2012 (12) TMI 1069 - AT - Income Tax

Summary

Issues Involved:
1. Cross-appeals against original assessment for AY 2000-01.
2. Assessee's appeal against the order u/s 263 for AY 2000-01.
3. Assessee's appeal arising out of proceedings u/s 263 for AY 2000-01.
4. Cross-appeals arising out of block assessment for AYs 1989-90 to 1999-2000.
5. Assessee's appeals for AYs 2003-04 and 2004-05.

Summary:

1. Cross-appeals against original assessment for AY 2000-01:
The effective grievance of the assessee in ITA No.543/Hyd/2006 is the non-grant of deduction on account of self-supervision while determining the cost of construction. The Revenue's grievance in ITA No.641/Hyd/2006 is against the relief granted by the CIT(A) regarding the cost of construction adopted by the assessing officer to arrive at the unexplained investment. The Tribunal found that the CIT(A) was not justified in brushing aside the report of the DVO without assigning any reason. The Tribunal directed the assessing officer to redetermine the cost of construction by giving a discount of 15% on account of rate difference and a further discount of 10% on account of self-supervision. Both appeals are partly allowed.

2. Assessee's appeal against the order u/s 263 for AY 2000-01:
The Commissioner of Income-tax set aside the original assessment order and directed the assessing officer to make necessary inquiries regarding the agricultural income of Rs. 11 lakhs claimed by the assessee. The Tribunal found that the agricultural income declared by the assessee was consistent with the income declared for other years and was accepted by the Revenue authorities. The Tribunal held that the Commissioner was not justified in invoking the provisions of S.263 of the Act and cancelled the order. The assessee's appeal ITA No.526A/Hyd/2005 is allowed.

3. Assessee's appeal arising out of proceedings u/s 263 for AY 2000-01:
Since the order of the Commissioner passed u/s 263 was cancelled, the proceedings initiated in pursuance of the said order no longer survive. The appeal ITA No.508/Hyd/2007 is dismissed as infructuous.

4. Cross-appeals arising out of block assessment for AYs 1989-90 to 1999-2000:
- Assessee's Appeal (ITA No.44/Hyd/2009): The Tribunal upheld the addition of Rs. 9,36,500 made by the assessing officer as unexplained investment and the addition of Rs. 22 lakhs as unexplained credits in the bank account. The appeal is dismissed.
- Revenue's Appeal (ITA No.45/Hyd/2009): The Tribunal found that the seized material was a mere loose slip of paper without any corroborative evidence and upheld the CIT(A)'s deletion of the addition of Rs. 82.01 lakhs. The appeal is dismissed.

5. Assessee's appeals for AYs 2003-04 and 2004-05:
- AY 2003-04 (ITA No.226/Hyd/2007): The Tribunal held that the income from the sale of agricultural land should be treated as agricultural income and not as business income. The disallowance of commission of Rs. 61,17,740 is rendered academic. The Tribunal also deleted the disallowance of agricultural income and rejected the ground regarding clubbing of income of the assessee's wife. The appeal is partly allowed.
- AY 2004-05 (ITA No.1407/Hyd/2010): The Tribunal held that the reopening of assessment u/s 147 was not valid as the income from the sale of agricultural land was exempt. The assessment made u/s 144 read with S.148 is cancelled. The appeal is allowed.

Order pronounced in the open court on 19th October 2012.