M. Srinivasa Reddy, Hyderabad v. Dy. Commissioner of income Tax, Circle-1(3),, Hyderabad

ITA 1558/HYD/2013 | 2007-2008
Pronouncement Date: 28-09-2016 | Result: Partly Allowed

Appeal Details

RSA Number 155822514 RSA 2013
Assessee PAN TANOS1557T
Bench Hyderabad
Appeal Number ITA 1558/HYD/2013
Duration Of Justice 2 year(s) 10 month(s) 7 day(s)
Appellant M. Srinivasa Reddy, Hyderabad
Respondent Dy. Commissioner of income Tax, Circle-1(3),, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 28-09-2016
Date Of Final Hearing 07-09-2016
Next Hearing Date 07-09-2016
Assessment Year 2007-2008
Appeal Filed On 21-11-2013
Judgment Text
ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER ITA NOS.1557 1558 AND 1559/HYD/2013 (ASSESSMENT YEARS: 2006-07 TO 2008-09) SHRI M. SRINIVASA REDDY HYDERABAD PAN : AFTPM 5606 G VS DY. COMMISSIONER OF INCOME TAX CIRCLE 1(3) HYDERABAD FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE: SHRI A. SITARAMA RAO DR O R D E R PER SMT. P. MADHAVI DEVI J.M. IN ALL THESE APPEALS THE COMMON GROUNDS ARE AGAINS T THE ESTIMATION OF AGRICULTURAL INCOME FOR THE RESPE CTIVE A.YS AND TREATING THE DIFFERENCE BETWEEN THE ESTIMATED INCOM E AND THE RETURNED INCOME AS INCOME FROM OTHER SOURCES. 2. BRIEF FACTS OF THE CASE THAT THE ASSESSEE AN IN DIVIDUAL AND THE MANAGING DIRECTOR OF M/S FARMAX INDIA LTD H YDERABAD HAD FILED HIS RETURN OF INCOME FOR THE RELEVANT A.YS . THERE WAS A SURVEY ACTION ON THE ASSESSEE U/S 133A OF THE ACT O N 31.01.2011 AND CERTAIN EVIDENCE WAS FOUND. CONSEQUENT TO THE S URVEY AND AFTER EXAMINING THE EVIDENCE INCLUDING THE INVESTME NT MADE BY THE ASSESSEE TOWARDS SHARE CAPITAL IT WAS NOTICED THAT THE INCOME DATE OF HEARING : 07.09.2016 DATE OF PRONOUNCEMENT : 28.09.2016 ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 2 OF 6 CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT. THEREFORE A NOTIC E U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE IN RESPONSE TO WHIC H THE ASSESSEE FILED A REVISED RETURN ADMITTING INCOME INCLUDING A GRICULTURAL INCOME. 3. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W .S. 147 OF THE ACT THE AO DIRECTED THE ASSESSEE TO PRO DUCE THE EVIDENCE IN SUPPORT OF HIS CLAIM OF AGRICULTURAL IN COME. THE ASSESSEE SUBMITTED THAT HE TOOK ON LEASE AGRICULTUR AL LANDS AND HAD GROWN CROPS LIKE MIRCHI COTTON MANGO AND SWEE T LIME THEREIN. HE FILED COPIES OF THE LAND HOLDINGS AND C ONFIRMATIONS FROM THE LESSORS. HE ALSO FURNISHED THE BREAKUP OF THE LAND TAKEN ON LEASE CROPS GROWN THEREON AND THE EXPENDITURE I NCURRED AND INCOME EARNED THEREFROM. IN ORDER TO VERIFY THE ABO VE EVIDENCE THE AO MADE FIELD INQUIRIES AND THE STATEMENTS OF T HE LANDLORDS AND ALSO THE BROKERS THROUGH WHOM THE ASSESSEE HAS SOLD THE AGRICULTURAL PRODUCE WERE RECORDED. AFTER EXAMINING THE ABOVE DETAILS THE AO ALSO GATHERED INFORMATION FROM AGRI CULTURAL MARKET YARD ABOUT THE PRICES OF VARIOUS AGRICULTURAL PRODU CE CLAIMED TO HAVE BEEN PRODUCED BY THE ASSESSEE. THEREAFTER HE PROCEEDED TO CONSIDER AND COMPARE THE AGRICULTURAL INCOME OFFERE D BY THE ASSESSEE WITH THE INCOME THE ASSESSEE WOULD HAVE EA RNED AS PER THE PRICES IN THE MARKET AND THEREAFTER HE REDUCED A PERCENTAGE OF THE INCOME AS EXPENDITURE AND ARRIVED AT THE NET AG RICULTURAL INCOME. THE DIFFERENCE BETWEEN THE INCOME OFFERED B Y THE ASSESSEE AS AGRICULTURAL INCOME AND INCOME ESTIMATE D BY THE AO HAS BEEN BROUGHT TO TAX AS INCOME FROM OTHER SOURC ES. ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 3 OF 6 AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS I N SECOND APPEAL BEFORE US. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD WE FIND THAT THERE IS NO DISPUTE AS TO T HE EXTENT OF LAND CULTIVATED BY THE ASSESSEE OR THE CROPS GROWN OR TH E QUANTUM OF PRODUCE. THE ONLY DISPUTE IS WITH REGARD TO THE PRI CES ESTIMATED BY THE AO ON THE BASIS OF THE INFORMATION RECEIVED BY HIM FROM VARIOUS GOVT. AGENCIES SUCH AS AGRICULTURAL MARKET YARD GUNTUR WITH REGARD TO MIRCHI AND AP COTTON ASSOCIATION GU NTUR WITH REGARD TO COTTON. AS REGARDS MANGO AND SWEET LIME A RE CONCERNED THE AO ESTIMATED THE INCOME APPROXIMATEL Y. AS FAR AS MIRCHI IS CONCERNED WE FIND THAT THE AO HAS CONSID ERED THE AVERAGE OF THE PRICES OF THREE CATEGORIES OF MIRCH I.E. MINIMUM MAXIMUM AND MIDDLE AND THE AO HAS TAKEN THE PRICE O F THE MIDDLE VARIETY AND AFTER REDUCING RS.100/- AS MIDDL EMEN MARGIN HAS ADOPTED THE PRICE. THE AO HAS REDUCED THE MIDDL EMEN MARGIN BECAUSE THE CONTENTION OF THE ASSESSEE WAS THAT HE HAS SOLD THE PRODUCE THROUGH MIDDLEMEN. ACCORDING TO TH E LEARNED COUNSEL FOR THE ASSESSEE THE ASSESSEE HAS PRODUCED THE BEST QUALITY OF MIRCHI AND THEREFORE THE PRICE OFFERED BY THE ASSESSEE SHOULD HAVE BEEN ADOPTED. IT IS COMMON KNOWLEDGE TH AT THE ENTIRE CROP PRODUCED BY THE ASSESSEE MAY NOT BE OF THE BEST QUALITY OR OF THE LEAST QUALITY. IT MAY BE A MIXTUR E OF BOTH THE QUALITIES AND THEREFORE THE AO HAS TAKEN THE MIDDL E QUALITY AS A BENCHMARK. HOWEVER SINCE IT CANNOT BE RULED OUT TH AT THE ASSESSEE HAS PRODUCED BEST QUALITY OF MIRCHI AND WH AT THE AO ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 4 OF 6 ESTIMATED IS THE PRICE ON THE BASIS OF THE AGRICULT URAL MARKET COMMITTEE REPORT WE DEEM IT FIT AND PROPER TO ESTI MATE THE SAME AT RS.3500/- PER QUINTAL AS AGAINST 2085/-PER QUINT AL TAKEN BY THE AO AS THE BEST QUALITY OF MIRCHI FETCHED AN AVE RAGE PRICE OF RS.3900/- PER QUINTAL EVEN AS PER THE MARKET COMMIT TEE REPORT. AFTER REDUCING RS.100/- TOWARDS MIDDLEMEN MARGIN W E DIRECT THE AO TO TAKE RS.3400/-PER QUINTAL AND RECOMPUTE THE I NCOME FROM MIRCHI AFTER REDUCING 42% AS EXPENDITURE. 5. AS REGARDS THE PRICES OF COTTON ARE CONCERNED T HE A.P.COTTON ASSOCIATION HAS REPORTED THE AVERAGE PRI CE AT RS.2400/2500/- PER QUINTAL DURING THE RELEVANT PERI OD WHEREAS THE AO HAS TAKEN RS.2010/- AND AFTER REDUCING RS.10 0/- AS MIDDLEMEN MARGIN HE ADOPTED THE PRICE AT RS.1900/P ER QUINTAL. THIS IS ALSO IN OUR OPINION IS ON THE LOWER SIDE AND THEREFORE WE DIRECT THE AO TO ADOPT THE PRICE OF RS.2400/- PER Q UINTAL AND AFTER REDUCING RS.100/- TO THE MIDDLEMEN MARGIN THE FINA L PRICE TO BE ADOPTED AT RS.2300/-PER QUINTAL. THE AO IS THEREFOR E DIRECTED TO RECOMPUTE THE INCOME FROM COTTON ACCORDINGLY AFTER REDUCING 42% OF INCOME AS EXPENDITURE. AS REGARDS THE INCOME FRO M MANGO AND SWEET LIME IS CONCERNED THE AO HAS ESTIMATED RS.30 000/- PER ACRE FROM MANGO GARDEN RS.15000 PER ACRE FROM SWEE T LIME. AS REGARDS THESE TWO CROPS NEITHER THE AO NOR THE AS SESSEE HAS PRODUCED ANY EVIDENCE FOR ARRIVING AT THE ESTIMATED INCOME. WE ALSO DO NOT HAVE DETAILS OF THE COMPUTATION OF INCO ME BY THE ASSESSEE AS TO HOW HE HAS ARRIVED AT THE INCOME FRO M MANGO AND SWEETLIME. IN VIEW OF THE SAME WE SEE NO REASON TO DISTURB THE FINDINGS OF THE AO AND THE CIT (A). AFTER RECOMPUTI NG THE INCOME ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 5 OF 6 AS DIRECTED ABOVE IF ANY DIFFERENCE AROSE BETWEEN THE RETURNED INCOME AND ESTIMATED INCOME WE DIRECT THE AO TO TR EAT THE SAME AS INCOME FROM OTHER SOURCES AS DONE IN THE ASSES SMENT ORDER AS THE ASSESSEE HAS NOT CHALLENGED THE HEAD ON WHIC H THE DIFFERENCE IS BROUGHT TO TAX. 6. IN THE RESULT ASSESSEES APPEAL FOR A.Y 2006-07 IS PARTLY ALLOWED. A.Y 2007-08: 7. FOR THE DETAILED REASONS GIVEN IN THE APPEAL FOR A.Y 2006-07 WE DIRECT THAT FOR THE A.Y 2007-08 THE PRI CE OF THE MIRCHI BE ADOPTED AT RS.6000/Q AS THE AVERAGE PRIC E AS THE MARKET COMMITTEE WAS RS.7000/-PER Q FOR THE BEST QU ALITY AND AFTER REDUCING THE MIDDLEMEN MARGIN OF RS.100/- AO IS DIRECTED TO RECOMPUTE THE INCOME FROM MIRCHI ACCORDINGLY. AS REGARDS THE PRICE OF COTTON IS CONCERNED THE AO IS DIRECTED TO ADOPT RS.2300/- AFTER THE MARGIN OF RS.100/- TO THE MIDDL EMEN AND RECOMPUTE THE INCOME ACCORDINGLY. AS REGARDS YIELDS FROM MANGO AND SWEETLIME WE DO NOT SEE ANY REASON TO DISTURB THE FINDINGS OF THE AO. ACCORDINGLY THE AO IS DIRECTED TO COMPUTE THE INCOME AS DIRECTED IN THE ASSESSMENT ORDER FOR A.Y 2006-07. A.Y 2007-08 8. FOR THE A.Y 2008-09 AO IS DIRECTED TO ADOPT RS.3500/- PER QUINTAL AS THE PRICE OF MIRCHI AFTER THE MIDDLEMEN CHARGES AND THE PRICE OF COTTON IS DIRECTED TO BE A DOPTED AT RS.2400/PER Q AFTER THE MIDDLEMENS MARGIN. THE EST IMATION OF ITA NOS 1557 TO 1559 OF 201 3 M SRINIVASA REDDY HYDERABAD PAGE 6 OF 6 INCOME FROM MANGO AND SWEETLIME IS NOT DISTURBED FO R THIS YEAR ALSO. AO IS DIRECTED TO RECOMPUTE THE INCOME ACCORD INGLY. 9. IN THE RESULT ASSESSEES APPEAL FOR ALL THE THR EE YEARS ARE TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 28 TH SEPTEMBER 2016. VINODAN/SPS COPY TO: 1 SHRI S. RAMA RAO ADVOCATE FLAT NO.102 SHRIYAS ELEGANCE H. NO.3-6-643 ST. NO.9 HIMAYATNAGAR HYDERABAD 500029 2 DY. COMMISSIONER OF INCOME TAX CIRCLE 1(3) HYDER ABAD 3 CIT (A)-II HYDERABAD 4 CIT - 1 HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER