2012 (6) TMI 453 - AT - Income Tax

Undisclosed Income - Source of Investment in FDRs being in question - assessee contended that same has been invested out of the amount received as successor to will of Father-in-law - Revenue questioned genuineness of Will on ground of it being non-registered and source of investments with deceased since deceased person was never assessed to Income or Wealth tax - Held that - Indian law only prescribes that Will should be in writing, and attested by two witness; there is no requirement of any registration or notarization thereof. In this case the Will is in writing and duly attested by two witnesses, therefore, no adverse inference can be drawn on the aspect that witness did not advice for registration of the same. Further, flow of writing as pointed out by AO cannot be held to be determinative to discard the Will, in the absence of any opinion of the handwriting expert. Moreover, genuineness of will has been confirmed by witnesses. Therefore, when the direct evidence is available the issue cannot be decided on assumption without contradicting the statements on record. Consequently the additions in respect of the amount arising out of the Will are deleted. Estimation of Agricultural Income - addition on ground of difference - AO estimated agricultural income taking the yield of 2000-01 as base year and applying the cost inflation index to it - Held that - Report of the Investigating officer itself suggest that agricultural income at Rs. 1500/- per bigha was reasonable. AO has adopted a yardstick of estimating the agricultural income on the basis of cost inflation index which, in our considered view, may be useful for capital gain purposes but cannot be a yardstick for estimating the assessee s agricultural income. Hence, agricultural income as claimed by assessee is allowed. Advances received qua the alleged agreement to sell the land - addition made on ground of it being cash transactions and doubt about credit-worthiness of purchasers - Held that - Excepting doubting the confirmations, additions have been made without further inquiries. therefore, we set aside these issues back to the file of AO to decide the same afresh in accordance with law.

Issues Involved:
1. Genuineness of the Will.
2. Estimation of Agricultural Income.
3. Advances Received for Sale of Agricultural Land.
4. Amount Received from Brother as Arrears of Past Agricultural Income.

Detailed Analysis:

1. Genuineness of the Will:
The primary issue was whether the amounts received by the assessee from the will of her deceased father-in-law were genuine. The assessee claimed Rs. 19.05 lakh in AY 1996-97 and Rs. 8.95 lakh in AY 1998-99. The Assessing Officer (AO) doubted the will's authenticity, citing reasons such as the will not being registered, the improbability of keeping large sums of cash and valuables at home, and the disproportionate distribution of assets. However, the ITAT noted that Indian law does not mandate the registration of wills and that the will was duly attested by two witnesses. The witnesses and beneficiaries confirmed the will's authenticity under oath. The AO's objections were deemed to be based on assumptions rather than concrete evidence. Consequently, the additions related to the will were deleted.

2. Estimation of Agricultural Income:
The assessee claimed combined agricultural income with her husband, which the AO estimated using the cost inflation index. The ITAT found this method inappropriate for estimating agricultural income. Instead, it relied on the report by the ADIT (Agra), which suggested a net saving of Rs. 1,500 per bigha per annum. The assessee owned 80 bighas and her husband 90 bighas, totaling 170 bighas. The ITAT accepted the ADIT's estimation, resulting in a combined agricultural income of Rs. 2,55,000 per annum. The ITAT allowed the agricultural income as claimed by the assessee.

3. Advances Received for Sale of Agricultural Land:
The assessee claimed to have received advances for the sale of agricultural land from various relatives and one unrelated person. The AO doubted the genuineness of these transactions, primarily because they were in cash and lacked formal agreements. The ITAT noted that the confirmations from the relatives and the unrelated person were on record and were not effectively rebutted by the AO. The ITAT found that the AO had not conducted sufficient inquiries to disprove these transactions. Therefore, the ITAT set aside this issue back to the AO for fresh examination in accordance with the law.

4. Amount Received from Brother as Arrears of Past Agricultural Income:
The assessee claimed Rs. 8 lakh received from her brother as arrears of past agricultural income. The AO rejected this claim, questioning the brother's creditworthiness and the lack of banking transactions. The ITAT noted that the brother had confirmed the transaction under oath and that the agricultural land holdings were not disputed. The ITAT found that the AO had not conducted adequate inquiries to disprove the brother's statement. Therefore, this issue was also set aside back to the AO for fresh examination.

Conclusion:
The ITAT found that the AO's conclusions were based on assumptions and insufficient inquiries. The issues related to the will and agricultural income were decided in favor of the assessee, while the issues related to advances and the amount received from the brother were remanded back to the AO for further investigation. The assessee's appeals were partly allowed for statistical purposes.

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