Income Tax Appellate Tribunal - Bangalore
Sundara Gowda Arbi, Uppinangady vs Assessee on 11 July, 2013
ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady
IN THE INCOME TAX APPELLATE TRIBUNAL
Bangalore A Benches, Bangalore
Before Shri N. Barthvaja Sankar, Vice President and
Shri George George K. Judicial Member
ITA No.946 & 947/Bang/2011
(Assessment year: 2004-05)
Shri Sundara Gowda Arbi, Vs. Income Tax Officer,
Door No.2/120 Main Road, Ward-1 Puttur
Near G.H.P. School,
Uppinangady
PAN: AHMPG 8356 Q
(Appellant) (Respondent)
Assessee by: Smt. Pratibha, Advocate
Department by: Shri Bijoy Kumar Panda DR
Date of Hearing: 11/07/2013
Date of Pronouncement: 26/07/2013
ORDER
Per George George K. J.M. These two appeals of the assessee are directed against the consolidated order of the CIT (A), Mysore dated 18.8.2011. The relevant assessment years are 2003-04 and 2004-05.
ITA Nos.946 & 947/B/11 - AYS 2003-04 & 2004-05:
2. The assessee had, initially, raised identical three grounds for both the AYs in his Memorandum of appeals. Subsequently, he came up with revised grounds of appeal dated 21.1.2013. Yet again, on 24.6.2013, he came up with a solitary ground for both the assessment years under dispute with the identical narration, namely:
"that the CIT (A) erred in confirming of the estimation of agricultural incomes at Rs.2,84,860/- and Rs.2,94,200/- as income from 'Other Sources' for the assessment years 2003-04 and 2004-05 respectively."Page 1 of 9
ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady
3. As the issues raised in these appeals being identical and pertaining to the same assessee, for the sake of convenience and clarity, they were heard, considered together and disposed off in this consolidated order.
4. Briefly stated, the facts of the issue are as under:
The assessee, an individual, derives income from petty business (sweet stall) besides income from agriculture. The assessee had admitted income from agriculture at Rs.4,05,800/- and Rs.4,12,300/- for the assessment years 2003-04 and 2004-05 respectively. The AO, in the original assessment orders, had not accepted the yield and the expenses shown by the assessee from the agricultural field and, accordingly, estimated the gross receipts at Rs.1,81,560/- for the AY 2003-04 of which 50% was estimated being the expenses out of the net income of Rs.90,780/-, 1/4th of share of Rs.22,475/- was treated as assessee's income and the balance of Rs.3,83,105/- was treated as assessee's income from 'Other Sources'.
4.1 Likewise, for the AY 2004-05, same exercise was repeated as in last year, according to which, Rs.3,23,920/- was treated as income from 'Other Source'. The AO had, further, observed that the agricultural holding were shared by four members of the family and, thus, 1/4th of agricultural income only was allowed in the hands of the assessee.
5. Aggrieved, the assessee took up the issues before the then CIT (A). However, the then CIT (A) sustained the AO's stand with a rider that the estimation of expenditure was to be taken at 40% as against 50%. When the issues had finally reached before the earlier Page 2 of 9 ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady Bench of this Tribunal, the Tribunal vide its consolidated order in ITA NOS.764 &N765/B/2007 dated 8.11.2007 had set aside the issues with the following observations:
"3....................................There is no dispute that the agricultural income was earned by the assessee. Further, it is also admitted that proper accounts were not maintained by the assessee. Therefore, the agricultural income has to be estimated. However, while estimating the income, the authorities below should take into consideration the quantum of agriculture land held by the assessee as well as the yield which may arise out of that land. The land holdings are owned by four co-sharers. In the statement of facts, it has been mentioned by the assessee that the assessee along his brothers and father hold agriculture land of 2.96 acres. There was a family partition among the brothers on 28.11.2001. According to the assessee, he was looking after the agricultural activities of the other members of the family who have surrendered their shares of income in favour of the assessee. A release deed was also executed on 5.6.2006 by which father and two brothers had relinquished their rights in the property in favour of the assessee. It appears that these materials were not considered by the authorities below. Although the deed of relinquishment was executed in the year 2006, but what was the intention of the parties during the present years, can be gathered from those documents. In view of the circumstances above, we are of the view that the matter should go back to the assessing officer for reconsideration. Accordingly, we set aside the impugned orders and restore the matter to the assessing officer for deciding afresh........"
6. After having discussed the issue elaborately and for the reasons recorded therein, the AO had, in compliance to the Tribunal's directions, worked out the net agricultural income in the hands of the assessee at Rs.27,234/- and Rs.26,514/- being 1/4th of total divisible incomes from agriculture at Rs.1,08,936/- and Rs.1,06,056/- for the assessment years 2003-04 and 2004-05 respectively.
Page 3 of 9ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady
7. Aggrieved, the assessee took up the issues again before the CIT (A). After having considered the contentions of the assessee and also perusal of the deed of relinquishment executed in the year 2006 etc., the CIT (A) had observed as under:
"4.2.....................................I have examined the documents furnished by the appellant in support of his claim. The appellant family has owned 2.89 acres of agricultural land on which commercial crops are grown. The main issue agitated before me is regarding allowing only 1/4th of agricultural income. It was argued by the appellant that he is one in the family who is managing the agricultural land. The appellant has filed a copy of family arrangement dtd. 29.12.2001. The AO has not given credence for this document on the ground that the father and brothers of the appellant in their deposition have not mentioned the existence of the same. Further, the document is not registered. As seen from the deposition of the family members they have not disputed the claim of the appellant.
4.3. Apparently, the deed of relinquishment was executed in the year 2006. As rightly pointed out by the Hon'ble ITAT, although the deed of relinquishment was executed during the year 2006, the intention of the parties during the relevant years can be gathered from the unregistered family partition and it is also deposed in their statement that appellant is in receipt of all the agricultural income. Even if the family partition is not to be taken into consideration, still in view of the statements of family members that appellant is in receipt of all the agricultural income and no part of it was received by them, strengthens the argument of the appellant. The fact that the family members later on even registered relinquishment deed shows the intention of the family members from the beginning. Regarding the sources of brothers, the appellant argued as follows:
'Mr.Babu Gowda is separately holding 1.44 acres of land cultivating coconut and areca nut. One of his daughters is also a teacher. Mr. Ananda Gowda is holding 30 cents of land with house properties from which he is earning rental income of Rs.6000/- per month. Further, he is also running a retail outlet Page 4 of 9 ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady New Bus Stand Uppanangady. The income from the above sources is sufficient for the maintenance of two of the appellant's brothers and their family.
We are bring to your honour's kind notice that, during the time of partition of the property of Late Thimmappa Gowda as per Partition Deed dated 28th November, 2001, a sum of Rs.50,000/- each was paid to two of his daughter viz., Smt. Sesamma and Jalajakshi which was paid by the appellant himself."
4.4. Considering the above factors, while I am in agreement with the AO regarding the estimation of agricultural income, it is not correct to allow only 1/4th of the income as belonging to appellant. The AO is directed to consider the entire agricultural income in the hands of the appellant only."
8. Aggrieved, the assessee has come up before us with the present appeals.
8.1. During the course of hearing, the submissions made by the learned AR are summed up as under:
- that the assessee along with his father and two brothers of agricultural lands owned 2.96 acres wherein areca-nut and coconut trees, pepper, plantation as intermediary crops were being grown; and that there was a family partition amongst the brothers as per partition deed dated 28.11.2001 in order to avoid future disputes in the family even though all the brothers were living in as a joint family;
- that the assessee who was looking after the agricultural activities of the family as well as maintaining the expenses of the family, the father and the two brothers surrendered their respective shares of income from the agricultural lands to the Page 5 of 9 ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady assessee and, accordingly, a family written agreement was made on 29.12.2001;
- that as per the release deed dated 5.6.2006, the assessee's father and other two brothers have relinquished their rights in the said lands in favour of the assessee;
- that the assessee had also cultivated the agricultural activities in the land ad-measuring around 4 acres owned his son-in-law and also earned substantial portion of agricultural income from it;
- that the sales of the agricultural produces were made mainly to local traders who used to collect the produce at the place itself and made payments by cash since the location of the lands was in a remote village; and all the receipts on sale of agricultural produces were by cash and no separate bank account was maintained by the assessee towards agricultural activities and, hence, no proof for sale of agricultural products such as areca-nut, coconut, pepper, banana etc.,
- that the main issue was the income considered as income from other sources for which, the CIT (A) had not given any relief; & 8.2. In conclusion, the learned AR submitted that the CIT (A) while sustaining the estimation of agricultural income made by the AO, ought to have treated the total agricultural income at Rs.2,84,860 + 1,08,936 = Rs.3,93,797/- and Rs.2,94,200 + 1,06,056 = Rs.4,00,256/- as agricultural income of the assessee for the assessment years under dispute.Page 6 of 9
ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady 8.3. On the other hand, the learned DR supported the stand of the authorities below on the issue. The learned DR had, further, submitted that the CIT (A), after analyzing the issue in depth, came to the conclusion which is fairly reasonable and, therefore, pleaded that the same requires to be sustained.
9. We have carefully considered the rival submissions, perused the relevant materials on record and also documentary evidences, such as copies of (i) break-up of expenses incurred on agricultural activities, (ii) crops grown, (iii) sale particulars of agricultural produce; (iv) affidavit in respect of issue of cultivation record dated 20.12.1995 etc., in the shape of paper books. We have also carefully perused the findings of the earlier Bench of this Tribunal in the assessee case (supra).
9.1. There is no dispute in the fact that the assessee was in receipt of income from agriculture. At the same time, it is an un- denying fact that no proper books of accounts were being maintained by the assessee. As rightly highlighted by the earlier Bench, the assessee along with his father and two brothers owned 2.96 acres of agricultural lands wherein they have been raising areca-nut and coconut trees and other produces as intermediary crops. There has been a family arrangement (written agreement) dated 29.12.2001. The assessee has been consistently asserting that he is looking after the agricultural activities of other members of the family who have volunteered themselves to surrender their shares of income in favour of the assessee. In the meanwhile, a release deed was executed on 5.6.2006, according to which, the assessee's father, his other two brothers have relinquished their rights over the said lands in favour of the assessee. According to the assessee, though the assessee is in overall control and supervision of the cultivation of agricultural lands etc., all the Page 7 of 9 ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady members of the family including his two brothers with their siblings were living in a joint family under one roof. The two brothers, namely Babu Gowda and Ananda Gowda were having their independent source of incomes through agricultural lands, rental income from house properties etc., 9.2. Taking into account the above facts and consideration, the CIT (A) had, however, concurred with the AO's estimation of agricultural incomes with a rider that the AO was not correct to allow only 1/4th of the income as belonged to the assessee and, accordingly, directed him to consider the entire agricultural incomes for both the assessment years in the hands of the assessee only.
9.3. Admittedly, the assessee had not maintained any regular books of accounts as pointed by the earlier Bench. Moreover, the break-up of expenses incurred on agricultural activities, sale particulars of agricultural produces, details of crops grown etc., were only on estimated basis. No document proofs such as bills/invoices/vouchers etc., with regard to procurement of seeds, manure, labour charges etc., are forth-coming. Pilferage in the claims in respect of expenses, sale produces etc., cannot thus be ruled out. Moreover, the break-up of expenses incurred on agricultural activities, sale particulars etc., were based only on estimates. No documentary evidences such as bills/invoices/sale patties etc., are forth-coming. Therefore, estimation of agricultural income was the only recourse open for the Income Tax Authorities. However, we are of the view that estimation of agricultural income at Rs.1,08,936 and Rs.1,06,056 for assessment year 2003-04 and 2004-05 are on the lower side. Since, the assessee is an individual earning income from small sweet stall, the possibilities of deriving huge income from "other sources" is quite remote.
Page 8 of 9ITA No.946 & 947 of 2011 Sundara Gowda Arbi, Uppinangady 9.4 Keeping in view the principles of natural justice and equity, we estimate the agricultural income at Rs.70,000 per acre for assessment year 2003-04 and Rs.75,000 per acre for assessment year 2004-05. Since the assessee was in possession of 2.96 acres of land, we hold that he was in receipt of agricultural income to the tune of Rs.2,07,200 and Rs.2,22,000 for the assessment year 2003- 04 and 2004-05. Therefore, the additions made other "other sources" is to be restricted to Rs.1,98,600 (Rs.4,05,800 - Rs.2,07,200) and Rs.1,90,300 (Rs.4,12,300 - Rs.2,22,000) for assessment year 2003-04 and 2004-05 respectively instead of Rs.2,96,844 and Rs.2,06,244 sustained by the CIT (A). It is ordered accordingly.
10. In the result the assessee's appeals for the AYs 2003-04 and 2004-05 are partly allowed.
Order pronounced at the end of the hearing on 26th July, 2013.
Sd/- Sd/-
(N. Barthvaja Sankar) (George George K)
Vice President Judicial Member
Bangalore, dated 26th July, 2013.
Vnodan/sps
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, ITAT, Bangalore
By Order
Senior Private Secretary
Income Tax Appellate Tribunal,
Bangalore Benches, Bangalore
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