. T HE DONOR HAS BEEN ABLE TO EXPLAIN THE SOURCE OF GIFTS. ONCE THE IDENTITY AND THE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 31 CREDITWORTHINESS OF THE DONOR IS ESTABLISHED THERE IS NO REASON TO DOUBT THE VERACITY OF THE GIFT. IN VIEW OF THE FACT THAT THE WIFE OF THE ASSESSEE I S FILING HER SEPARATE RETURN OF INCOME AND THE FACT THAT IT HAS BEEN CLEARLY ESTABLISHED THAT THE GIFTS WERE GIVEN BY SHRI RAJA RABIDEV TO HER SISTER-DR.VINODINI DINAKARAN THERE IS NO QUESTION OF MAKING ADDITION OF THE SAID GIFTS IN THE HANDS OF THE ASSE SSEE. THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY ASSESSING OFFICER . THEREFORE THIS GROUND OF APPEAL OF REVE NUE IS DISMISSED BEING DEVOID OF MERIT. 13.5 THE NEXT ISSUE RAISED IN THE APPEAL BY THE REV ENUE IS WITH REGARD TO CASH DEPOSITS IN THE ACCOUNT OF DR.VINODI NI DINAKARAN WIFE OF THE ASSESSEE. THE ASSESSING OFFICER HAS MA DE ADDITION OF ` 8 42 000/- AS UN-EXPLAINED DEPOSIT IN THE BANK ACCO UNT OF DR.VINODINI DINAKARAN. THE ASSESSING OFFICER HAS M ADE SUBSTANTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE AS WELL AS HIS WIFE. THE ASSESSING OFFICER IN THE CASE OF DR. VINODINI DINAKARAN FOR THE AY.2004-05 HAS TREATED CASH DEPOS ITS/PAYMENTS OF ` 7 98 000/- OUT OF ` 8 42 000/- AS INCOME FROM OTHER SOURCES AND HAS MADE ADDITION OF THE SAME. THE WIFE OF ASSESSE E IN HER RETURN ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 32 OF INCOME HAS EXPLAINED THE SOURCE OF SAID DEPOSIT. SINCE THE WIFE OF THE ASSESSEE IS AN INDEPENDENT INCOME TAX A SSESSEE AND THIS AMOUNT IS REFLECTED IN HER RETURN OF INCOME T HERE IS NO QUESTION OF MAKING ADDITION OF THE SAME AMOUNT IN T HE RETURN OF INCOME OF THE ASSESSEE. WE DO NOT FIND ANY MERIT I N THIS GROUND OF APPEAL OF THE REVENUE. THERE IS NO REASON TO INTER FERE WITH THE FINDINGS OF CIT(APPEALS) ON THE ISSUE THUS THIS G ROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13.6 THE NEXT ISSUE IN APPEAL IS WITH REGARD TO CAS H DEPOSITS IN THE BANK ACCOUNTS OF DAUGHTERS OF THE ASSESSEE MS. AMUDHA DINAKARAN ( ` 2 25 000/-) AND MS.AMIRTHA DINAKARAN ( ` 3 50 600/-). THE DAUGHTERS OF THE ASSESSEE HAVE RECEIVED GIFTS O F THE AFORESAID AMOUNT FROM SHRI JACOB WILLIAMS. IT IS AN UN-DISPU TED FACT THAT THE DONOR AND DONE ARE CLOSE RELATIVES. THE DONOR HAS CONFIRMED THE GIFT AND THE DONOR HAS ALSO BEEN ABLE TO SHOW THE S OURCE OF INCOME FOR MAKING SUCH GIFTS. SINCE THE GIFTS AND THE SOURCE OF GIFTS HAVE BEEN FULLY ESTABLISHED WE FIND NO REASO N TO ADD GIFT AMOUNTS IN THE INCOME OF THE ASSESSEE. THIS GROUND OF APPEAL OF THE REVENUE IS THUS DISMISSED BEING WITHOUT MERIT. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 33 13.7 THE LAST ISSUE IN THIS APPEAL IS WITH REGARD T O ADDITION OF AGRICULTURE INCOME OF THE RELATIVES OF THE ASSESSEE I.E. SHRI RAJA RABIDEV SMT.M.G.PARIPOORNAM AND MR.JACOB WILLIAMS IN THE RETURN OF INCOME OF THE ASSESSEE. ALL THE THREE PE RSONS ARE INDEPENDENTLY ASSESSED TO TAX AND HAVE BEEN FILING SEPARATE RETURN OF INCOME REFLECTING AGRICULTURE INCOME OVER THE PERIOD OF TIME. ALL THE AFORESAID PERSONS ARE HAVING LAND-HO LDINGS IN THEIR INDIVIDUAL NAMES. THE LANDS WERE PURCHASED BY THEM WAY BACK IN 1980S AND 1990S. ALL THE AFORESAID PERSONS ARE CAR RYING AGRICULTURE OPERATIONS ON THEIR RESPECTIVE LANDS. NOTHING IS EMANATING FROM RECORDS THAT THE LAND CULTIVATED BY THESE PERSONS IS IN ANY WAY OWNED OR CONTROLLED BY THE ASSESSEE. THE REVENUE HAS NOT BEEN ABLE TO ESTABLISH ANY CREDIBLE REASON FOR MAKING ADDITION OF THE AGRICULTURE INCOMES EARNED BY THE A FORESAID PERSONS IN THE HANDS OF THE ASSESSEE. THE ASSESSIN G OFFICER IN THE CASE OF SHRI JACOB WILLIAMS IN RE-ASSESSMENT PR OCEEDINGS HAVE ACCEPTED HIS ENTIRE CLAIM OF AGRICULTURE INCOM E. ONCE THE CLAIM IS FOUND TO BE GENUINE IN THE HANDS OF A PART ICULAR ASSESSEE THE SAME AMOUNT CANNOT BE ADDED IN THE INCOME OF AN OTHER PERSON. IN THE CASE OF OTHER TWO PERSONS ALSO THE ASSESSING OFFICER HAS ACCEPTED PART OF AGRICULTURE INCOME AS GENUINE AND ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 34 ASSESSED THE REMAINING INCOME AS INCOME FROM OTHER SOURCES IN THEIR RESPECTIVE RETURN. IF THE INCOME IS ASSESSED TO TAX IN THE HANDS OF ONE PERSON THE SAME INCOME CANNOT BE BROU GHT TO TAX ON PROTECTIVE BASIS IN THE HANDS OF SOME OTHER PERS ON. WE CONCUR WITH THE REASONED FINDINGS OF THE CIT(APPEALS) IN D ELETING THE ADDITION AND UPHOLD THE SAME. ACCORDINGLY THIS G ROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. IN RESULT THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 14. ITA NO.1857 TO 1868/MDS/2013 (AYS.2007-08 TO 2 009-10) : THE ABOVE APPEALS BY THE REVENUE ARE AGAINST THE CO MPANIES: I. M/S.CANAAN GARDENS (P) LTD. II. M/S.AMUDHAM GARDENS (P) LTD. III. M/S.AMIRTHAM GARDENS (P) LTD. IV. M/S.DEAR LANDS (INDIA) (P) LTD. 14.1 IN ALL THE APPEALS THE REVENUE HAS RAISED COM MON ISSUE. THE ASSESSING OFFICER HAD DIS-ALLOWED PART OF AGRI CULTURE INCOME RETURNED BY THE ASSESSEE-COMPANIES AND TREATED THE SAME AS INCOME FROM OTHER SOURCES/UN-EXPLAINED INCOME. TH E ASSESSING ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 35 OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE COMPANIES HAVE SHOWN SUBSTANTIAL AMOUNT OF AGRICULTURE INCOME IN THEIR RESPECTIVE RETURNS OF I NCOME FOR THE AYS.2007-08 2008-09 & 2009-10. THE ASSESSING OFFI CER HELD THAT THE AGRICULTURE INCOME SHOWN BY THE ASSESSEE COMPAN IES ARE EXCESSIVE AND UN-REASONABLE AND HENCE TREATED THE PART OF AGRICULTURE INCOME AS INCOME FROM OTHER SOURCES. THE DETAILS OF AGRICULTURE INCOME RETURNED BY THE COMPANIES AND TH E DIS- ALLOWANCE MADE BY THE ASSESSING OFFICERS IN CASE OF RESPECTIVE COMPANIES ARE AS UNDER: NAME OF THE COMPANY ASSESSING OFFICER ASST. YEAR AGRI. INCOME SHOWN BY THE COMPANY AGRI. INCOME ACCEPTED BY THE ASSESSING OFFICER TREATED AS INCOME FROM OTHER SOURCES M/S.DEARLANDS (I) P.LTD. ITO COMPANY WARD-I(1) CHENNAI 2007-08 5 11 710 2 80 542 2 31 168 2008-09 8 00 110 2 99 600 5 00 510 2009-10 11 48 800 3 75 780 7 73 020 M/S.CANAAN GARDENS P. LTD. ITO COMPANY WARD-I(1) CHENNAI 2007 - 08 7 86 000 1 5 3 330 6 32 670 2008-09 11 06 300 3 59 153 7 47 147 2009-10 11 71 300 3 58 810 8 12 490 M/S.AMUDHAM GARDENS P. LTD. ITO COMPANY WARD-I(1) CHENNAI 2007-08 7 86 000 (-)4 68 032 12 54 032 2008 - 09 5 27 350 ( - )8 85 040 14 12 390 2009-10 13 14 160 (-)3 36 135 16 50 295 M/S.AMIRTHAM GARDENS P. LTD. ITO COMPANY WARD-I(1) CHENNAI 2007-08 75 800 (-)11 54 886 12 30 686 2008-09 4 03 973 (-)9 13 471 13 17 444 2009-10 11 36 106 (-)2 80 484 14 16 590 ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 36 THE COMPANIES WERE FLOATED IN THE YEAR 2005 AND THE LANDS WERE TRANSFERRED TO THE ABOVE COMPANIES BY THE RELATIVES OF SHRI P.D.DINAKARAN. THE EXTENT OF LAND TRANSFERRED BY V ARIOUS PERSONS TO THESE COMPANIES AND CROPS GROWN THEREON ARE AS U NDER: NAME OF COMPANY LAND TRANSFERRED BY EXTENT OF LAND TRANSFERRED TO CO. (IN ACRES) CROPS GROWN M/S.CANAAN GARDENS P.LTD. K. RAJA RABIDEV 20.42 27.85 48.27 MANGO INTER CROP AND VEGETABLES SHANTI SANGAMITHRA M/S.AMUDHAM GARDENS P.LTD. JACOB WILLAMS 16.49 04.75 20.83 15.91 57.98 MANGO GROUND NUT VEGETABLES AND PADDY DR. PKA CHANDRASEKAR M.G. PARIPOORNAM K. RAJA RABIDEV M/S.AMIRTHAM GARDENS P.LTD. DR. PKA CHANDRASEKAR 13.72 16.59 18.21 03.34 51.86 MANGO INTER CROP PADDY GROUND NUT AND VEGETABLES JACOB WILLAMS M.G. PARIPOORNAM K. RAJA RABIDEV M/S.DEAR LANDS INDIA P.LTD. JACOB WILLAMS 13.42 08.49 18.37 40.28 VEGETABLES MANGO AND GROUND NUT K. RAJA RABIDEV SHANTI SANGAMITHRA THE SHARES IN COMPANIES WERE ALLOTTED TO THE PERSO NS WHO TRANSFERRED THEIR LAND TO THE COMPANIES. THE SHARE S WERE ALLOTTED IN THE PROPORTION OF LANDHOLDINGS TRANSFERRED. SUB SEQUENTLY THE COMPANIES LEASED OUT AGRICULTURAL LANDS TO SOME OF ITS SHAREHOLDERS. M/S.CANAAN GARDENS P. LTD. LEASED OU T ITS LAND TO ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 37 SMT.M.G.PARIPOORNAM M/S.AMUDHAM GARDENS P.LTD. LEA SED OUT ITS LAND TO SHRI K.RAJA RABIDEV AND M/S.DEAR LANDS (INDIA) P.LTD. LEASED OUT ITS LAND TO SHRI JACOB WILLIAMS. AS PER THE LEASE AGREEMENTS THE PROCEEDS OF AGRICULTURE PRODUCE FRO M THE LANDS WAS TO BE SHARED BETWEEN THE COMPANY AND THE LESSEE S IN THE RATIO OF 1:2. SINCE THE ASSESSING OFFICER IN CASE OF THE COMPANIES AND THE LESSEES WERE DIFFERENT THE ASSESSING OFFIC ERS FOLLOWED DIFFERENT CRITERIA FOR ASSESSING AGRICULTURE INCOME OF THE COMPANIES AND THE ASSESSEES. THE SAME IS EVIDENT FROM THE TA BLE GIVEN AS UNDER: NAME OF THE INDIVIDUAL (LESSEES OF THE LANDS OWNED BY THE COMPANIES) ASSESSING OFFICER ASST. YEAR AGRI. INCOME SHOWN BY THE LESSEE AGRI. INCOME ACCEPTED BY AO TREATED AS INCOME FROM OTHER SOURCES SHRI J. WILLIAMS [LESSEE FOR THE LANDS OF M/S.DEARLANDS (I) P. LTD] ITO COMPANY WARD-I(6) VELLORE 2007-08 9 92 500 9 92 500 0 2008-09 9 46 418 9 46 418 0 2009-10 13 52 100 13 52 100 0 SMT. M.G. PARIPOORNAM [LESSEE FOR THE LANDS OF M/S.CANAAN GARDEN P LTD] ITO SALARY WARD-I(3) COIMBATOR E 2007-08 9 74 926 5 77 005 3 97 921 2008-09 13 69 065 NOT ASSESSD 2009-10 13 69 065 3 48 465 10 20 600 SHRI RAJA RABIDEV [LESSEE FOR THE LANDS OF M/S.AMUDHAM GARDENS P LTD] ITO SALARY WARD-I(5) COIMBATOR E 2007-08 0 NOT ASSESSD 2008-09 45 000 NOT ASSESSD 2009-10 6 63 550 0 6 63 550 ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 38 A PERUSAL OF THE ABOVE TABLE SHOWS THAT THE ASSESS ING OFFICER OF SHRI J.WILLIAMS WHO IS THE LESSEE OF M/S.DEAR LAND (INDIA) P.LTD. IN RE-ASSESSMENT PROCEEDINGS AFTER VERIFICATION OF THE DETAILS ACCEPTED THE AGRICULTURE INCOME DISCLOSED BY SHRI W ILLIAMS IN HIS RETURN OF INCOME FOR THE AYS.2007-08 2008-09 AND 2 009-10. THE REVENUE HAS PLACED ON RECORD DISTRICT COLLECTORS R EPORT WHICH IS BASED ON A DETAILED SURVEY OF AGRICULTURAL LAND CON DUCTED BY THE OFFICIALS OF HORTICULTURE DEPARTMENT AGRICULTURE D EPARTMENT AND REVENUE DEPARTMENT. A PERUSAL OF REPORT SHOWS THAT THE LAND OWNED BY THE ASSESSEE COMPANIES AND OTHER PERSONS A RE WET LANDS WITH IRRIGATION FACILITIES. THE LANDS ARE U NDER CULTIVATION WITH INTER-CROP AND HIGH YIELDING FRUIT TREES VIZ. MANG O GUAVA SAPOTA ETC. WITH AGE 5 YEARS TO 20 YEARS. THE AGRICULTUR E LAND OF ALL THE COMPANIES ARE LOCATED IN THE SAME AREA AND ARE CONT IGUOUS. HAVE SAME TYPE OF SOIL AND IRRIGATION FACILITIES T HE CROPS GROWN ARE ALSO THE SAME THE QUALITY AND YIELD OF CROPS IS MO RE OR LESS THE SAME. THEREFORE THE AGRICULTURE INCOME DERIVED BY ONE ASSESSEE IS INDICATIVE OF THE AGRICULTURE INCOME DERIVED BY THE OTHERS. THE ASSESSING OFFICER OF SHRI JACOB WILLIAMS BEFORE ACC EPTING THE RETURNED INCOME CONDUCTED FIELD ENQUIRIES RECORDE D THE STATEMENT OF NEIGHBORING FARMERS AND ULTIMATELY CAM E TO THE ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 39 CONCLUSION THAT APART FROM MANGOES INTER CROPS AN D VEGETABLES ARE GROWN ON THE AGRICULTURE LAND OWNED BY THE LESS OR COMPANY. BASED ON THE ENQUIRIES AND REPORTS THE ASSESSING O FFICER OF SHRI JACOB WILLIAMS CAME TO THE CONCLUSION THAT THE INCO ME DISCLOSED BY THE ASSESSEE IS REASONABLE AND GENUINE. THE ASS ESSING OFFICER ALSO ACCEPTED THE YIELD AND RATES OF MANGOE S BASED ON THE REPORT OF DISTRICT HORTICULTURE AND REVENUE DEPARTM ENTS. ONCE THE AGRICULTURE INCOME FROM THE ADJACENT LAND IS ACCEPT ED THERE IS NO QUESTION AS TO WHY THE AGRICULTURE INCOME FROM THE CONTIGUOUS PARCEL OF LAND SHOULD NOT BE ACCEPTED. WE ARE IN F ULL AGREEMENT WITH THE DETAILED FINDINGS OF THE CIT(APPEALS) IN D ELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER IN RESPECT OF ALL THE FOUR COMPANIES. 14.2 THE NEXT ARGUMENT RAISED BY THE LD.COUNSEL FOR THE REVENUE IS THAT ASSESSMENTS IN THE CASE OF COMPANIES HAVE B EEN MADE ON PROTECTIVE BASIS. SUBSTANTIVE ASSESSMENTS HAVE TO BE MADE IN THE HANDS OF SHRI P.D.DINAKARAN AS HE WAS THE PERSON C ONTROLLING AFFAIRS OF THE COMPANIES. IN SUPPORT OF HIS SUBMIS SIONS THE LD.STANDING COUNSEL REFERRED TO THE STATEMENTS OF S HRI RAJA RABIDEV SHRI G.PARI CHARTERED ACCOUNTANT AND SHRI J.WILLIAMS ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 40 RECORDED BEFORE JIC AND U/S.131 OF THE ACT BEFORE I NCOME TAX AUTHORITIES. WE HAVE EXAMINED THE STATEMENTS REFERRED TO BY THE LD.STANDING COUNSEL. FROM PERUSAL OF THE STATEMENT S IT IS NOT MADE OUT THAT THE INCOME OF THE COMPANIES IS IN ANY MANNER ASSESSABLE IN THE HANDS OF SHRI P.D.DINAKARAN. EXC EPT FROM THE STATEMENTS THE REVENUE HAS NOT BEEN ABLE TO BRING ON RECORD ANY DOCUMENT TO SUBSTANTIATE THAT SHRI DINAKARAN WAS TH E PERSON CONTROLLING THE AFFAIRS AND MANAGEMENT OF THE COMPA NIES. THERE IS ABSOLUTELY NO MATERIAL TO SUGGEST THAT THE AGRICULT URE INCOME OF THE COMPANIES IS IN FACT THE INCOME OF SHRI DINAKARAN. THE LIST OF PERSONS WHO HAVE TRANSFERRED THEIR LANDS TO THE ASS ESSEE- COMPANIES HAVE BEEN GIVEN ELSEWHERE IN THE ORDER. THE LANDS WERE PURCHASED BY THE SAID PERSONS IN THEIR OWN NAM ES WAY BACK IN LATE 1980S AND EARLY 1990S I.E. THE PERIOD P RIOR TO SHRI P.D.DINAKARAN WAS APPOINTED AS JUDGE OF THE HIGH CO URT. THE LANDS WERE TRANSFERRED BY THE LANDOWNERS TO THE COM PANIES IN LIEU OF SHARES IN THE SAID COMPANIES. THEREAFTER THE C OMPANIES LEASED OUT THEIR LANDS. AS PER LEASE AGREEMENTS T HE INCOME IS TO BE SHARED BETWEEN THE COMPANY (LESSOR) AND THE LESS EE IN THE RATIO OF 1:2. THE LESSEES HAVE DECLARED THEIR INCO ME IN THEIR ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 41 RESPECTIVE RETURN OF INCOME AND THE COMPANIES BEING SEPARATE LEGAL ENTITIES ARE ASSESSABLE TO TAX INDEPENDENTLY. THE COMPANIES HAVE FILED THEIR RETURN OF INCOME DISCLOSING THEIR SHARE OF AGRICULTURE INCOME. WE SEE NO REASON TO CLUB THE I NCOME OF COMPANIES WITH THE INCOME OF SHRI P.D.DINAKARAN. W E DO NOT FIND ANY SUBSTANCE TO ACCEPT THE SUBMISSIONS OF THE LD.S TANDING COUNSEL. 14.3 THE LD.STANDING COUNSEL FOR THE REVENUE HAS FU RTHER ASSAILED THE FINDINGS OF CIT(APPEALS) ON THE STATEM ENT MADE BY SHRI BABU. THE ASSESSEES HAVE BEEN SELLING THEIR P RODUCE TO VARIOUS PERSONS INCLUDING SOME PROCESSING INDUSTRIE S. THE REVENUE MADE INVESTIGATIONS FROM THE BUYERS OF MANG OS OF THE ASSESSEES. THE BUYERS INCLUDE M/S.RELIANCE FOODS L TD. M/S.CAPRICORN FOOD PRODUCTS LTD. M/S.GEETA ENTERPR ISES M/S.MASOFI FOODS LTD. ETC. ALL THE BUYERS HAVE SH OWN PURCHASES IN THEIR BOOKS OF ACCOUNT. THE INVESTIGATION WING OF THE DEPARTMENT VERIFIED THE RATES QUANTITIES AND INCOM E FROM THE SALE OF MANGOES. THE PAYMENTS WERE RECEIVED BY THE ASSE SSEES THROUGH CHEQUES. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 42 SHRI R.BABU ONE OF THE BUYER OF MANGOES AND VEGET ABLES FROM THE ASSESSEES WAS EXAMINED BY THE DEPARTMENT O N 24-11-2010 AND 29-12-2010. ON 24-11-2010 HE ADMIT TED THAT HE HAD PURCHASED GROUNDNUTS FROM THE ASSESSEES. THERE FORE ON 29-12-2010 HE DENIED PURCHASE OF GROUNDNUTS FROM A SSESSEES AND STATED THAT SHRI P.D.DINAKARAN SENT CASH THROUG H SHRI SELVAM. THE CASH WAS DEPOSITED IN THE BANK AND CHEQUES WERE ISSUED. SUBSEQUENTLY IN A SWORN AFFIDAVIT R.BABU RETRACTS FROM HIS STATEMENT MADE ON 29-12-2010 AND REVERTS TO THE ADM ISSION MADE BY HIM ON 24-11-2010. IN HIS AFFIDAVIT HE FURTHER STATES THAT HE WAS FORCED TO MAKE STATEMENT ON 29-12-2010 UNDER TH REAT FROM SHRI J.SARAVANAN (DEPUTY DIRECTOR OF INCOME TAX). AN AFFIDAVIT WAS ALSO TAKEN ON 30-12-2010 UNDER THREAT. THE REVENUE IS HARPING ON THE STATEMENT OF SHRI R. BABU MADE ON 29-12-2010 TO SAY THAT THE ASSESSEES WERE I NDULGING IN DUBIOUS SALES. THE REVENUE HAS FAILED TO TAKE NOTE OF THE FACT THAT SUBSTANTIAL SALES OF THE PRODUCE WERE MADE BY THE A SSESSEES TO PROCESSING INDUSTRIES. THE INVESTIGATION WING OF T HE DEPARTMENT HAS FOUND THE SAME TO BE GENUINE. SHRI R.BABU IS C OMPARATIVELY SMALL TRADER. HE MADE A STATEMENT THEN RETRACTS AN D AGAIN REVERTS BACK TO HIS ORIGINAL STANCE. SINCE HE HAS BEEN SH IFTING HIS STAND ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 43 HIS STATEMENT IS NOT RELIABLE AND TRUSTWORTHY. THE REFORE MUCH IMPORTANCE CANNOT BE ATTACHED TO HIS STATEMENT WHIL E TAKING A HOLISTIC VIEW OF THE CIRCUMSTANCES. WE DO NOT FIND FORCE IN THIS ARGUMENT OF THE REVENUE AND THE SAME IS REJECTED. 14.4 ALL THE APPEALS OF THE REVENUE ARE DISMISSED B EING DEVOID OF MERIT. 15. ITA NO.1971 TO 1975/MDS/2013 (AYS.2004-05 TO 2 007-08 & 2009-10) : IN APPEALS THE REVENUE HAS ASSAILED THE FINDINGS O F CIT(APPEALS) IN DELETING THE ADDITIONS WITH RESPECT TO: 1.AGRICU LTURE INCOME; 2.GIFTS RECEIVED BY THE ASSESSEE; AND 3.PAYMENTS M ADE TO TAMIL NADU HOUSING BOARD. THE ADDITIONS DELETED BY THE C IT(APPEALS) IN AYS UNDER CONSIDERATION ARE AS UNDER: AY 2004 - 05 AY 2005 - 06 AY 2006 - 07 AY 2007 - 08 AY 2009 - 10 AGRIL. INCOME 1 85 625 1 44 969 4 75 448 4 34 183 8 00 94 GIFTS 15 00 000 12 16 200 12 50 000 20 50 000 -- CASH PAYMENTS TO TNEB 7 98 000 4 41 900 -- -- -- TOTAL ADDITIONS 24 83 625 18 03 069 17 25 448 24 84 183 8 00 949 AFTER HEARING BOTH THE SIDES AT LENGTH OUR ISSUE-WI SE FINDINGS ARE AS UNDER: ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 44 15.1 THE ASSESSEE IS A MEDICAL PRACTITIONER AND IS HAVING INDEPENDENT SOURCE OF INCOME FROM HER MEDICAL PROFE SSION AS WELL AS FROM AGRICULTURAL OPERATIONS. THE ASSESSEE OWNS AGRICULTURE LAND MEASURING 29.96 ACRES AT KAVERIRAJAPURAM TIRU TTANI TALUK. THE LAND WAS ACQUIRED BY THE ASSESSEE SOMEWHERE IN LATE 1980S AND EARLY 1990S. AS PER THE DOCUMENTS ON RECORD T HE ASSESSEE HAS FRUIT BEARING TREES SUCH AS MANGO AND IS ALSO C ULTIVATING PADDY GROUND NUTS AND SOME INTERCROPS ON THE LAND. THE AGRICULTURE INCOME AS DISCLOSED BY THE ASSESSEE AND AS DEALT WITH BY THE ASSESSING OFFICER DURING THE IMPUGNED AYS IS TABULATED AS UNDER: ASST. YEAR AGR. INCOME SHOWN BY THE ASSESSEE (`) AGRI. INCOME ACCEPTED BY ASSESSING OFFICER (`) TREATED AS INCOME FROM OTHER SOURCES BY AO (`) 2004 -05 2 82 750 97 125 1 85 625 2005 -06 2 45 113 97 125 1 44 969 2006 -07 5 90 992 1 00 144 4 75 448 2007 -08 6 49 870 2 00 287 4 34 183 2009 -10 11 16 780 3 00 341 8 00 949 THE ASSESSING OFFICER RESTRICTED THE ASSESSEES CLA IM OF AGRICULTURE INCOME AS STATED ABOVE AND TREATED THE REMAINING AMOUNT AS INCOME FROM OTHER SOURCES/UN-EXPLAINED S OURCES. THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME FROM S ALE OF MANGO CROP AS WELL AS FROM SALE OF PADDY AND OTHER CROPS. FROM PERUSAL ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 45 OF SURVEY REPORT PLACED ON RECORD BY THE REVENUE I T IS EVIDENT THAT THE ASSESSEE IS HAVING FRUIT BEARING TREES IN HER L AND AND IS HAVING FERTILE LAND FIT FOR CULTIVATION. THE LAND IS IRRI GATED AND INTER CROPS ARE CULTIVATED ON THE LAND. THE ASSESSEE HAS PLANT ED HYBRID & HIGH YIELDING VARIETIES OF MANGOES VIZ. BANGINAPAL LI THOTHAPURI AND HIMAMPASANTH. THE BUYERS HAVE CONFIRMED THE PU RCHASE OF MANGOES FROM THE ASSESSEE. IN THE ASSESSEES OWN C ASE FOR THE AY.2008-09 THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT U/S.143(3) ACCEPTED THE SALE PRICE OF MANGOES AT ` 15 / ` 16.50 / ` 18 PER KG (DEPENDING ON THE VARIETY) AS CLAIMED BY THE ASSESSEE IN HER RETURN OF INCOME. WHEREAS IN THE IMPUGNED AYS THE ASSESSING OFFICER APPLIED THE RATE OF ` 2.5 PER KG FOR THE AYS.2004- 05 2005-06 & 2006-07 ` 5/- PER KG IN THE AY.2007-08 AND ` 7.15 PER KG IN THE AY.2009-10. NO REASON WHAT SO EVER IS GIVEN BY THE ASSESSING OFFICER FOR ARBITRARY FIXING SUCH LOW RAT ES. THE ASSESSEE HAS ADOPTED THE RATES FIXED BY THE NATIONAL HORTICU LTURE BOARD. IT IS OBSERVED THAT THE LAND OF THE ASSESSEE IS ADJACE NT TO THE LAND OF SHRI JACOB WILLIAMS. THE ASSESSING OFFICER OF JACO B WILLIAMS ACCEPTED THE RATES APPLIED BY MR.JACOB WILLIAMS. TH E ASSESSING OFFICER OF THE ASSESSEE IN OUR OPINION HAS MERELY A CTED ON PRESUMPTIONS AND ESTIMATIONS WITHOUT ACTUAL STUDY T O MAKE DIS- ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 46 ALLOWANCE. THE CIT(APPEALS) IN THE IMPUGNED ORDER HAS GIVEN DETAILED FINDINGS WITH RESPECT TO YIELD AS WELL AS RATES GIVEN IN THE DISTRICT COLLECTORS REPORT. THE YIELD CLAIMED BY THE ASSESSEE IS WELL BELOW THE AVERAGE YIELD MENTIONED IN COLLECTOR S REPORT. THERE IS NO REASON TO DISBELIEVE THE AGRICULTURE IN COME RETURNED BY THE ASSESSEE. THE LD.STANDING COUNSEL FOR THE DEPA RTMENT HAS NOT BEEN ABLE TO CONTROVERT ANY OF THE FINDINGS OF THE CIT(APPEALS) ON THIS ISSUE. WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE DETAILED AND WELL REASONED FINDINGS OF THE CIT(APPE ALS) ON THE ISSUE. ACCORDINGLY THIS GROUND OF APPEAL OF THE R EVENUE IS DISMISSED. 15.2 THE NEXT ISSUE RAISED BY THE REVENUE IN THE AP PEAL IS GIFTS RECEIVED BY THE ASSESSEE FROM HER HUSBAND AND HER C LOSE RELATIVES. THE ASSESSING OFFICER MADE ADDITION OF THE GIFTS RECEIVED BY THE ASSESSEE FROM HER HUSBAND AND RELAT IVES ON THE GROUND THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENT ARY EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE GIFTS AND THE SOURCES OF THE DONORS. THE ASSESSEE HAS RECEIVED ALL THE GIFTS BY WAY OF CHEQUES/DEMAND DRAFT. THE ASSESSEE HAD FURNISHED T HE DETAILS OF THE DONORS CONFIRMATION LETTERS AND AFFIDAVITS FRO M THE DONORS. ALL ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 47 THE DONORS HAVE REFLECTED GIFTS MADE BY THEM IN THE IR RESPECTIVE STATEMENT OF AFFAIRS AND RETURN OF INCOME. ALL THE DONORS HAVE THEIR INDEPENDENT SOURCE OF INCOME AND ARE FILING RETURNS OF INCOME REGULARLY. THUS THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY OF THE DONORS GENUINENESS OF THE GIFT S AND CREDITWORTHINESS OF THE DONORS. ONCE THESE THREE BASIC CONDITIONS IN RESPECT OF GIFT ARE PROVED THERE IS NO REASON T O DOUBT THE GENUINENESS OF THE GIFTS. THE CONTENTION OF THE RE VENUE THAT THE ASSESSEE HAS NOT BROUGHT ANY CORROBORATIVE OR DOCUM ENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE GIFTS IS U N-SUSTAINABLE. WE DO NOT FIND ANY MERIT IN THIS GROUND RAISED BY T HE REVENUE. ACCORDINGLY THE SAME IS DISMISSED. 15.3 THE LAST ISSUE RAISED BY THE REVENUE IN ITS AP PEALS AGAINST SMT.VINODINI DINAKARAN IS WITH REGARD TO CASH PAYM ENTS MADE TO TAMIL NADU HOUSING BOARD. THE ASSESSING OFFICER HA S MADE DIS- ALLOWANCE OF CASH PAYMENTS TO TAMIL NADU HOUSING BO ARD FOR PURCHASE OF PLOTS. THE REVENUE HAS QUESTIONED THE NEXUS BETWEEN THE APPLICATION AND SOURCE OF INCOME. THE CIT(APPEALS) IN HIS ORDER HAS OBSERVED THAT THE ADDITION HAS BEE N MADE BY THE ASSESSING OFFICER MERELY STATING: ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 48 . THE CASH PAYMENTS OF ` 7 98 000/- ON PAYMENT TO TNHB IS ADDED TO THE TOTAL INCOME AS UN-EXPLAINED INCOME . THE ASSESSING OFFICER HAS MADE NO OTHER DISCUSSION EXCEPT ABOVE OBSERVATIONS ON THE ISSUE IN THE ENTIRE ASSESSMENT ORDER. WHEREAS THE ASSESSEE IN HER BOOKS OF ACCOUNT HAD R EFLECTED THE SOURCE AS WELL AS APPLICATION OF FUNDS. IN FIRST APPEAL THE CIT(APPEALS) HAS GIVEN HIS FIN DINGS ON THIS ISSUE AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. FIRST OF ALL THE ASSESSING OFFICER HAS NOT GIVEN TH E REASONS AS TO WHY THE SAID PAYMENTS ARE DISALLOWED AND ADDED T O THE TOTAL INCOME. THE ASSESSEE REFLECTED THE PAYMENTS IN HER STATEMENT OF AFFAIRS BY SHOWING THE PLOTS PURCHASED . THE SOURCES INCOME FOR THE PURCHASE (PAYMENTS) ARE THE PROFESSIONAL INCOME AGRICULTURAL INCOME GIFTS REC EIVED ETC AS SHOWN IN THE RETURNS OF INCOME. THUS THE PAYMENTS AS WELL THE SOURCES ARE SHOWN IN THE RETURNS OF INCOME FILE D. HENCE THE PAYMENTS CANNOT BE TREATED AS UNACCOUNTED INVESTMENTS/EXPENDITURE. FURTHER THE SOURCES LIKE AGRICULTURAL INCOME GIFTS ETC ARE SEPARATELY EXAMINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT ORDE RS. THEREFORE ONCE THE SOURCE IS EXAMINED AND ADDED TO THE INCOME OF THE ASSESSEE (OR ALLOWED AS GENUINE AS T HE CASE MAY BE) ANY SUBSEQUENT PAYMENTS FROM THE SAID SOUR CES IS ONLY AN APPLICATION OF INCOME AND HENCE NO SEPARATE ADDITION ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 49 DISALLOWANCE IS WARRANTED ON SUCH PAYMENTS (APPLICA TION OF INCOME). AS MENTIONED IN THE FORGING PARAS THE AS SESSEES CLAIM OF AGRICLULTURAL INCOME AND THE GIFTS ARE HEL D TO BE GENUINE. HENCE THE PAYMENTS TO TNHB FOR PURCHASE O F HOUSING PLOTS ARE THE APPLICATION OF INCOME FROM TH E SAID DECLARED SOURCES OF INCOME. HENCE NO ADDITION/DISA LLOWANCE IS WARRANTED ON ACCOUNT OF THESE PAYMENTS. FURTHER THESE PAYMENTS WHICH ARE APPARENTLY PAID BY WAY OF CASH ARE NOT BUSINESS EXPENSES CLAIMED U/S.28 TO 3 7 OF THE ACT AND HENCE EVEN THE PROVISIONS OF SEC.40A(3) OF THE ACT CANNOT BE INVOKED IN THE PRESENT CASE. THE LD.STANDING COUNSEL FOR THE DEPARTMENT HAS NOT BEEN ABLE TO SUBSTANTIATE HIS CONTENTIONS IN REBUTTING THE FINDI NGS OF THE CIT(APPEALS). WE DO NOT FIND ANY REASON TO DIFFER WITH THE FINDINGS OF THE FIRST APPELLATE AUTHORITY ON THE ISSUE. ACC ORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. IN RESULT ITA NOS.1971 TO 1975/2013 FOR THE AYS. 2004-05 TO 2007-08 & 2009-10 OF THE REVENUE ARE DISMISSED. ITA.NOS. 1 492/13 1857 TO 1868/13 & 1971 TO 1975/13 C.O.NOS. 149/13 174 TO 185/MDS/13 50 16. TO CONCLUDE ITA NOS.1492/MDS/2013 1857 TO 186 8/MDS/13 1971 TO 1975/MDS/2013 OF THE REVENUE AND C.O.NOS. 149/MDS/13 174 TO 185/MDS/2013 OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON TUESDAY THE 18 TH NOVEMBER 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT / JUDICIAL MEMBER /CHENNAI /DATED: 18 TH NOVEMBER 2014 TNMM !'#$ %&$ /COPY TO: 1. %'#() /APPELLANT 2. !*() /RESPONDENT 3. + (%'#) /CIT(A) 4. + /CIT 5. $./' !01 /DR 6. /23 4# /GF