V.Reginakantham, Thanjavur v. ACIT, CHENNAI

ITA 401/CHNY/2011 | 1993-1994
Pronouncement Date: 18-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 40121714 RSA 2011
Assessee PAN AACPR5172N
Bench Chennai
Appeal Number ITA 401/CHNY/2011
Duration Of Justice 8 month(s) 16 day(s)
Appellant V.Reginakantham, Thanjavur
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 18-11-2011
Date Of Final Hearing 15-11-2011
Next Hearing Date 15-11-2011
Assessment Year 1993-1994
Appeal Filed On 03-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI N. S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NOS. 399 TO 409/MDS/2011 ASSESSMENT YEARS : 1991-92 TO 1996-97 & 2000-01 20 02-03 TO 2006-07 SMT. V. REGINAKANTHAM NO.8C/225 SECOND CROSS STREET ARULANDANAGAR THANJAVUR-613 007. V. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-II(4) CHENNAI. [PAN: AACPR5172N] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAVI CA RESPONDENT BY : SHRI RAMASAMY SR. STANDING COUNSEL DATE OF HEARING : 15-11-2011 DATE OF PRONOUNCEMENT : 18-11-2011 O R D E R PER BENCH: ITA NO. 399/MDS/2011 IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II C HENNAI IN ITA NO. 248/07-08 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 1991-92. ITA NO. 400/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF T HE LEARNED CIT(APPEALS)-II CHENNAI IN ITA NO. 249/07-08 DATED 15-12-2010 FOR T HE ASSESSMENT YEAR 1992-93. I.T.A. NO.399-409/MDS/2011 2 ITA NO. 401/MDS/2011 IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II CHENNAI IN ITA NO. 250/07- 08 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 1993-94. ITA NO. 402/MDS/2011 IS A N APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-II CHENNAI IN ITA NO. 251/07-08 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 1994-95. ITA NO. 403/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF THE LEARNED CIT(APPEALS)-II CHENNAI IN ITA NO. 252/07-08 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 1995-96. ITA NO. 404/MDS/2011 IS A N APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-II CHENNAI IN ITA NO. 253/07-08 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 1996-97. ITA NO. 405/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF THE LEARNED CIT(APPEALS)-II CHENNAI IN ITA NO. 7/03-04 DATED 1 5-12-2010 FOR THE ASSESSMENT YEAR 2000-01. ITA NO. 406/MDS/2011 IS AN APPEAL FI LED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II CHENNAI IN IT A NO. 208/04-05 DATED 15-12- 2010 FOR THE ASSESSMENT YEAR 2002-03. ITA NO. 407/ MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A PPEALS)-II CHENNAI IN ITA NO. 410/06-07 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 2004-05. ITA NO. 408/MDS/2011 IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF THE LEARNED CIT(APPEALS)-II CHENNAI IN ITA NO. 254/07-08 DATED 15-12-2010 FOR THE I.T.A. NO.399-409/MDS/2011 3 ASSESSMENT YEAR 2005-06. ITA NO. 409/MDS/2011 IS A N APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(APPEA LS)-II CHENNAI IN ITA NO. 204/08-09 DATED 15-12-2010 FOR THE ASSESSMENT YEAR 2006-07. AS ALL THESE APPEALS RELATE TO THE SAME ASSESSEE AND INVOLVE SUB STANTIALLY IDENTICAL ISSUES ALL THE ELEVEN APPEALS ARE BEING DISPOSED OF BY THIS CO MMON ORDER. 2. SHRI K. RAVI CA REPRESENTED ON BEHALF OF THE AS SESSEE AND SHRI K. RAMASAMY SENIOR STANDING COUNSEL REPRESENTED ON BE HALF OF THE REVENUE. 3. AT THE TIME OF HEARING THE LEARNED AUTHORISED R EPRESENTATIVE SUBMITTED THAT HE WAS NOT PRESSING THE GROUNDS RELATING TO THE RE- OPENING AND VALIDITY OF THE ASSESSMENTS IN ALL THE APPEALS. CONSEQUENTLY THE GROUNDS RELATING TO THE RE- OPENING AND VALIDITY OF THE ASSESSMENTS ARE DISMISS ED AS NOT PRESSED. 4. ON MERITS IT WAS SUBMITTED BY THE LEARNED AUTHOR ISED REPRESENTATIVE THAT THE FIRST ISSUE WAS AGAINST THE ACTION OF THE LEARNED C IT(A) IN CONFIRMING THE ESTIMATION OF INCOME FROM HOUSE PROPERTY WHICH WAS CLAIMED AS SELF-OCCUPIED PROPERTY. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTAT IVE THAT ORIGINALLY THE ASSESSMENT HAD BEEN COMPLETED U/S 144 READ WITH SEC TION 147 OF THE INCOME TAX ACT 1961 ON 27-03-1997. THIS ASSESSMENT HAD BEEN THE SUBJECT MATTER OF AN APPEAL BEFORE THE LEARNED CIT(A) WHO HAD GRANTED SO ME RELIEF TO THE ASSESSEE IN REGARD TO CERTAIN UNEXPLAINED GIFTS AND AGRICULTURA L INCOME. IT WAS THE SUBMISSION THAT AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 25-02-2003 THE ASSESSEE HAD PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL AND THE CO-ORDINATE BENCH OF THIS I.T.A. NO.399-409/MDS/2011 4 TRIBUNAL VIDE ITS ORDER IN ITA NOS. 1103 TO 1108/MD S/2003 AND ITA NOS. 533 TO 536/MDS/2004 DATED 17-04-2006 HAD SET ASIDE THE ORD ER OF THE LEARNED CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OF FICER FOR RE-ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. IT WAS THE SUBMISSION THAT THE ORDER GIVING EFFECT TO THE ORDER OF THE TR IBUNAL HAD BEEN PASSED ON 27-12- 2007 AND ADDITIONS HAD BEEN MADE IN THE SAME ASSESS MENT ORDER. IT WAS THE SUBMISSION THAT THOUGH IN THE ORIGINAL ASSESSMENT T HE ASSESSEES TAXABLE INCOME IS DETERMINED AT ` 6 35 053/- IN THE ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL THE TAXABLE INCOME HAD BEEN DETERMINED AT ` 1 48 305/-. IT WAS THE SUBMISSION THAT ONE OF THE ISSUES WAS THE RENTAL INCOME FROM T HE HOUSE PROPERTY. IT WAS THE SUBMISSION THAT ON APPEAL BEFORE THE LEARNED CIT(A) AGAINST THE ORDER GIVING EFFECT TO THE TRIBUNALS ORDER THE LEARNED CIT(A) HAD DIS MISSED THE ASSESSEES APPEAL AND CONSEQUENTLY THE ASSESSEE WAS IN APPEAL BEFORE THE TRIBUNAL AGAIN. IT WAS THE SUBMISSION THAT IN THE WEALTH-TAX RETURN THE ASSESS EE HAD FOR THE PURPOSE OF DETERMINING THE VALUE OF THE HOUSE OWNED BY HER AT KOOTHANALLUR ADOPTED A GROSS MONTHLY RENT AT ` 3 000/-. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ONLY ONE HOUSE WHICH WAS A SELF-OCCUPIED PROPERTY. IT WAS T HE SUBMISSION THAT THIS PROPERTY AT KOOTHANALLUR WAS IN THANJAVUR. THE LEARNED AUTH ORISED REPRESENTATIVE DREW OUR ATTENTION TO THE WEALTH-TAX RETURN FILED BY THE ASS ESSEE FOR THE YEAR ENDED 31-03- 1991 TO SUBSTANTIATE HIS SUBMISSIONS. IT WAS THE S UBMISSION THAT THE ASSESSING OFFICER HAD ASSUMED THAT THE PROPERTY HAD BEEN GIVE N ON RENT AND CONSEQUENTLY I.T.A. NO.399-409/MDS/2011 5 ADOPTED THE FAIR MARKET VALUE AT ` 3 000/- AND HAD MADE AN ADDITION OF ` 30 000/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WA S THE SUBMISSION THAT AS THE HOUSE PROPERTY WAS SELF-OCCUPIED NO NOTIONAL RENT COULD BE ADDED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS THE SUBMISSIO N THAT THE ADDITION AS MADE BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LEARN ED CIT(A) WAS LIABLE TO BE DELETED. 5. IN REPLY THE LEARNED SR. STANDING COUNSEL ON BE HALF OF THE REVENUE SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE RENTA LS FROM THE PROPERTY IN HER WEALTH-TAX RETURNS AT ` 3000/- PER MONTH AND THE SAME WAS LIABLE TO BE TRE ATED AS INCOME FROM HOUSE PROPERTY. HE VEHEMENTLY SUPPORTE D THE ORDERS OF THE LEARNED CIT(A) AND THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE WEALTH-TAX RETURNS OF THE ASSESSEE CLEARLY SHOWS THAT THE ASSE SSEE HAS ONLY ONE RESIDENTIAL HOUSE AT KOOTHANALLUR. FURTHER THE COMPUTATION OF THE MARKET VALUE OF THE PROPERTY CLEARLY SHOWS THAT IT IS FOR THE PURPOSE O F ARRIVING AT THE MARKET VALUE AND THE ASSESSEE HAS ADOPTED THE GROSS RENT OF ` 3000/- PER MONTH. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER PASSED U/S 144 READ WITH SECTION 147 OF THE ACT PASSED ON 27-03-1997 ALSO SHOWS THAT THE ASSESSMENT IS AS A RESULT OF A SEARCH CONDUCTED ON 24-09-1996 IN THE CASE OF THE ASSESSEES SON SH RI K. V. MAHADEVAN. IT IS FURTHER NOTICED THAT IN THE COURSE OF SEARCH NOTHIN G HAD BEEN FOUND TO SHOW THAT THE SAID HOUSE PROPERTY WAS GIVEN ON RENT. OBVIOUS LY IN THE ABSENCE OF ANY I.T.A. NO.399-409/MDS/2011 6 EVIDENCE TO SHOW THAT THE HOUSE PROPERTY AT KOOTHAN ALLUR HAD BEEN GIVEN ON RENT AND ALSO ON ACCOUNT OF THE FACT THAT THE HOUSE PROP ERTY AT KOOTHANALLUR IS THE ONLY HOUSE PROPERTY OWNED BY THE ASSESSEE NO ADDITION O N ACCOUNT OF THE NOTIONAL RENT CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THE C IRCUMSTANCES THE ADDITION MADE BY THE ASSESSING OFFICER IN REGARD TO THE INCO ME FROM HOUSE PROPERTY AND AS CONFIRMED BY THE LEARNED CIT(A) STANDS DELETED. 7. IN REGARD TO THE SECOND ISSUE IT WAS SUBMITTED B Y THE LEARNED AUTHORISED REPRESENTATIVE THAT THE ASSESSEE IS IN APPEAL AGAIN ST THE ACTION OF THE LEARNED CIT(A) IN TREATING THE SALE OF THE OLD BUILDING MAT ERIALS AS A REVENUE RECEIPT. IT WAS THE SUBMISSION THAT THE AMOUNT OF ` 20 000/- WAS SHOWN IN THE CAPITAL ACCOUNT OF THE ASSESSEE AND THIS WAS UNDISPUTED. IT WAS THE S UBMISSION THAT THE ASSESSING OFFICER HAD MADE THE ADDITION ON THE GROUND THAT NO EVIDENCE HAD BEEN PRODUCED TO SUBSTANTIATE THE CLAIM OF THE RECEIPT OF THIS AM OUNT AS ARISING OUT OF THE SALE OF THE OLD MATERIALS IN SPITE OF REPEATED OPPORTUNITIE S. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD OFFERED CAPITAL GAINS ON THE SALE OF T HE PROPERTY REPRESENTING THE PROPERTY AT MANNARGUDI. IT WAS THE SUBMISSION TH AT AS THE PROPERTY SOLD WAS A VACANT LAND THE OLD BUILDING THERE ON THE LAND HAD BEEN DEMOLISHED AND SOLD. IT WAS THE SUBMISSION THAT THE AMOUNT HAD ALSO BEEN RE CORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS SALE PROCEEDS FROM THE O LD DEMOLISHED BUILDING. IT WAS THE SUBMISSION THAT IN THE COURSE OF SEARCH THESE B OOKS WERE FOUND AND THE ENTRIES IN THE BOOKS WERE LIABLE TO BE ACCEPTED AS GENUINE ESPECIALLY WHEN NO ADVERSE I.T.A. NO.399-409/MDS/2011 7 EVIDENCE HAD BEEN FOUND. IT WAS THE SUBMISSION THA T THIS TRANSACTION RELATED TO THE ASSESSMENT YEAR 1991-92 AND THE SEARCH HAD TAKEN PL ACE IN 1996. THE ASSESSMENT WAS COMPLETED IN 1997 FOR THE FIRST TIME. IT WAS T HE SUBMISSION THAT EVEN IN THE ASSESSMENT ORDER PASSED ORIGINALLY ON 27-03-1997 TH E ASSESSING OFFICER HAD RECOGNIZED THAT THE BUILDING EXISTED IN THE EARLIER YEARS LIST OF FIXED ASSETS AND THE SAME DID NOT APPEAR DURING THE RELEVANT ASSESSMENT YEAR. IT WAS THE SUBMISSION THAT THE FACT THAT THE BUILDING EXISTED DURING THE EARLIER YEARS AND DID NOT EXIST DURING THE RELEVANT ASSESSMENT YEAR ITSELF PROVES T HE DEMOLITION OF THE BUILDING. IT WAS THE SUBMISSION THAT THE SAME COULD ONLY BE TREA TED AS THE CAPITAL GAINS ARISING FROM THE DEMOLITION AND SALE OF THE LONG TERM CAPIT AL ASSET BEING THE BUILDING. IT WAS THE SUBMISSION THAT EVEN THIS WAS SO THE COMPU TATION ITSELF WOULD GO INTO A LOSS WHICH HAS NOT BEEN DONE OR CLAIMED BY THE ASSE SSEE. 8. IN REPLY THE LEARNED STANDING COUNSEL ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND T HE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NOT PROVED THAT TH E AMOUNT OF ` 20 000/- AS SHOWN IN THE BOOKS WAS THE SALE PROCEEDS ARISING OU T OF THE SALE OF THE OLD BUILDING MATERIALS. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER ORIGINALLY PASSED ON 27-03-1997 CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS RECOGNIZED THAT THE PROPERTY AT MANNARGUDI DID HAVE A BUILDING WHICH WAS SHOWN IN THE BALANCE SHEET AND THE SAID BUILDING DID NOT EXI ST IN THE CURRENT YEARS BALANCE I.T.A. NO.399-409/MDS/2011 8 SHEET. THIS CLEARLY SHOWS THAT THE BUILDING HAD BE EN DEMOLISHED. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CLAIM TH AT THIS AMOUNT OF ` 20 000/- REPRESENTED THE SALE PROCEEDS OF THE OLD BUILDING M ATERIALS STANDS PROVED AND CANNOT BE TREATED AS THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. WE MAY ALSO MENTION HERE THAT THE ASSESSEE HAS DISC LOSED LONG TERM CAPITAL GAINS ON THE SALE OF THE MANNARGUDI PROPERTY AT ` 74 169/- AND THE SAME HAS ALSO BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IN THE CIRCUMSTANCES THE ADDITION MADE ON THIS COUNT BY THE ASSESSING OF FICER AND AS CONFIRMED BY THE LEARNED CIT(A) STANDS DELETED. 10. THE THIRD ISSUE IT IS SUBMITTED RELATED TO TH E DEPOSITS IN THE BANK ACCOUNTS. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT DURING THE RELEVANT ASSESSMENT YEAR THERE WERE TWO DEPOSITS WH ICH WERE IN QUESTION BEING THE DEPOSIT IN THE BANK ACCOUNT TO THE TUNE OF ` 16 652/- AND ANOTHER AMOUNT OF ` 5 000/- IT WAS THE SUBMISSION THAT THE AMOUNT OF ` 16 652/- WAS OUT OF THE AGRICULTURAL INCOME OF THE ASSESSEE. IT WAS FURTHE R SUBMITTED THAT THE AMOUNT OF ` 5 000/- WAS OUT OF THE REALIZATION OF SUNDRY DEBTOR S. IT WAS THE SUBMISSION THAT THE ASSESSEE OWNED NEARLY 10.23 ACRES OF AGRICULTURAL L AND AND FOR THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD DISCLOSED AGRICULT URAL INCOME OF ` 52 900/-. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD NO OTHER I NCOME OTHER THAN THE SAID AGRICULTURAL INCOME. I.T.A. NO.399-409/MDS/2011 9 11. IN REPLY THE LEARNED SR. STANDING COUNSEL ON B EHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). IT WAS THE SUBMISSION THAT THE ASSESSEE COULD NOT EXPLAIN THE ENTRIES IN HER B ANK ACCOUNT AND CONSEQUENTLY THE SAME WAS LIABLE TO BE THE UNEXPLAINED INCOME OF THE ASSESSEE. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSEE HAS DISCLOSED AGRICULTURAL INCOME OF ` 52 900/-. COPY OF THE INCOME & EXPENDITURE ACCOUNT FILED ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1991-92 ON 30-06-199 5 FOUND AT PAGES 1 TO 3 OF THE ASSESSEES PAPER BOOK CLEARLY SHOWS THAT THE IN COME IS BASICALLY ON ACCOUNT OF AGRICULTURAL OPERATIONS. THE SEARCH HAS ALSO NOT R EVEALED THAT THE ASSESSEE HAS GOT ANY OTHER SOURCE OF INCOME. IT IS FURTHER NOTICED THAT THE BANK BALANCES DISCLOSED IN THE RETURNS HAVE NOT BEEN DISPUTED BY THE REVENU E. OBVIOUSLY THESE DEPOSITS IN THE BANK WOULD HAVE BEEN TAKEN INTO CONSIDERATION W HILE PREPARING THE INCOME & EXPENDITURE ACCOUNT AND THE BALANCE SHEET OF THE ASS ESSEE. THERE BEING NO OTHER SOURCE OF INCOME ALSO HAVING BEEN FOUND EVEN AFTER THE SEARCH IT CANNOT BE ASSUMED THAT THE ASSESSEE HAS UNEXPLAINED INCOME WH ICH HAS BEEN DEPOSITED IN THE BANK. EVEN OTHERWISE THE TRANSACTION RELATES TO THE ASSESSMENT YEAR 1991-92 AND THE ASSESSMENT HAS BEEN DONE IN 1997 FOR THE FI RST TIME AND IN 2007 IN THE SET ASIDE PROCEEDINGS. EVEN DURING THIS PERIOD OF TIME NOTHING HAS BEEN FOUND AGAINST THE ASSESSEE FOR SHOWING ANY OTHER SOURCES OF INCOM E. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THESE AMOUNTS OF ` 16 652/- AND ` 5 000/- ARE OUT OF THE I.T.A. NO.399-409/MDS/2011 10 AGRICULTURAL INCOME OF THE ASSESSEE WHICH HAVE BEEN DISCLOSED AND ACCEPTED BY THE REVENUE. IN THE CIRCUMSTANCES THE ADDITION MADE O N THIS COUNT BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE LEARNED CIT(A) STAN DS DELETED. 13. IN REGARD TO THE FOURTH ISSUE IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE SAME RELATES TO THE CREDIT IN THE NAME OF P.A.T. ANBALAGAN. NO SERIOUS ARGUMENTS HAD BEEN PLACED BY THE LEARNED AUTHORISED REPRESENTATIVE IN REGARD TO THIS ISSUE. CONSEQUENTLY THE SAME IS DI SMISSED. 14. THE FIFTH ISSUE WAS AGAINST THE ACTION OF THE L EARNED CIT(A) IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE A GRICULTURAL INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ASSESSEE OWNED 10.23 ACRES OF AGRICULTURAL LAND AND THE ASSESSEE HAD BEEN DISCLOSING AGRICULTURAL INCOM E FOR MORE THAN 20 YEARS AND HER RETURNS HAD ALSO BEEN ACCEPTED. IT WAS THE SUB MISSION THAT IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER HAD TREATED THE AG RICULTURAL INCOME DISCLOSED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. HOWEV ER ON FIRST APPEAL THE LEARNED CIT(A) HAD ESTIMATED THE AGRICULTURAL INCOME AT ARO UND ` 67 500/-. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER IN THE ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL PASSED ON 27-12-2007 ESTIMATED THE ASSESSE ES AGRICULTURAL INCOME AT ` 67 500/- AS ESTIMATED BY THE LEARNED CIT(A). IT WA S THE SUBMISSION THAT THE ONLY REASON FOR MAKING THE ADDITION WAS THAT THE ASSESSE E COULD NOT PRODUCE ANY EVIDENCES TO SUBSTANTIATE THE CLAIM OF AGRICULTURAL OPERATIONS AND THE SALE OF THE AGRICULTURAL LAND. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAS ALSO I.T.A. NO.399-409/MDS/2011 11 ACCEPTED THAT THE ASSESSEE HELD AGRICULTURAL LAND O F NEARLY 10.23 ACRES AS HAD BEEN ACCEPTED BY THE LEARNED CIT(A) IN THE ORIGINAL FIR ST APPELLATE PROCEEDINGS. IT WAS THE SUBMISSION THAT FOR THE ASSESSMENT YEAR 1992-93 THE ASSESSEE HAD DECLARED AN AMOUNT OF ` 1 23 400/- AS THE AGRICULTURAL INCOME AS AGAINST ` 52 900/- DISCLOSED IN THE ASSESSMENT YEAR 1991-92. IT WAS THE SUBMISSION THAT FOR THE ASSESSMENT YEAR 1991-92 THE AGRICULTURAL INCOME AS DISCLOSED BY THE ASSESSEE HAD ALSO BEEN ACCEPTED BY THE SAME ASSESSING OFFICER EVEN IN THE ORIGINAL PROCEEDINGS. IT WAS THE SUBMISSION THAT THE ADDITION ON THIS COUNT MAY BE DELETED. 15. IN REPLY THE LEARNED SR. STANDING COUNSEL ON B EHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OF FICER AND THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT NO EVIDENCE IN REGARD TO THE LAND HOLDINGS OR THE AGRICULTURAL OPERATIONS HAD BEEN PRODUCED BEFORE TH E ASSESSING OFFICER. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUT SET IT IS NOTICED THAT THE ASSESSMENT ITSELF IS A VERY OLD ASSESSMENT AND IT WOULD BE PRACTICALLY IMPOSSIBLE FOR A NORMAL PERSON TO KEEP OLD RECORDS. FURTHER T HE FACT THAT THE ASSESSING OFFICER HAD IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMEN T YEAR 1991-92 ACCEPTED THE CLAIM OF AGRICULTURAL INCOME CLEARLY SHOWS THAT THE REVENUE WAS WELL AWARE THAT THE ASSESSEE HAD AGRICULTURAL LANDS AND WAS DOING AGRIC ULTURAL OPERATIONS. A PERUSAL OF THE WEALTH-TAX RETURNS FILED BY THE ASSESSEE ALSO C LEARLY SHOWS THE AVAILABILITY OF AGRICULTURAL LANDS. THE SEARCH ALSO CLEARLY BROUGH T OUT THAT THE ASSESSEE HELD AGRICULTURAL LANDS AND WAS DOING AGRICULTURAL OPERA TIONS. THE INCOME & EXPENDITURE I.T.A. NO.399-409/MDS/2011 12 ACCOUNT FOUND IN THE COURSE OF SEARCH CLEARLY SHOWE D THE EXISTENCE OF AGRICULTURAL INCOME. ONCE THERE IS SO MUCH OF EVIDENCE IN FAVOU R OF THE ASSESSEE TO SHOW THE EXISTENCE OF AGRICULTURAL OPERATIONS AND THE AGRICU LTURAL INCOME TO DO AN ARITHMETICAL EXERCISE TO ESTIMATE THE AGRICULTURAL INCOME AFTER MORE THAN 20 YEARS IS BUT A FUTILE EXERCISE. HERE WE MAY ALSO MENTION TH AT THE SEARCH DID NOT REVEAL ANY OTHER SOURCES OF INCOME IN THE HANDS OF THE ASSESSE E. THIS BEING SO WE ARE OF THE VIEW THAT THE AGRICULTURAL INCOME AS DISCLOSED BY T HE ASSESSEE IS REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMS TANCES THE FINDING OF THE LEARNED CIT(A) AND THE ASSESSING OFFICER ON THIS ISSUE IS R EVERSED AND THE ASSESSING OFFICER IS DIRECTED TO TREAT THE AGRICULTURAL INCOME DISCLO SED BY THE ASSESSEE AS THE AGRICULTURAL INCOME AND DELETE THE ADDITION MADE BY TREATING THE ESTIMATED AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES. 17. THE SIXTH ISSUE IN THE APPEAL WAS IN REGARD TO THE DEPOSITS IN THE BANK ACCOUNTS AND UNEXPLAINED CREDITORS AS ADDED BY THE ASSESSING OFFICER. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD PRODUCED CONFIRMAT ION LETTERS FROM THE CREDITORS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFI CER HAD ISSUED INDEPENDENT LETTERS TO THE CREDITORS. IT WAS THE SUBMISSION TH AT THE CREDITORS HAD WRITTEN BACK TO THE ASSESSING OFFICER GIVING VARIOUS REASONS FOR NO T APPEARING BEFORE THE ASSESSING OFFICER. HOWEVER IT WAS THE SUBMISSION THAT NONE OF THE CREDITORS HAD DENIED THE TRANSACTIONS WITH THE ASSESSEE. IT WAS THE SUBMISS ION THAT THE ASSESSING OFFICER HAD DISALLOWED THE INVESTMENTS IN THE BANK ACCOUNTS RELATING TO THE TRANSACTIONS I.T.A. NO.399-409/MDS/2011 13 WITH THE CREDITORS AS ALSO TREATING THE SUNDRY CRED ITORS SHOWN IN THE BALANCE SHEET AS NON-GENUINE ONLY ON THE GROUND THAT NO ADDITIONA L DOCUMENTARY EVIDENCE WAS PRODUCED BEFORE THE ASSESSING OFFICER NOR THE PARTI ES PRODUCED FOR EXAMINATION. IT WAS THE SUBMISSION THAT THE TRANSACTIONS WERE VERY OLD AND ALL THE PARTIES HAD RESPONDED TO THE LETTERS ISSUED BY THE ASSESSING OF FICER. IT WAS THE SUBMISSION THAT THE CREDITORS WERE IN THANJAVUR AND NEARBY PLACES A ND THE ASSESSING OFFICER WAS IN CHENNAI AND NONE OF THE CREDITORS WERE WILLING TO T RAVEL TO CHENNAI TO DEPOSE BEFORE THE ASSESSING OFFICER. IT WAS THE SUBMISSIO N THAT THE INDEPENDENT LETTERS ISSUED BY THE ASSESSING OFFICER HAD BEEN RESPONDED TO ITSELF SHOWS THAT THE CREDITORS WERE GENUINE. IT WAS THE FURTHER SUBMISS ION THAT NONE OF THE CREDITORS HAD ALSO DENIED THE TRANSACTIONS WITH THE ASSESSEE. 18. IN REPLY THE LEARNED SR. STANDING COUNSEL ON B EHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OF FICER AND THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT OTHER THAN THE CONFIRMAT ION LETTERS NO OTHER EVIDENCES HAD BEEN PRODUCED TO PROVE THE CLAIM OF CREDITORS. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS M ENTIONED EARLIER THESE TRANSACTIONS ARE MORE THAN 20 YEARS OLD AND WHEN TH E SECOND ROUND OF INVESTIGATION ITSELF WAS GOING ON THE MATTERS WERE MORE THAN 15 YEARS OLD. A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER SHOWS THAT THE ADDITION ON THIS COUNT WAS PRACTICALLY THE TOTAL CREDITS IN THE BANK ACCOUNTS OF THE ASSESSEE. FOR EXAMPLE FOR THE ASSESSMENT YEAR 1992-93 THE ADDITION ON ACCOUNT OF THE INVESTMENT IN THE BANK I.T.A. NO.399-409/MDS/2011 14 ACCOUNT WAS TO THE EXTENT OF ` 8 15 000/- AND THE ASSESSEE HAS BEEN ABLE TO EXPLAIN AS HAS BEEN MENTIONED IN THE ASSESSMENT OR DER DATED 27-12-2007 TO THE EXTENT OF ` 7 15 000/- BEFORE THE LEARNED CIT(A). THE BALANCE OF ` 1 LAKH AS SHOWN IN THE BANK ACCOUNT HAS BEEN AMOUNTS RECEIVED FROM SIX DIFFERENT PERSONS FOR WHICH CONFIRMATION FROM THREE PERSONS HAD ALSO BEEN PRODU CED AND OUT OF THE BALANCE AMOUNT OF SUNDRY CREDITORS OF ` 3 58 000/- THE ASSESSEE HAS PRODUCED CONFIRMATION LETTERS. OBVIOUSLY NO CREDITOR WOULD AFTER RECEIV ING BACK THE MONIES TAKE THE TROUBLE OF TRAVELING FROM THANJAVUR TO CHENNAI TO D EPOSE BEFORE THE ASSESSING OFFICER. THE ASSESSEE WOULD ALSO BE NOT HAVING ANY CONTROL OVER THESE PERSONS TO COMPEL THEM TO APPEAR BEFORE THE ASSESSING OFFICER. THE FACT THAT THEY HAVE GIVEN CONFIRMATION LETTERS AFTER SO MANY YEARS ITSELF SHO ULD BE TREATED AS ADEQUATE EVIDENCE. FURTHER THE FACT THAT ALL THESE TRANSACT IONS HAD BEEN RECORDED IN THE BOOKS OF ACCOUNT AS FOUND IN THE COURSE OF SEARCH I TSELF GIVES CREDENCE TO THE CLAIM INSOFAR AS THE PROVISIONS OF SEC. 132(4A) OF THE AC T ITSELF PROVIDES FOR THE PRESUMPTION THAT THE ENTRIES AS FOUND IN THE BOOKS ARE GENUINE. IN THE CIRCUMSTANCES THE ADDITION AS MADE BY THE ASSESSIN G OFFICER AND AS CONFIRMED BY THE LEARNED CIT(A) ON THESE COUNTS STANDS DELETED. 20. THE SEVENTH ISSUE RELATES TO THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION REPRESENTING THE DIFFERENCE BETWEEN TH E COST OF CONSTRUCTION DISCLOSED BY THE ASSESSEE AND AS ESTIMATED BY THE DVO IN REGA RD TO THE KALYANAMANDAPAM WHICH WAS CONSTRUCTED BY THE ASSESSEE DURING THE PE RIOD 1991-92 TO 1994-95. IT I.T.A. NO.399-409/MDS/2011 15 WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTAT IVE THAT THE ASSESSEE HAD ADMITTED AN EXPENDITURE OF ` 39 85 062/- ON ACCOUNT OF THE COST OF CONSTRUCTION OF THE KALYANAMANDAPAM. IT WAS SUBMITTED THAT THE KALY ANAMANDAPAM WAS CONSTRUCTED ON THE LAND OWNED BY THE ASSESSEE AT TH IRUTHURAIPOONDI. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD TAKEN LOAN FROM IN DIAN BANK ALSO OF AN AMOUNT OF ` 14 10 750/- FOR THIS PURPOSE. IT WAS THE SUBMISSI ON THAT THE CONSTRUCTION OF THE KALYANAMANDAPAM WAS DONE UNDER THE SUPERVISION OF T HE ASSESSEES HUSBAND WHO EXPIRED ON 19-12-1993. IT WAS THE SUBMISSION THAT THE VALUATION REPORT HAD NOT BEEN GRANTED TO THE ASSESSEE FOR REBUTTAL. IT WAS THE FURTHER SUBMISSION THAT FOR THE PURPOSE OF VALUATION THE CPWD RATES HAD BEEN AP PLIED AND NO DEDUCTION TOWARDS SELF-SUPERVISION HAD ALSO BEEN GRANTED TO T HE ASSESSEE. IT WAS THE SUBMISSION THAT IN VIEW OF THE DECISION OF THE HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. V. T. RAJENDRAN REPORTED IN 288 ITR 312 THE ASSESSING OFFICER MAY BE DIRECTED TO HAVE THE PROPERTY VALUED BY APPL YING THE PWD RATES FOR THE RELEVANT ASSESSMENT YEAR ON THE FIRST PART AND TO G RANT THE ASSESSEE THE BENEFIT OF DEDUCTION TOWARDS SELF-SUPERVISION. IT WAS THE SUB MISSION THAT IF THIS IS DONE THERE WOULD BE NO VARIATION FROM THE AMOUNT DISCLOSED BY THE ASSESSEE. 21. IN REPLY THE LEARNED SR. STANDING COUNSEL ON B EHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OF FICER AND THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE DVO HAD VALUED THE C OST OF CONSTRUCTION AT ` 72 32 100/- INCLUDING THE COST OF FURNITURE. IT WA S THE FURTHER SUBMISSION THAT THE I.T.A. NO.399-409/MDS/2011 16 ASSESSING OFFICER HAD CATEGORICALLY RECORDED THAT T HE ASSESSEE HAD NOT OBJECTED TO THE SHOW CAUSE NOTICE ISSUED IN THE PROPOSAL FOR TH E COMPLETION OF THE ASSESSMENT U/S 144 OF THE ACT WHEREIN IT WAS POINTED OUT THAT THE VALUATION OF THE BUILDING HAD BEEN REFERRED TO THE VALUATION CELL OF THE INCOME T AX DEPARTMENT AND IT WAS ALSO INFORMED THAT IF THE VALUATION OF THE VALUATION CEL L IS HIGHER THE SAME WOULD BE CONSIDERED FOR THE ASSESSMENT. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUTSET THE CPWD RATES ARE APPLICABLE FOR MAJOR CITIES. CPWD DOES NOT HAVE AN Y SPECIFIC RATES FOR THE VILLAGES SUCH AS THIRUTHURAIPOONDI. PWD ON THE OTHER HAND H AS THE RATES FOR THE STATE. OBVIOUSLY THE COST FROM PLACE TO PLACE WOULD VARY ON ACCOUNT OF THE LABOUR COST AS ALSO COST OF SAND AND OTHER BUILDING MATERIALS WHIC H WOULD BE AVAILABLE LOCALLY. THE KALYANAMANDAPAM HAVING BEEN PUT UP IN THIRUTHURAIPO ONDI WHICH WAS A VILLAGE AREA CLEARLY CPWD RATES CANNOT BE APPLIED FOR ESTI MATING THE COST OF CONSTRUCTION. IN REGARD TO THE SUBMISSION OF THE LEARNED SR. STAN DING COUNSEL THAT THE ASSESSEE HAD AGREED TO THE ADDITION A PERUSAL OF THE ASSESS MENT ORDER CLEARLY SHOWS THAT THE PROPOSAL WHICH WAS SENT BY THE ASSESSING OFFICE R WAS IN REGARD TO THE ASSESSMENT U/S 144 WHICH IS AN EX PARTE ASSESSMENT. THE ASSESSEE HAS NOWHERE ACCEPTED THE PROPOSAL OF MAKING THE ADDITION AT A H IGHER AMOUNT AS VALUED BY THE VALUATION CELL. THE ASSESSING OFFICER HAS ONLY RECO RDED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTIONS. THE FACT THAT THE ASSESSMENT HAD ORIGINALLY BEEN COMPLETED U/S 144 SHOWS THAT THERE WAS NO CO-OPERATION FROM T HE ASSESSEES SIDE AT THAT POINT I.T.A. NO.399-409/MDS/2011 17 OF TIME. THIS CANNOT BE TAKEN TO BE AN ACCEPTANCE BY THE ASSESSEE OF A PROPOSAL BY THE ASSESSING OFFICER BECAUSE IF THIS IS SO THE N THE ASSESSEE COULD NOT HAVE FILED AN APPEAL AGAINST THE ORIGINAL ASSESSMENT U/S.144 I TSELF. HOWEVER THE ASSESSEE HAS FILED AN APPEAL AND THE ISSUES IN THAT APPEAL H AD BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE-ADJUDICATION. IN THE RE-A DJUDICATION PROCEEDINGS ALSO THE ADDITIONS AS MADE IN THE ORIGINAL ASSESSMENT U/S.14 4 HAVE BEEN REDUCED DRASTICALLY. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE V ALUATION OF THE KALYANAMANDAPAM CANNOT BE DONE BY APPLYING THE CPWD RATES. NORMALLY WE WOULD DIRECT THAT THE ASSESSING OFFICER TO VALUE TH E PROPERTY BY APPLYING THE PWD RATES AND GRANT THE ASSESSEE DEDUCTION TOWARDS SELF -SUPERVISION. HOWEVER CONSIDERING THE LAPSE OF TIME AND THE FUTILITY OF M AKING ANOTHER VALUATION BY APPLYING THE PWD RATES FOR THE ASSESSMENT YEARS 199 1-92 TO 1994-95 AND ALSO ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAS DISCLOSED THE INVESTMENT IN THE COST OF CONSTRUCTION AT NEARLY ` 40 LAKHS THE ADDITION AS MADE BY THE ASSESSING OF FICER ON THIS GROUND STANDS DELETED. 23. THE EIGHTH ISSUE IN ALL THESE APPEALS RELATES T O THE RECEIPT OF GIFT ON THE INAUGURAL FUNCTION OF THE KALYANAMANDAPAM FROM VARI OUS FRIENDS AND RELATIVES. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD T REATED THE GIFTS RECEIVED AS UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE. I T WAS THE SUBMISSION THAT THE ASSESSEE HAD DISCLOSED HAVING RECEIVED GIFTS OF ` 1 35 435/- WHICH WAS REDUCED BY THE LEARNED CIT(A) IN THE ORIGINAL APPELLATE PROCEE DINGS TO ` 95 435/-. IT WAS THE I.T.A. NO.399-409/MDS/2011 18 SUBMISSION THAT THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE DETAILS OF THE NAMES AND ADDRESSES OF THE DONORS DATE AND AMOUNT AND MODE OF RECEIPT WITH DOCUMENTARY EVIDENCE WHICH THE ASSESSEE COULD NOT PRODUCE. IT WAS THE SUBMISSION THAT THE DISALLOWANCE MAY BE DELETED. I N THE ALTERNATIVE PRAYER WAS THAT THE DISALLOWANCE MAY BE REDUCED. 24. IN REPLY THE LEARNED SR. STANDING COUNSEL ON B EHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). IT WAS THE SUBMISSION THAT NO EVIDENCE HAD BEEN PRODUCED BY THE ASSESSEE TO SU BSTANTIATE HER CLAIM. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. CONS IDERING THE FACT THAT THE ASSESSMENTS HAVE BEEN PENDING FOR SO MANY YEARS AND AFTER SUCH A LONG TIME IT WOULD BE IMPOSSIBLE FOR THE ASSESSEE TO PRODUCE THE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER WE ESTIMATE THE GIFT RECEIVED BY THE ASSESSEE AND GRANT THE ASSESSEE AN ADDITIONAL RELIEF OF ` 45 435/-. IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION ON THI S COUNT TO ` 50 000/-. 26. IN REGARD TO THE NINTH AND THE LAST ISSUE WHIC H IS AGAINST THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION REPRESENT ING THE EXCESS CLAIM OF INTEREST ON LIABILITY NO SERIOUS ARGUMENTS HAVE BEEN PLACED BEFORE. CONSEQUENTLY THE SAME IS DISMISSED. 27. IN THE CIRCUMSTANCES ITA NO. 399/MDS/2011 ISS UES IN ITEM NOS. 1 2 3 & 4 AS DECIDED IN THE EARLIER PORTION OF THIS ORDER RE SULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED; ITA NO. 400/MDS/2011 ISSUES IN ITEM NOS. 1 5 6 & 7 DECIDED I.T.A. NO.399-409/MDS/2011 19 ABOVE RESULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED; ITA NO. 401/MDS/2011 ISSUES OF ITEM NOS. 1 5 6 7 & 8 DECID ED ABOVE RESULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED; ITA NO. 402/M DS/2011 ISSUES IN ITEM NOS. 1 5 6 7 & 9 RESULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED; ITA NO. 403/MDS/2011 ISSUES IN ITEM 1 5 6 & 9 DECIDED ABOV E RESULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED; ITA NO. 404/MDS/201 1 ISSUES IN ITEM NOS. 1 & 5 RESULTS IN THE APPEAL OF THE ASSESSEE BEING PARTLY ALLOWED AND ITA NOS. 405 TO 409/MDS/2011 HAVING SINGLE ISSUE BEING THE ISSUE NO .5 THE APPEALS OF THE ASSESSEE ARE ALLOWED. 28. IN THE RESULT ITA NOS. 399 TO 404/MDS/2011 ARE PARTLY ALLOWED AND ITA NOS. 405 TO 409/MDS/2011 ARE ALLOWED. 29. THE ORDER WAS PRONOUNCED IN THE COURT ON 18/11/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 18 TH NOVEMBER 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE