R.Samiappan, Karur v. ITO, Karur

ITA 237/CHNY/2009 | 2004-2005
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 23721714 RSA 2009
Assessee PAN AAQPS8762H
Bench Chennai
Appeal Number ITA 237/CHNY/2009
Duration Of Justice 2 year(s) 25 day(s)
Appellant R.Samiappan, Karur
Respondent ITO, Karur
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 25-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2004-2005
Appeal Filed On 02-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER) .. I.T.A. NO. 237/MDS/2009 ASSESSMENT YEAR : 2004-05 SHRI R. SAMIAPPAN S/O RAMASAMY GOUNDER MAIN ROAD ARAVAKURICHI KARUR. PAN : AAQPS8762H (APPELLANT) V. THE INCOME TAX OFFICER WARD I(2) KARUR. (RESPONDENT) APPELLANT BY : SHRI V.D. GOPAL RESPONDENT BY : SHRI K.E.B. RENGARAJAN JUNIOR STANDING COUNSEL O R D E R PER HARI OM MARATHA JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 20 04-05 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) TIRUCHIRAPALLI DATED 23 RD JANUARY 2009. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE APPELLANT IS A PARTNER IN SIX FIRMS WHICH ARE CARRYING ON BUSINESS IN MONEY LENDING AND DERIVES SHARE INCOME THEREFROM IN THE FORM OF S ALARY AND INTEREST. I.T.A. NO. 237/MDS/09 2 HE ALSO DERIVES INCOME FROM HOUSE PROPERTY SITUATED AT KARUR. THE APPELLANT OWNED 12.68 HECTARES OF AGRICULTURE LAND AND APART FROM THAT 7.48 HECTARES OF LAND WAS TAKEN ON LEASE. HE CULTIVATED THIS LAND FOR GETTING AGRICULTURE INCOME. IN THE RETURN OF I NCOME (ROI) FILED FOR ASSESSMENT YEAR 2004-05 ON 28.3.2005 HE DECLARED T OTAL INCOME OF ` 1 09 120/- AND ALSO SHOWED AGRICULTURE INCOME OF ` 16 37 720/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF IN COME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT) THE A.O. HAS M ADE VARIOUS ADDITIONS WHICH WERE CONFIRMED BY LD. CIT(APPEALS). 3. NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE US. HE HAS RAISED THE FOLLOWING GROUNDS IN HIS APPEAL:- I. THE ORDER OF THE COMMISSIONER (APPEALS) TRICHY IN I.T.A. NO. 553 / 06-07 DATED 23.01.2009 CONFIRMING THE OR DER OF THE ASSESSING OFFICER IS AGAINST LAW FACTS OF THE CASE AND MATERIAL EVIDENCES ON RECORD. II A. THE CIT(A) FAILED TO APPRECIATE THAT APPELLA NT SUBSTANTIATED THE RECEIPT OF AGRICULTURE INCOME BY ADDUCING PROOF TO THE ASSESSING OFFICER TO SHOW TH AT THE RAISED MEDICINAL AND COMMERCIAL CROPS ON 12.68 HECT ARES OF OWN LANDS AND 7.48 HECTARES OF LEASED LANDS; AND PR ODUCED INVOICES BANK PASSBOOK IN SUPPORT OF SALE OF GLORASIASUPPRVA SEEDS FOR ` 10 80 000 TURMERIC IN GOVERNMENT REGULATED MARKET FOR ` 1 93 561 VEGETABLES FOR ` 1 54 808 AND KAMBU CHOLAM AND ONION N THE LOCAL MARKET FOR ` 2 09 450. I.T.A. NO. 237/MDS/09 3 B. THE CIT(A) OUGHT TO HAVE NOTICED THAT THE ASS ESSING OFFICER SUMMARILY REJECTED THE MATERIAL EVIDENCES TO ESTIMATE THE AGRICULTURE INCOME AT ` 12 45 780 AS AGAINST APPELLANTS CLAIM OF ` 16 37 720 AND ASSESSED THE DIFFERENCE OF ` 3 91 940 AS INCOME FROM OTHER SOURCES. C. THE CIT(A) ERRED IN CONFIRMING THE ADDITION ON THE GROUND THAT THE ASSESSING OFFICER HAD TAKEN EXPERT GUIDANC E DISREGARDING THE INVOICES AND BANK PASSBOOK EVIDENC ING RECEIPT OF AGRICULTURE INCOME TO THE TUNE OF ` 16 37 720. III A. THE CIT(A) FAILED TO APPRECIATE THAT APPEL LANT MAINTAINED CONSTRUCTION ACCOUNT FULLY SUPPORTED BY VOUCHERS AND THAT THE ASSESSING OFFICER EVEN BEFORE GOING INTO SUCH A CCOUNT REFERRED TO THE DVO TO ESTIMATE THE COST OF CONSTRU CTION. B. THE CIT(A) FAILED TO NOTICE THAT APPELLANT FILED A DETAILED OBJECTION AGAINST THE ESTIMATION OF COST BY DVO AT ` 64 74 500 AS AGAINST THE ACTUAL COST OF ` 48 39 599 AND TOTALLY ERRED IN OBSERVING THAT APPELLANT HAS NOT F URNISHED ANY DETAILS OF OBJECTIONS ON THE SPECIFIC POINTS MAD E BY THE VALUATION CELL. C. THE CIT(A) FAILED TO CONSIDER THE AUTHORITIES LAYING DOWN THE LAW THAT (I) THE ASSESSING OFFICER CANNOT REF ER THE MATTER TO THE DVO TO ESTIMATE THE COST WITHOUT REJE CTING THE BOOKS OF ACCOUNT MAINTAINED IN THAT BEHALF (242 ITR 478); (II) THE ASSESSING OFFICER CANNOT SUBSTITUTE THE OPINION OF THE DVO IN THE PLACE OF ACTUAL COST AS R ECORDED IN THE BOOKS (246 ITR 351 MAD) RELIED ON BY THE APPELLANT AND OUGHT TO HAVE DELETED THE ADDITION IN THE LIGHT OF THE ABOVE AUTHORITIES. IV THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF ` 5 50 000 AND ` 1 25 000 ASSESSED UNDER THE HEAD OTHER SOURCES DISBELIEVING THE GIFTS RECEIVED BY APPELLANT AND HIS DAUGHTER RESPECTIVELY IN THE FACTS AND CIRCUMSTANCE S OF THE CASE. I.T.A. NO. 237/MDS/09 4 4. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE EVIDENCE AVAILABLE ON RECORD. THE FIRST GROUND IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 5. GROUND NO.II (A B&C) HAS THREE PARTS BUT RELATE ONLY TO ONE ISSUE REGARDING ADDITION ON ACCOUNT OF DISALLOWANCE OUT OF AGRICULTURE INCOME SHOWN IN THE ROI. 5.1 THE CASE OF THE ASSESSEE IS THAT IN HIS OWN LAN D MEASURING 12.68 HECTARES CASH CROPS AND MEDICINAL CROPS WERE GROWN. ON THE LEASED LANDS MEASURING 7.48 HECTARES ALSO CASH CROP S WERE GROWN. IN SUPPORT OF AGRICULTURAL PRODUCE THE ASSESSEE PR ODUCED INVOICES AND BANK PASS-BOOK IN SUPPORT OF SALE OF GLORASIASU PPRVA SEEDS FOR A TOTAL AMOUNT OF ` 10 80 000/- AND FOR THE SALE OF TURMERIC FOR A CONSIDERATION OF ` 1 93 561/- INCLUDING SALE OF VEGETABLES AT ` 1 54 808/- AND OTHER ITEMS LIKE KAMBU CHOLAM AND O NION WHICH WERE SOLD IN LOCAL MARKET FOR ` 2 09 450/-. BUT THE A.O. HAS COME TO A CONCLUSION ON THE BASIS OF ESTIMATES THAT THE ASSES SEE SHOULD HAVE EARNED AGRICULTURE INCOME OF ` 12 45 780/- AS AGAINST ` 16 37 720/- SHOWN IN THE ROI. THE DIFFERENCE OF ` 3 91 940/- HAS BEEN ADDED AS INCOME OF THE YEAR FROM OTHER SOURCES. THE LD. CIT (APPEALS) HAS ALSO CONFIRMED THIS ADDITION. I.T.A. NO. 237/MDS/09 5 5.2 IT WAS ARGUED ON BEHALF OF THE APPELLANT THAT T HE ASSESSEE HAS PROVED THE AGRICULTURAL LAND CULTIVATED DURING THE YEAR AND THE A.O. HAS NOT DISPUTED THIS FACT. FURTHER ARGUMENT WAS T HAT THE SO-CALLED EXPERT GUIDANCE TAKEN BY THE A.O. TO ESTIMATE INCOM E VIS--VIS THE PROOF IN THE FORM OF INVOICES AND BANK PASS-BOOK EV IDENCE RECEIPT OF AGRICULTURE INCOME TO THE TUNE OF ` 16 37 720/- IS NOT A CORRECT PROCEDURE. 5.3 ON THE OTHER HAND THE LEARNED D.R. HAS SUPPORT ED THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW. 5.4 WE ARE AFRAID AS THE OPINION OF ANY EXPERT CAN NOT BE TAKEN AS PROOF OF ANY FACT TO THE HILT. AN OPINION IS AFTER ALL AN OPINION WHICH IS BASED ON NUMEROUS FACTORS BOTH OBJECTIVE AND SUBJEC TIVE. IN THE GIVEN CASE WHEN THE ASSESSEE HAS PRODUCED PROOF IN THE FORM OF INVOICES AND THE TRANSACTIONS ARE RECORDED IN THE B ANK PASSBOOK IN OUR CONSIDERED OPINION THE METHOD ADOPTED BY BOTH T HE AUTHORITIES BELOW CANNOT BE APPROVED BY US. IN OUR CONSIDERED OPINION NO LEGAL FORUM WOULD GIVE PRECEDENCE TO OPINION OF AN EXPERT (OF THE AGRICULTURE DEPARTMENT) IN CONTRAST TO A DIRECT PRO OF AS IT IS BEYOND THE KNOWN CANNONS OF LAW. THE A.O. CAN ESTIMATE ON LY WHEN THERE IS I.T.A. NO. 237/MDS/09 6 NO PROOF SUPPORTING ANY INCOME OR EXPENDITURE AND T HAT TOO AFTER REJECTING THE BOOKS OF ACCOUNTS. ADMITTEDLY THE A .O. HAS NOT REJECTED THE BOOKS OF ACCOUNTS MAINTAINED BY THE AS SESSEE. IT SEEMS THAT THE A.O. HAS IGNORED ALL THE MATERIAL EVIDENCE S PRODUCED AND HAS SIMPLY CHOSEN TO ESTIMATE THE AGRICULTURE INCOM E THAT TOO WITHOUT ANY VALID BASIS AND SIMPLY ON THE BASIS OF AN OPINI ON MAY BE OF AN EXPERT. SUCH ACTION OF THE A.O. CANNOT BE APPROVED BY US. THE AGRICULTURE INCOME SUPPORTED BY EVIDENCE HAS TO BE ACCEPTED. ACCORDINGLY WE ACCEPT THE DECLARED AGRICULTURE INC OME AND DELETE THE ESTIMATED ADDITION MADE RELATABLE TO THIS ASSES SMENT YEAR WHICH IS IMPUGNED THROUGH THIS GROUND. OUR ABOVE FINDIN G RESULTS IN ACCEPTANCE OF GROUND II (A B & C). 6. NEXT ISSUE RAISED THROUGH GROUND NO.III A B & C IS IN RELATION TO AN ADDITION MADE IN THE ACCOUNT OF HOUSE CONSTRUCTI ON. 6.1 DURING THE RELEVANT YEAR THE ASSESSEE HAS GOT A HOUSE CONSTRUCTED FOR WHICH INVESTMENT OF ` 48 39 599/- HAS BEEN SHOWN. WITHOUT FINDING ANY DEFECT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE FOR HOUSE CONSTRUCTION AND WITHOUT REJECTI NG THE SAME THE A.O. HAS REFERRED THE MATTER FOR VALUATION TO THE V ALUATION CELL WHO I.T.A. NO. 237/MDS/09 7 IN TURN HAS ESTIMATED THE VALUE OF THE INVESTMENT IN THE HOUSE AT ` 64 74 500/- WHICH HAS RESULTED INTO AN ADDITION OF ` 11 28 150/- PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON. THE REMAINING AMOUNT HAS BEEN ASSESSED IN THE OTHER ASS ESSMENT YEAR. IT WAS ARGUED BY THE LEARNED A.R. THAT WITHOUT REJE CTING THE BOOKS OF ACCOUNTS THE A.O. IS NOT EMPOWERED TO REFER THE MA TTER FOR VALUATION TO THE DEPARTMENTAL VALUATION OFFICER AS HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA V. CIT ( 2010) 328 ITR 513 (SC). 6.2 PER CONTRA THE LEARNED D.R. SUPPORTED THE ORDE R OF THE LD. CIT(APPEALS) AND HAS REPEATED THE REASONINGS GIVEN BY HIM TO CONFIRM THE IMPUGNED ADDITION. 6.3 IT IS AN UNDISPUTED FACT THAT BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE A.O. BEFORE REFERRING THE MATTER TO DEPARTME NTAL VALUATION CELL. IT HAS BEEN CLEARLY HELD BY HON'BLE SUPREME COURT IN THE CASE OF SARGAM CINEMA (SUPRA) THUS: THE ASSESSING OFFICER COULD NOT REFER THE MATTER T O THE DEPARTMENTAL VALUATION OFFICER IN A CASE WHERE THER E WAS A CATEGORICAL FINDING RECORDED BY THE TRIBUNAL THAT TH E BOOKS OF ACCOUNT WERE NEVER REJECTED. I.T.A. NO. 237/MDS/09 8 IN VIEW OF THE ABOVE NOTED DECISION WE CANNOT SUST AIN THE IMPUGNED ADDITION. THEREFORE FOLLOWING THE ABOVE DICTUM OF LAW GROUND NO.III A B & C OF THIS APPEAL STANDS ALLOWED. 7. THE LAST GROUND OF THIS APPEAL TAKEN VIDE GROUND NO.IV IS IN RELATION TO ADDITION OF ` 5 50 000/- AND ` 1 25 000/- ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. 7.1 THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSES SEE ALLEGEDLY RECEIVED CASH GIFTS TOTALLING TO ` 5 50 000/- DURING THE YEAR. THE A.O. HAS TREATED THIS ENTIRE AMOUNT AS ASSESSEES OWN UN DISCLOSED INCOME HAVING BEEN INTRODUCED BY WAY OF GIFT AND HE NCE HAS ADDED THIS AMOUNT UNDER SECTION 68 OF THE ACT. THE LD. C IT(APPEALS) HAS CONFIRMED THIS ADDITION WITHOUT GIVING INDEPENDENT FINDING AND HAS SIMPLY ACCEPTED WHAT HAS BEEN DECIDED BY THE A.O. 7.2 BEFORE US IT WAS ARGUED THAT THE ASSESSEE HAS R ECEIVED A GIFT OF ` 1 50 000/- FROM SHRI WANGILIAPPA GOUNDER ARAVAKUR ICHI. A CONFIRMATION LETTER FROM THE DONOR WAS ALSO FILED. HIS SOURCE OF INCOME WAS STATED TO BE RENTAL INCOME AND INTEREST INCOME. HE ALSO ADMITTED A CASH GIFT OF ` 1 50 000/- HAVING BEEN GIVEN TO THE ASSESSEE AFTER WITHDRAWING FROM BANK ACCOUNT. IN O UR OPINION THIS I.T.A. NO. 237/MDS/09 9 GIFT STANDS CONFIRMED. IT IS NOT JUDICIAL TO ASK T HE ASSESSEE TO PROVE THE SOURCE OF THE SOURCE WHICH IS NOT PERMISSIBL E UNDER LAW. LIKEWISE A GIFT OF ` 1 LAKH WAS GIVEN BY SHRI VIVEKANANDAN COIMBATORE WHO IS A RETIRED PERSON FROM NTC AND HA D SOURCE OF RETIREMENT BENEFITS FOR MAKING THIS GIFT. THE DONO R HAS ALSO FILED CONFIRMATION LETTER DATED 11.11.2006 CONFIRMING THI S GIFT HAVING BEEN MADE TO THE ASSESSEE. TO OUR MIND NO FURTHER PROO F OF THE GIFT IS REQUIRED IN THE GIVEN FACTS AND CIRCUMSTANCES OF TH E CASE. THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED A GIFT OF ` 50 000/- FROM SHRI P. KARUPPUSAMY. A CONFIRMATION FROM THIS DONOR WAS ALSO FILED SUPPORTING THE FACTUM OF GIFT. AN ENQUIRY UNDER SE CTION 131 OF THE ACT WAS MADE IN WHICH HE ADMITTED HAVING MADE THIS GIFT . HE HAS ALSO EXPLAINED THE SOURCE OF THIS GIFT. THE A.O. HAS DI SALLOWED THIS CLAIM OF GIFT WITHOUT GIVING ANY PLAUSIBLE REASONING. WE CANNOT DISBELIEVE THIS ESTABLISHED GIFT. ANOTHER GIFT OF ` 50 000/- WAS GIVEN BY SHRI K. PALANISAMY BHAVANI. CONFIRMATION FROM THIS PARTY WAS ALSO FILED. ACTION UNDER SECTION 131 OF THE ACT WAS TAKEN AND A STATEMENT WAS RECORDED ON 30.11.2006. HE APART FROM ACCEPTING T HE FACTUM OF GIFT HAS GIVEN COMPLETE DETAILS OF HIS SOURCE. THE A.O. HAS SIMPLY TRIED TO EXPLAIN AWAY THIS GIFT BY TREATING IT AS CREDIT UNDER SECTION 68 OF I.T.A. NO. 237/MDS/09 10 THE ACT. WE ARE NOT IN AGREEMENT WITH LD. CIT(APPE ALS) IN THIS REGARD. LIKEWISE A GIFT OF ` 50 000/- WAS CLAIMED TO HAVE BEEN GIVEN BY SHRI R. PITCHAIMUTHU. CONFIRMATION WAS FILED FROM HIM A LSO. HE GAVE THE DETAILS OF HIS SOURCE. HENCE THIS GIFT HAS TO BE ACCEPTED AS GENUINE. A GIFT OF ` 50 000/- FROM SHRI V.K. PALANISAMY WAS CONFIRMED F ROM HIS STATEMENT RECORDED ON 13.11.2006 IN WHICH HE HAS EX PLAINED THE SOURCE OUT OF WHICH THE GIFT WAS MADE. A GIFT OF ` 25 000/- WAS MADE BY SHRI SIVASAMY. HIS STATEMENT WAS ALSO RECORDED HE HAS CONFIRMED THE GIFT AND ALSO DETAILED THE SOURCE OF HIS INCOME. ANOTHER GIFT OF ` 75 000/- WAS MADE BY SMT. KUPPATHAL. SHE ALSO CONFIRMED HER GIFT ALONG WITH THE SOURCE THEREOF. THE ASSESSEE ALSO SHOWED AN AMOUNT OF ` 2 50 000/- IN THE NAME OF MOI ACCOUNT. A COPY SHOWING DETAILS OF PERSONS FROM WHOM MOI AMOUN TS WERE RECEIVED WAS FILED. THE A.O. HAS ACCEPTED THAT THE ASSESSEE RECEIVED THIS AMOUNT ON THE OCCASION OF HIS DAUGHTE RS PUBERTY FUNCTION. BUT AS PER THE A.O. THE RECEIPT OF MOI AMOUNT WAS NOT FULLY PROVED. SO HE HAS RESTRICTED IT TO 50% AND HAS AD DED AN AMOUNT OF ` 1.25 LAKHS. 7.3 AFTER HEARING BOTH SIDES WE ARE NOT CONVINCED ABOUT THE REASON GIVEN BY THE DEPARTMENT IN SUSTAINING THIS A DDITION. THE I.T.A. NO. 237/MDS/09 11 ENTIRE AMOUNT HAS TO BE ACCEPTED. IN THE RESULT G ROUND NO.IV IS ALSO ALLOWED. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25 TH MARCH 2011. SD/- SD/- (ABRAHAM P. GEORGE) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 25 TH MARCH 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A) TIRUCHIRAPALLI (4) CIT-I TIRUCHY (5) D.R. (6) GUARD FILE