Sri Sampathirao Appa Rao (HUF), Srikakulam v. The ITO, Ward-2, Srikakulam

ITA 58/VIZ/2010 | 2002-2003
Pronouncement Date: 22-10-2010 | Result: Dismissed

Appeal Details

RSA Number 5825314 RSA 2010
Assessee PAN AAIHA1693P
Bench Visakhapatnam
Appeal Number ITA 58/VIZ/2010
Duration Of Justice 8 month(s) 19 day(s)
Appellant Sri Sampathirao Appa Rao (HUF), Srikakulam
Respondent The ITO, Ward-2, Srikakulam
Appeal Type Income Tax Appeal
Pronouncement Date 22-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 22-10-2010
Date Of Final Hearing 06-10-2010
Next Hearing Date 06-10-2010
Assessment Year 2002-2003
Appeal Filed On 03-02-2010
Judgment Text
I TA NO S . 57 TO 60 /VIZAG/20 1 0 ASSESSMENT YEARS : 2001 - 02 TO 200 4 - 0 5 RESPECTIVELY SRI SAMP ATHIRAO APPA RAO (HUF) SRIKAKULAM I TO WARD - 2 SRIKAKULAM (APPELLANT) VS. (RESPONDENT) PAN NO. AAIHA 1693P ITA NO S .61 TO 64/VIZAG/2010 ASSESSMENT YEARS : 2001 - 02 TO 2004 - 05 RESPECTIVELY SRI SAMPATHIRAO APPA RAO SRIKAKULAM ITO WARD - 2 SRIKAKU LAM (APPELLANT) VS. (RESPONDENT) PAN NO.BBAPS 5367N ITA NO S . 65 TO 68 /VIZAG/2010 ASSESSMENT YEARS : 2001 - 02 TO 2004 - 05 RESPECTIVELY S MT. SAMPATHIRAO DHANALAKSHMI SRIKAKULAM ITO WARD - 2 SRIKAKULAM (APPELLANT) VS. (RESPONDENT) PAN NO.BBAPS 536 8D WTA NOS.3 TO 7/VIZAG/2009 ASSESSMENT YEARS : 2001 - 02 TO 2005 - 06 RESPECTIVELY SMT. S. DHANALA KSH MI SRIKAKULAM WTO WARD - 2 SRIKAKULAM (APPELLANT) VS. (RESPONDENT) PAN NO.BBAPS 5368D WTA NOS.8 TO 12/VIZAG/2009 ASSESSMENT YEARS : 2001 - 02 TO 2005 - 0 6 RESPECTIVELY SRI S. APPA RAO (HUF) SRIKAKULAM WTO WARD - 2 SRIKAKULAM (APPELLANT) VS. (RESPONDENT) PAN NO.AAIHA 1693P BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM 2 WTA NOS.13 TO 17/VIZAG/2009 ASSESSMENT YEARS : 2001 - 02 TO 2005 - 06 RESPECTIVELY SRI S. APPA RAO SRIKAKULAM WTO WARD - 2 SRIKAKULAM (APPELLANT) VS. (RESPONDENT) PAN NO.BBAPS 5367N ORDER PER BENCH : - THESE APPEALS ARE PREFERRED BY THE ASSESSEES AGAINST THE RESPECTIVE ORDERS OF THE CIT(A)/CWT(A) . S INCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS T HESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 2. THERE ARE THREE SET OF APPEALS ; ONE IN THE CASE OF ASSESSEE SHRI S. APPA RAO AND THE SECOND IN THE CASE OF ASSESS EES HUF I.E. S. APPA RAO (HUF) AND THE THIRD IN THE CASE OF SMT. S. DHANALAKSHMI W/O S. APPA RAO. THE FACTS IN ALL THESE THREE SETS OF CASES ARE ALMOST IDENTICAL EXCEPT THE QUANTUM INVOLVED IN THE RESPECTIVE APPEALS. THE BRIEF HISTORY OF THESE CASES AR E THAT DURING THE ASSESSMENT YEAR 2005 - 06 ALL THE ASSESSEES HAVE FILED THE CASH FLOW STATEMENTS IN WHICH OPENING CASH BALANCE AS ON 1.4.2003 AND INCOME FROM INTEREST AND AGRICULTURE WERE SHOWN. A CASH FLOW STATEMENT S SINCE FINANCIAL YEAR 1980 - 81 TILL FIN ANCIAL YEAR 2004 - 05 W ERE FILED SHOWING THE RECEIPT OF INCOME FROM INTEREST AND AGRICULTURE. THE SOURCE OF AGRICULTURAL INCOME WAS SHOWN TO BE FROM THE CULTIVATION OF LEASE HOLD LANDS TAKEN FROM THE FATHER - IN - LAW OF THE ASSESSEE SHRI S. APPA RAO. SINCE TH E INCOME SHOWN IN THE CASH FLOW STATEMENTS WERE EXORBITANT AND HYPOTHETICAL THE ASSESSMENT FOR THE ASSESSMENT YEARS 2001 - 02 TO 2004 - 05 WERE RE - OPENED U/S 147 R.W.S. 148 OF THE INCOME TAX ACT. SINCE THE HUGE CASH BALANCE WAS SHOWN IN THOSE RESPECTIVE YEAR S THE ASSESSMENT FOR WEALTH TAX WAS ALSO RE - OPENED IN ALL THESE THREE CASES FOR THE ASSESSMENT YEARS 2001 - 02 TO 2005 - 06. APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI J. SIRI KUMAR DR 3 3 . T HE ASSESSEES WERE ASKED TO EXPLAIN THE AVAILABILITY OF THIS OPENING BALANCE AS ON 1.4.2000 BESIDES PRODUCTION OF THE BOOKS OF AC COUNTS BANK ACCOUNTS AND EVIDENCE REGARDING OWNING OF AGRICULTURAL LAND BY THE FATHER - IN - LAW OF SHRI S. APPA RAO. THE A.O. HAS EXAMINED THE EXPLANATION AND ESTIMATED THE AGRICULTURAL INCOME AND OTHER INCOME OF THE ASSESSEES AND MADE THE ADDITION OF THE S AME . T HE MATTER S WERE BROUGHT BEFORE THE CIT(A). THE CIT(A) LOOKED INTO THE ENTIRE ACTIVITIES OF THE ASSESSEE S AND HE HAS ENHANCED THE INCOME AFTER HAVING NOTICED THAT THE ASSESSEE COULD NOT EXPLAIN THE OPENING BALANCE SHOWN AS 1.4.2000. HE ACCORDINGLY TREATED THE OPENING BALANCE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND MADE THE ADDITION OF THE SAME. THE CIT(A) HAS NOT ACCEPTED THE STORY OF AGRICULTURAL INCOME EARNED BY THE ASSESSEES FROM THE LEASE HOLD AGRICULTURAL LAND. HE ACCORDINGLY TREATED THE ENTIRE AGRICULTURAL INCOME AS AN INCOME FROM OTHER SOURCES AND MADE THE ADDITION OF THE SAME. THE CIT (A) WAS ALSO NOT CONVINCED WITH THE INCOME OF THE HUF FROM OTHER ACTIVITIES AND HE TREATED THAT INCOME AS AN INCOME OF THE INDIVIDUAL ASSESSEE SRI S. APPA RAO AND MADE THE ADDITION OF THE SAME. 4 . IN WEALTH TAX MATTERS THE ASSESSEE HAVE STATED THAT THEY HAVE GIVEN CERTAIN ADVANCES TO VARIOUS PARTIES FOR PURCHASE OF LAND. HAVING REALIZED THAT THE ASSESSEE HAD BEEN MAKING THESE ADVANCES YEAR AFTER YE AR AND THE SALE OF THE AGRICULTURAL LAND WAS NEVER MATERIALIZED AND ULTIMATELY THE ENTIRE AMOUNT WAS RECEIVED BACK BY THE ASSESSEES T HE CIT(A) TREATED THE INVESTMENT UPTO 2000 - 01 AND OTHER SUCCEEDING YEARS AS CASH IN HAND BESIDES DECLARED CASH IN HAND BY THE ASSESSEES AND ASSESSED THE SAME IN WEALTH TAX ACT AFTER GIVING A CREDIT OF EXEMPTION U/S 2(E)(A)(VI) OF RS.50 000/ - . 5. NOW THE ASSESSEE S HA VE PREFERRED THEIR APPEAL S BEFORE US IN ALL THESE CASES. THOUGH WE HAVE DISCUSSED THE GENERAL FACTS OF ALL T HESE CASES WE NOW PREFER TO ADOPT THE APPEAL NO.61 OF 2010 IN THE CASE OF ASSESSEE INDIVIDUAL PERTAINING TO THE ASSESSMENT YEAR 2001 - 02 IN INCOME TAX AS A LEAD CASE AND DISCUSSED ITS FACTS AS UNDER IN ORDER TO UNDERSTAND THE PROPER REASONING FOR WHICH THE CLAIM OF THE ASSESSEES WERE TURNED DOWN BY THE REVENUE. 4 6 . THE ASSESSEE SRI S. APPA RAO INDIVIDUAL HAS FILED ITS RETURN OF INCOME FOR THE FIRST TIME IN THE ASSESSMENT YEAR 2005 - 06 DISCLOSING ITS TOTAL INCOME OF RS.53 200/ - ALONG WITH THE AGRICULTURAL INC OME OF RS.99 300/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS DIRECTED TO FURNISH CASH FLOW STATEMENT EXPLAINING THE INVESTMENT MADE BY HIM FROM YEAR TO YEAR. A CASH FLOW STATEMENT SINCE FINANCIAL YEAR 1980 - 81 TILL THE FINANCIAL YEAR 2004 - 05 WAS FILED SHOWING THE RECEIPT OF INCOME FROM INTEREST AND AGRICULTURE. THE A.O. FOUND THAT PAYMENT OF RS.1 LAKH WAS MADE AS ADVANCE TOWARDS PURCHASE OF AGRICULTURAL LAND AND ALSO RECEIPTS WERE FOUND NOT TO BE SUPPORTED WITH ANY VALID SOURCE OF INC OME AND THERE WAS NO PROOF WITH REGARD TO THE ACCUMULATION OF SUCH AMOUNT YEAR AFTER YEAR IN THE FORM OF ANY BANK ACCOUNT OR OTHERWISE. IT WAS STATED BEFORE THE A.O. THAT ASSESSEE HAS TAKEN THE AGRICULTURAL LAND OF 10 ACRES AT KINTHALI VILLAGE BELONGING T O HIS FATHER - IN - LAW ON LEASE FROM WHICH HE HAS EARNED THE AGRICULTURAL INCOME ON PAYMENT OF LEASE RENT AT RS.1200/ - P.A. HAVING NOTED THAT IN THE CASH FLOW STATEMENT AN EXORBITANT AND HYPOTHETICAL INCOME WERE SHOWN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001 - 02 TO 2004 - 05 WERE RE - OPENED IN ORDER TO CONSIDER THE INVESTMENT MADE BY THE ASSESSEES. THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND NOTICES U/S 143(2) AND 142(1) OF THE INCOME - TAX ACT WERE ISSUED TO THE ASSESSEE REQUIRING HIM TO FURNISH THE FOLLOWING DOCUMENTS: 1) BOOKS OF ACCOUNTS RELATING TO THE ASSESSMENT YEAR 1999 - 2000 2000 - 01 & 2001 - 02. 2) BANK ACCOUNTS. 3) EVIDENCE REGARDING RECEIPT OF AGRICULTURAL INCOME AND PROOF OF EXPENSES . 4) E VIDENCE REGARDING AVAI LABILITY OF CASH BALANCE AS ON 1.4.2000 5) E VIDENCE REGARDING OWNING OF AGRICULTURAL LAND BY THE FATHER - IN - LAW OF THE ASSESSEE AND ALSO TO FURNISH THE CONFIRMATION LETTER FROM THE LESSOR. SINCE THERE WAS NO COMPLIANCE FROM THE ASSESSEE A PROPOSED ADDITION VIDE LETTER DATED 7.10.2008 WAS ISSUED AND SERVED ON THE ASSESSEES ON 16.10.2008 . I N RESPONSE TO WHICH ASSESSEE FILED A RETURN OF INCOME ON 21.11.2008 ADMITTING HIS TOTAL INCOME AT RS.29 300/ - BESIDES AGRICULTURAL INCOME OF RS.1 12 800/ - . IT WAS ALSO E XPLAINED BY THE ASSESSEE THAT HE DID 5 NOT HAVE ANY BANK ACCOUNT NOR DID HE MAINTAIN ANY BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT HE HAD EARNED RS.11 280/ - PER ACRE THROUGH AGRICULTURAL ACTIVITIES AND THAT HE HAD KEPT THAT CASH IN H IS HOUSE. BESIDES HE WAS DOING THE BUSINESS OF BROKERAGE OF LAND IN HIS HUF STATUS. IN THE ABSENCE OF ANY EVIDENCE REGARDING RECEIPT OF AGRICULTURAL INCOME AS WELL AS THE EXPENDITURE INCURRED THE A.O. ESTIMATED THE AGRICULTURAL INCOME FROM LEASE HOLD LA ND AT RS.80 000/ - NET PER ANNUM AND MADE THE ADDITION OF THE BALANCE OF RS.32 800/ - . BESIDES OPENING BALANCE OF RS.38 019/ - AND INCOME ADMITTED IN THE HANDS OF HUF AT RS.49 200/ - WERE ALSO ADDED IN THE HANDS OF THE ASSESSEES. 7 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND CIT(A) EXAMINED ALL THE ISSUES ONE AFTER THE OTHER. WITH REGARD TO THE AGRICULTURAL INCOME THE CIT(A) HAS OBSERVED THAT CONTENTION OF THE ASSESSEES CANNOT BE ACCEPTED AS IN SUPPORT OF AGRICULTURAL ACTIVITY NO DETAILS/EVID ENCE WITH REGARD TO THE INCOME AS WELL AS EXPENDITURE INCURRED FOR THE SAME HAS BEEN FURNISHED. THE DOCUMENTARY EVIDENCE WITH REGARD TO THE LEASE HOLD LAND SUBMITTED BY THE ASSESSEE IS ALSO ON THE PLA I N PAPER SIGNED BY ONE S. LAXMAIAH WHICH DOES NOT PROVE THAT LAND WAS GIVEN ON LEASE TO THE ASSESSEE. NO PROPER LEASE DOCUMENT WAS FILED BY THE ASSESSEE. THE CIT(A) HAS ALSO OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS IT WAS CLAIMED BY THE ASSESSEE THAT LEASE HOLD LAND WAS TAKEN BY HIM FROM HIS FATHER - IN - LAW ON A PAYMENT OF RS.1200/ - LEASE RENT PER ANNUM. WHEREAS AT THE TIME OF APPEAL PROCEEDINGS HE HAS CLAIMED THAT LAND WAS TAKEN ON LEASE FROM ONE SHRI S . LAXMAIAH. THUS THERE WAS NO CONSISTENCY IN THE ASSESSEES OWN STATEMENT WITH REGARD TO THE LEASE HOLD LAND. THE CIT(A) ACCORDINGLY DID NOT ACCEPT THE CONTENTION OF THE ASSESSEES THAT HE HAD SOME AGRICULTURAL INCOME ON CULTIVATION OF AGRICULTURAL LAND. HE ACCORDINGLY ENHANCED THE INCOME FROM OTHER SOURCES AND DIRECT THE A.O. TO ASSESS THE ENTIRE ALLE GED AGRICULTURAL INCOME OF RS.1 12 800/ - UNDER THE HEAD INCOME FROM OTHER SOURCES. 8 . WITH REGARD TO THE OPENING CASH BALANCE AS ON 1.4.2000 AT RS.38 019/ - WHICH WAS TREATED BY THE A.O. AS AN INCOME FROM UNDISCLOSED SOURCES. THE CIT(A) HAS OBSERVED THAT THE OPENING CAPITAL BALANCE AS PER THE BALANCE 6 SHEET AS ON 31.3.2001 WAS OF RS.43 21 020/ - . SINCE THIS BEING THE FIRST YEAR OF FILING THE RETURN ON INCOME DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SUCH O PENING CAPITAL BALANCE. SINCE NO SATISFACTORY EXPLANATION WAS OFFERED THEREFORE ENHANCEMENT NOTICE DATED 14.9.2009 ENHANCING THE ASSESSEES INCOME BY RS.4 3 21 020 / - WAS ISSUED AND SERVED ON THE ASSESSEE. 9 . IN RESPONSE TO THE SAID LETTER THE ASSESSEE FILED A CASH FLOW STATEMENT SHOWING AGRICULTURAL INCOME AND INTEREST INCOME SINCE 1980 - 81 TILL DATE AND BALANCE SHEET AS ON 31.3.2001 ALREADY FILED BEFORE THE A.O. THE SOURCE OF OPENING CAPITAL BALANCE HAS BEEN EXPLAINED AS DERIVED FROM AGRICULTURAL INCOM E AND INTEREST INCOME . I N SUPPORT OF THESE FACTS THE ASSESSEE HAS FILED A PHOTOCOPY OF LETTER O N PLAIN PAPER SIGN ED BY S. LAXMAIAH AND HAS CONTENDED THAT HE HAD BEEN DOING AGRICULTURAL ACTIVITY SINCE 1980 TILL DATE ON SUCH LEASE HOLD LAND AND ALSO DERIVED INTEREST INCOME ON LOANS GIVEN TO SOME PERSONS. THE CIT(A) PERUSED THE SAID LETTER AND NOTICED THAT THE PERIOD MENTIONED THEREIN IS 2000 - 2010 THEREFORE THERE IS NO QUESTION OF DERIVING ANY AGRICULTURAL INCOME PRIOR TO THE YEAR UNDER CONSIDERATION WHICH HAS BEEN SHOWN IN CASH FLOW STATEMENT SINCE 1980 - 81 WHICH RESULTED INTO AN ACCUMULATION OF OPENING CAPITAL BALANCE AMOUNTING TO RS.43 21 020/ - . THE CIT (A) FURTHER NOTED THAT AT THE TIME OF ASSESSMENT PROCEEDINGS IT WAS CLAIMED BY THE ASSESSEE THAT LAND WAS TAKEN ON LEASE FROM HIS FATHER - IN - LAW ON PAYMENT OF RS.1200/ - AS LEASE RENT. WHEREAS NOW THE ASSESSEE HAS CLAIMED THAT LAND WAS TAKEN ON LEASE FROM S. LAXMAIAH. THE CIT(A) ACCORDINGLY OBSERVED THAT THERE WAS NO LEASE HOLD LAND BEING CULTIVATED BY TH E ASSESSEE SINCE 1980 - 81 THEREFORE THE ASSESSEE S CLAIM OF HAVING AGRICULTURAL INCOME SINCE 1980 - 81 CANNOT BE ACCEPTED AND HE REJECTED THE SAME. BESIDES IT WAS ALSO CONTENDED BY THE ASSESSEE THAT DURING THE PERIOD 1995 - 2001 RS.20 LAKHS WAS GIVEN AS AD VANCE TO SHRI S.S. RAO WHICH HAS BEEN RECEIVED BACK BY THE ASSESSEE DURING THE FINANCIAL YEAR 2001 - 02 2002 - 03 & 2003 - 04. OUT OF THIS RS.21 LAKHS RS.16 LAKHS HAS BEEN RECEIVED DURING THE YEAR UNDER CONSIDERATION. BESIDES THIS RS.11 LAKHS HAS ALSO BEEN RECEIVED BACK FROM SMT. M. SEETAMMA. NO SATISFACTORY EXPLANATION WITH REGARD TO THE ADVANCES GIVEN AGAINST THE PURCHASE OF THE LAND AND THE CASH 7 RECEIVED BACK DURING THE YEAR HAS BEEN GIVEN. SOME PHOTOCOPIES OF RECEIPTS CONFIRMING SAID ADVANCES AND CASH RETURN TO THE ASSESSEE HAVE BEEN FILED BUT THE IDENTITY AND CREDITWORTHINESS OF SH. S.S. RAO AND M. SEETAMMA TO WHOM THE ASSESSEE CLAIMS TO HAVE GIVEN ADVANCES AND RECEIVED BACK THE CASH DURING THE YEAR UNDER CONSIDERATION HAVE NOT BEEN ESTABLISHED. THE G ENUINENESS OF THE TRANSACTIONS HAS ALSO NOT BEEN PROVED BY THE ASSESSEES. 10 . THE CIT(A) FURTHER OBSERVED THAT BEING THE FIRST YEAR OF THE ASSESSMENT IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE SOURCE OF OPENING CAPITAL BALANCE OF RS.43 21 020/ - WHICH HE FAILED TO DO SO. HE ACCORDINGLY TREATED THIS AMOUNT AS AN INCOME FROM UNDISCLOSED SOURCES AND MADE THE ADDITION OF THE SAME U/S 68 OF THE ACT AFTER HAVING RELIED ON VARIOUS JUDGEMENTS OF THE APEX COURT AND VARIOUS HIGH COURTS. THE INCOME OF THE HUF W AS ALSO CONSIDERED TO BE THE INCOME OF THE ASSESSEES. 11 . IN WEALTH TAX MATTERS THE ASSESSEES HAVE SHOWN THE VARIOUS ADVANCES GIVEN TO DIFFERENT PARTIES FOR THE PURCHASE OF AGRICULTURAL LAND. THESE ADVANCES WERE CONSIDERED TO BE THE CASH AVAILABLE IN TH E HANDS OF THE ASSESSEES. FOR THE SAKE OF REFERENCE WE TAKE THE FACTS OF WTA NO.13 OF 2009 IN THE CASE OF ASSESSEE INDIVIDUAL AND WE FIND THAT IN THE ASSESSMENT YEAR 2001 - 02 THE ASSESSMENT WAS RE - OPENED ON THE BASIS OF THE OBSERVATIONS OF THE A.O. IN INC OME TAX PROCEEDINGS IN A.Y. 2005 - 06 WHEN THE ASSESSEE HAS CLAIMED TO HAVE MADE VARIOUS ADVANCES TO DIFFERENT PERSONS TO PURCHASE THE AGRICULTURAL LAND. THE DETAILS OF ADVANCES ARE AS UNDER: - FINANCIAL YEAR 1995 - 96 RS. 5 00 000/ - FINANCIAL YEAR 1996 - 97 RS. 4 00 000/ - FINANCIAL YEAR 1997 - 98 RS.10 00 000/ - FINANCIAL YEAR 1998 - 99 RS. 1 00 000/ - FINANCIAL YEAR 2000 - 01 RS. 1 00 000/ - ------------------ RS.21 00 000/ - ------------------ 1 2 . IN ADDITION TO THE ABOVE ASSESSEE HAD ALSO POSSESSED CASH BALANCE OF RS.49 539/ - AT THE END OF THE RELEVANT FINANCIAL YEAR I.E. 31.3.2001. THE A.O. FOUND THAT PURCHASE OF AGRICULTURAL LAND FOR WHICH THE ALLEGED ADVANCE S 8 CLAIMED TO HAVE BEEN PAID HAS NOT BEEN MATERIALIZED TILL DATE. THE ASSES SEE HAS CLAIMED CERTAIN ADVANCES AS OUTSTANDING ON THE DATE OF VALUATION WHICH APPARENTLY SHOWS ACCORDING TO THE A.O. THAT ASSESSEE HAS TAKEN SHELTER IN THIS WAY TO AVOID WEALTH TAX LIABILITY. FROM THE CASH FLOW STATEMENT FILED BY THE ASSESSEE IT WAS FOU ND THAT THE ASSESSEE HAS PAID ADVANCES DURING THE YEAR UNDER CONSIDERATION WHICH WAS RECEIVED BACK IN THE SUBSEQUENT YEARS. THE A.O. THEREFORE HELD THAT THE ADVANCES REPRESENTS CASH IN HAND FOR THE YEAR UNDER CONSIDERATION WHICH IS AN ASSET WITHIN THE MEA NING OF SECTION 2(EA) OF THE WEALTH TAX ACT. THUS NET WEALTH AFTER CONSIDERING THE ADVANCES OF RS.21 LAKHS AND CASH IN HAND RS.49 539/ - (TOTAL OF RS.20 99 540/ - ) AND AFTER ALLOWING EXEMPTION U/S 2(EA)(VI) OF RS.50 000/ - WAS CONSIDERED FOR COMPUT ING THE N ET WEALTH. 13. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE ASSESSMENT WAS FRAMED EX - PARTE AND THE CASH WAS AVAILABLE ONLY AT RS.49 539/ - AND RS.21 LAKHS WAS GIVEN AS ADVANCES FOR THE PURCHASE OF LAND. THE CIT (A) RE - EXAM INED THE ISSUE BUT WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEES AND HE ACCORDINGLY CONCLUDED THAT A.O. HAS CORRECTLY TREATED THE ADVANCES AS CASH IN HAND WITHIN THE MEANING OF SECTION 2(EA) OF THE WEALTH TAX ACT AS ON THE VALUATION DATE. THE RE LEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER: I HAVE GONE THROUGH THE ABOVE FACTS OF THE CASE APPELLANTS SUBMISSION AS WELL AS AOS FINDINGS. UNDER THE PROVISIONS OF WEALTH TAX ACT CLAUSE - VI OF SEC.2(EA) ASSETS MEANS `CASH IN HAND IN EXCESS OF FIFTY THOUSAND RUPEES OF INDIVIDUALS AND HINDU UNDIVIDED FAMILIES AND IN THE CASE OF OTHER PERSONS ANY AMOUNT NOT RECORDED IN THE BOOKS OF ACCOUNT. THE CONTENTION OF THE APPELLANT IS THAT THE PAYMENT MADE TOWARDS PURCHASE OF AGRICULTURAL LAN D IS AN ADVANCE NOT FALLING WITHIN THE DEFINITION OF SEC.2(EA) OF THE WEALTH TAX ACT TO ATTRACT WEALTH TAX. HOWEVER THE A.O. IS OF THE VIEW THAT SINCE THE PURCHASE OF THE AGRICULTURAL LAND HAS NOT BEEN MATERIALIZED TILL DATE THEREFORE ALL SUCH AMOUNTS CLAIMED TO HAVE PAID AS ADVANCE HAS TO BE TREATED AS `CASH IN HAND FALLING WITHIN THE DEFINITION OF SEC.2(EA) OF THE WEALTH TAX ACT TO ATTRACT WEALTH TAX. 9 IN THIS CONNECTION THE INCOME TAX ASSESSMENT RECORDS OF THE APPELLANT HAVE ALSO BEEN PERUSED AND I FIND THAT SINCE ASST. YEAR 2001 - 02 THE APPELLANT HAD BEEN SHOWING THESE ADVANCES AGAINST THE PURCHASE OF THE AGRICULTURAL LAND BUT IT HAS NOT BEEN MATERIALIZED TILL DATE. IN SOME CASES THE ADVANCES HAVE BEEN RETURNED TO THE APPELLANT BY THE PARTIE S SO THE GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE APPELLANT. THEREFORE THE GENUINENESS OF THE TRANSACTION IS ITSELF DOUBTFUL. NO DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE APPELLANT TO PROVE THAT THE AMOUNTS WERE ACTUALLY PAID TO THE PARTIES FOR PURCHASING OF AGRICULTURAL LAND. IT WILL NOT BE OUT OF PLACE TO MENTION HERE THAT THESE ARE ALL CASH TRANSACTIONS WHICH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. IT MAY ALSO BE NOTED THAT UNDER THE SCHEME OF THE ACT AS WELL AS INTE RIM REPORT OF THE TAX REFORM COMMITTEE THE WHOLE SCHEME OF THE WEALTH TAX ACT IS TO ENCOURAGE THE TAX PAYERS TO INVEST IN PRODUCTIVE ASSETS OR FINANCIAL ASSETS SUCH AS SHARES SECURITIES BONDS BANK DEPOSITS ETC. THEREFORE THE FINANCE BILL 1992 (CLAUSE - 91) SOUGHT TO INTRODUCE THE DESIRED AMENDMENTS TO THE ACT AND `CASH IN HAND WAS ALSO ADDED TO THE ITEMS OF TAXABLE WEALTH AS RECOMMENDED BY THE TAX REFORM COMMITTEE. THUS THE INTENTION OF THE LEGISLATIVE IS TO LEVY WEALTH TAX ON NON PRODUCTIVE WEALTH A ND TO ENCOURAGE INVESTMENTS IN PRODUCTIVE ASSET. IN THE APPELLANTS CASE UNDER CONSIDERATION AS STATED ABOVE THE VERY BASIC THING I.E. THE GENUINENESS OF THE TRANSACTION AND THE IDENTITY OF THE PARTY IN THE ABSENCE OF DOCUMENTARY EVIDENCE HAS NOT BEEN PROVED. THUS CONSIDERING THE TOTALITY OF THE FACTS I HOLD THAT THE A.O. HAS CORRECTLY TREATED THE ADVANCES AS `CASH IN HAND WITHIN THE MEANING OF S.2(EA) OF THE WEALTH TAX ACT AS ON THE DATE OF VALUATION AND THEREBY BRINGING THE SAME TO TAX UNDER WEALT H TAX ACT. UNDER THE CIRCUMSTANCES AND FACTS OF THE CASE THE ACTION OF THE A.O. IS HEREBY CONFIRMED. IN THE RESULT APPELLANTS APPEAL STANDS DISMISSED. 1 4 . FACTS OF ALL THESE CASES RELATING TO INCOME TAX MATTERS ARE ALMOST SIMILAR EXCEPT THE QUANTUM OF WEALTH INVOLVED THEREIN. NOW THE ASSESSEE HAVE PREFERRED THESE APPEALS AGAINST THE RESPECTIVE ORDERS OF THE CIT(A) BEFORE US AND REITERATED ITS CONTENTIONS AS RAISED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL FOR THE ASSESSEE HAS EMPHATICALLY ARGUE D THAT THE ASSESSEES HAVE TAKEN THE AGRICULTURAL LAND ON LEAS E FOR ITS CULTIVATION AND THE AGRICULTURAL INCOME WAS ACCUMULATED YEAR AFTER YEAR WHICH WAS ADVANCED TO DIFFERENT PARTIES FOR THE PURCHASE OF LAND. SOME HOW THE PURCHASE COULD NOT BE MATERIALIZ ED AND THE AMOUNT WAS REFUNDED BACK TO THE ASSESSEE IN SUCCEEDING YEARS. THEREFORE THE REVENUE IS NOT CORRECT IN DOUBTING THE 10 AGRICULTURAL ACTIVITY UNDERTAKEN BY THE ASSESSEES AND THE AGRICULTURAL INCOME EARNED BY IT. 1 5 . WITH RESPECT TO THE WEALTH TA X APPEALS THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT ADVANCES GIVEN TO VARIOUS PARTIES TOWARDS THE PURCHASE OF AGRICULTURAL LAND CANNOT BE CONSIDERED TO BE THE CASH AVAILABLE IN HANDS. THEREFORE THE REVENUE HAS WRONGLY TREATED THE ENTIRE ADVANC ES AS THE CASH AVAILABLE IN HAND FOR THE PURPOSE OF WEALTH TAX. 1 6 . THE LD. D.R. HAS INVITED OUR ATTENTION TO CERTAIN FACTS WITH THE SUBMISSION THAT THESE ARE 3 ASSESSEES AND THEY ARE INTER - RELATED WITH EACH OTHER. ONE IS INVIDIDUAL SECOND IS WIFE AND THIRD IS INDIVIDUAL S HUF. ALL THESE ASSESSEES HAVE DECLARED THE AGRICULTURAL INCOME YEAR AFTER YEAR IN LAKHS OF RUPEES WITHOUT HAVING ANY AGRICULTURAL LAND HOLDINGS. THE LD. D.R. FURTHER CONTENDED THAT IT IS VERY STRANGE TO NOTE THAT THE ENTIRE AGRICULT URAL INCOME IN LAKHS OF RUPEES WERE KEPT AT HOME. ALL THESE FACTS CLEARLY INDICATES THAT ASSESSEE HAS TRIED TO BUILT UP HIS CAPITAL BY ADOPTING THE DUBIOUS MEANS. IT IS NOT A CASE WHERE THE REVENUE IS TRYING TO INTRODUCE SOMETHING IN THE HANDS OF THE ASS ESSEES FOR THE PURPOSE OF AN ADDITION. IT IS A CASE WHERE THE ASSESSEES THEMSELVES HAVE DECLARED THE ACCUMULATION OF FUND AS ON 1.4.2000. WHEN THE ASSESSEE CLAIMED THE OPENING BALANCE IN A PARTICULAR YEAR IT IS HIS DUTY TO EXPLAIN THE SOURCE OF ITS ACCU MULATION. SINCE THE ASSESSEE IS BADLY FAILED TO EXPLAIN THE SOURCE OF ACCUMULATION OF THE FUND THE REVENUE HAS RIGHTLY TREATED THE SAME AS AN UNDISCLOSED INCOME OF THE ASSESSEES AND THERE AFTER TREAT ED IT TO BE THE CASH AVAILABLE IN THE HANDS OF THE ASSE SSEES FOR THE PURPOSE OF WEALTH TAX. 1 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS PLACED ON RECORD. IN ALL THESE 3 SET OF CASES THE SIMILAR TYPE OF ARGUMENT WAS RAISED ON BEHALF OF THE ASSESSEES. THE ASSESSEES HAVE FILED THEIR RETURN OF INCOME FIRST TIME IN THE ASSESSMENT YEAR 2005 - 06. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE FOR MAKING ADVANCES FOR PURCHASE OF LAND THE ASSESSEE W AS ASKED TO FILE A CASH FLOW STATEMENT AND FROM TH E CASH FLOW STATEMENT IT WAS NOTICED THAT ASSESSEE 11 HAD A HUGE OPENING BALANCE AS ON 31.3.2001 . IN THE CASE OF S. APPA RAO INDIVIDUAL THE OPENING BALANCE AS ON 31.3.2001 WAS SHOWN BY THE ASSESSEE AT RS.43 21 020/ - . IN THE CASE OF ASSESSEE HUF I.E. S. APP A RAO (HUF) THE OPENING CASH BALANCE WAS SHOWN AT RS.48 80 540/ - AS ON 31.3.2001. IN THE CASE OF SMT. S. DHANALAXMI WIFE OF S. APPA RAO THE OPENING BALANCE AS ON 31.3.2001 WAS SHOWN TO BE AT RS.52 28 910/ - . PRIOR TO THE ASSESSMENT YEAR 2005 - 06 NO RETU RN OF INCOME WAS FILED BY ANY OF THE ASSESSEES. ON THE BASIS OF THIS INFORMATION THE ASSESSMENT FOR THE ASSESSMENT YEAR 2001 - 02 TO 2004 - 05 WERE RE - OPENED U/S 147 READ WITH SECTION 148 OF THE I.T. ACT. SINCE THE FUND WAS AVAILABLE IN CASH WEALTH TAX ASS ESSMENT WAS ALSO RE - OPENED FOR THE ASSESSMENT YEAR 2001 - 02 TO 2005 - 06. IN ALL THESE CASES ASSESSEES HAVE TAKEN A COMMON STAND THAT THE AGRICULTURAL INCOME WAS ACCUMULATED OVER A PERIOD OF YEARS SINCE 1980 - 81 FROM THE AGRICULTURAL INCOME EARNED FROM LEASE HOLD LAND BUT NO DOCUMENTARY EVIDENCE WAS FILED IN SUPPORT OF THESE CONTENTIONS. BEFORE THE A.O. THE ASSESSEES HAVE TAKEN A STAND THAT LAND WAS TAKEN ON LEASE FROM FATHER - IN - LAW OF SHRI S. APPA RAO BUT DURING THE APPELLATE PROCEEDINGS IT WAS CLAIMED TO HAVE TAKEN FROM S. LAXMAIAH. EVEN BEFORE US NO EVIDENCE WAS FILED TO PROVE THESE FACTS THAT THE ASSESSEE HAVE EVER TAKEN AGRICULTURAL LAND FROM ANY ONE. NO COPIES OF REVENUE RECORD IS PLACED BEFORE US. IN REVENUES RECORD THE YEARLY ENTRIES ARE TO BE MADE BY THE REVENUE OFFICIALS WITH REGARD TO THE OWNERSHIP OF THE AGRICULTURAL HOLDINGS AND ALSO THE PERSON WHO CULTIVATE THE AGRICULTURAL LAND. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE OR OTHERWISE WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSE ES THAT THEY HAVE EVER CULTIVATED THE AGRICULTURAL LAND IN ANY OF THE YEARS. SINCE THE OPENING CASH BALANCE AS ON 31.3.2001 WAS SHOWN BY THE ASSESSEES IN THEIR CASH FLOW STATEMENTS FILED BEFORE THE CIT(A) THE ONUS IS UPON THEM TO PROVE THE ACCUMULATION O F THE OPENING BALANCE AS ON 31.3.2001. NEITHER BEFORE THE LOWER AUTHORITIES NOR BEFORE US THE ASSESSEE COULD PLACE A SATISFACTORY EXPLANATION ABOUT THE ACCUMULATION OF THE OPENING BALANCE. WE THEREFORE OF THE VIEW THAT CIT(A) HAS RIGHTLY TREATED THE OPE NING BALANCE IN ALL THE 3 CASES IN THE ASSESSMENT YEAR 2001 - 02 AS AN UNEXPLAINED CASH CREDIT. 12 1 8 . SO FAR AS THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEES IN ALL THESE YEARS ARE CONCERNED WE ARE OF THE VIEW THAT SINCE THE ASSESSEE COULD NOT PLACE ANY E VIDENCE ON RECORD WITH REGARD TO THE CULTIVATION OF LAND THE CIT(A) HAS RIGHTLY TREATED THE ENTIRE INCOME AS AN INCOME FROM OTHER SOURCES. WE THEREFORE CONFIRM HIS ORDER. 1 9 . THE OTHER ISSUE WITH REGARD TO THE BROKERAGE INCOME OF THE HUF IS CONCERNED WE HAVE EXAMINED THE FACTS AND THE ORDER OF THE LOWER AUTHORITIES AND WE FIND THAT IN THIS REGARD ALSO NOTHING HAS BEEN PLACED BEFORE US TO PROVE THAT THE HUF WAS ENGAGED IN THE BUSINESS OF BROKERAGE. THEREFORE WHATEVER INCOME FROM BROKERAGE WAS DECLARED IN THE NAME OF THE HUF IT WAS RIGHTLY TREATED TO BE AN INCOME OF THE INDIVIDUAL ASSESSEE S. APPA RAO. 20 . IN THE CASE OF HUF THE ASSESSEE HAS CLAIMED THAT IT HAS RECEIVED A GIFT OF RS.50000/ - IN CASH EACH IN EVERY YEAR I.E. FROM 2001 - 02 TO 2004 - 05. BU T BEFORE THE LOWER AUTHORITIES ASSESSEE HAS NOT FILED A SATISFACTORY EXPLANATION FROM WHOM HE HAS RECEIVED THE GIFT. DESPITE OF REPEATED REQUEST OF THE A.O. THE ASSESSEE COULD NOT FILE THE CONFIRMATION LETTERS NOR COULD HE PRODUCE HIM FOR EXAMINATION . SINCE THE ASSESSEE COULD NOT PROVE THE SOURCE OF GIFT PROPERLY THE REVENUE HAS RIGHTLY TREATED THE SAME AS AN INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS REGARD AND WE CONFI RM THE SAME . 2 1. NOW WE COME TO THE WEALTH TAX APPEALS. IN THE WEALTH TAX MATTERS THE ASSESSEES THEMSELVES HAVE DECLARED THE SUBSTANTIAL AMOUNT OF ADVANCES GIVEN TO DIFFERENT PARTIES IN DIFFERENT YEARS. UP TO THE FINANCIAL YEAR 2000 - 01 RELEVANT TO THE ASSESSMENT YEAR 2001 - 02 IN THE CASE OF S. APPA RAO THE ADVANCES WERE GIVEN AT RS.21 LAKHS. IN THE CASE OF SMT. S. DHANALAXMI W/O S. APPA RAO THE ADVANCES WERE GIVEN UPTO 2000 - 01 AT RS.49 49 000/ - AND I N THE CASE OF HUF I.E. S. APPA RAO (HUF) THE ADVAN CES WERE GIVEN UPTO FINANCIAL YEAR 2000 - 01 AT RS.49 LAKHS. THESE ADVANCES WERE CLAIMED TO HAVE BEEN GIVEN TOWARDS THE PURCHASE OF AGRICULTURAL LAND BUT NONE OF THE PURCHASES HAVE BEEN MATERIALIZED TILL DATE AND IT WAS CONTENDED BY THE ASSESSEE S THAT THE A DVANCES WERE FINALLY RETURNED BACK IN SUBSEQUENT YEARS. 13 BUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR BEFORE THE CIT(A) THE ASSESSEE COULD NOT SUBSTANTIATE THESE FACTS EITHER BY PRODUCING THE PROPOSED TRANSFEROR/DEBTOR OR BY PRODUCING ANY SALE AGREE MENT. IN THE ABSENCE OF RELEVANT EVIDENCE THE ENTIRE AMOUNT WAS TREATED TO BE THE CASH AVAILABLE WITH THE ASSESSEES AND THE A.O. HAS ASSESSED THE WEALTH TAX IN THE HANDS OF RESPECTIVE ASSESSEES AFTER ALLOWING A BENEFIT OF EXEMPTION OF RS.50 000/ - AS PER PROVISIONS OF SECTION 2(EA)(VI) OF THE WEALTH TAX ACT. IN SUCCEEDING YEAR THE OPENING BALANCE + THE ADVANCES GIVEN BY THE ASSESSEES WERE TAKEN INTO ACCOUNT FOR THE PURPOSE OF WEALTH TAX. IN THE ABSENCE OF MATERIAL EVIDENCE THE REVENUE HAS TREATED THESE ADVANCES AS A CASH AVAILABLE IN THE HANDS OF ASSESSEES. SIMILAR IS THE POSITION BEFORE US AS NOTHING IS PLACED TO PROVE THESE FACTS. WE HOWEVER CAREFULLY EXAMINED THE ORDER OF THE CIT(A) AND WE FIND THAT HE HAS EXAMINED THE ISSUE IN A PROPER PERSPECTIV E IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD AND WE THEREFORE FIND NO INFIRMITY THEREIN. ACCORDINGLY WE CONFIRM HIS ORDER IN ALL THE CASES OF WEALTH TAX. 22 . IN THE RESULT ALL APPEALS OF THE ASSESSES IN INCOME TAX AND WEALTH TAX STAND DISMISSED. PR ONOUNCED IN THE OPEN COURT ON 22.10 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 22 ND OCTOBER 20 10 14 COPY TO 1 SRI SAMPATHIRAO APPA RAO (HUF) KATTERA STREET SRIKAKULAM 2 SRI SAMPATHIRAO APPA RAO KATTERA STREET SRIKAKULAM 3 S MT. SAMPATHIRAO DHANALAKSHMI KATTERA STREET SRIKAKULAM 4 SMT. S. DHANALAKSHMI KATTERA STREET SRIKAKULAM 5 SRI S. APPA RAO (HUF) KATTERA STREET SRIKAKULAM 6 SRI S. APPA RAO KAT TERA STREET SRIKAKULAM 7 WEALTH TAX OFFICER WARD - 2 SRIKAKULAM 8 ITO WARD - 2 SRIKAKULAM 9 THE CIT - 2 VISAKHAPATNAM 10 THE CIT(A) VISAKHAPATNAM 11 THE CWT (A) VISAKHAPATNAM 12 THE DR ITAT VISAKHAPATNAM. 13 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM