2013 (8) TMI 521 - AT - Income Tax

Unexplained investment under section 69 of the Income Tax Act Claimed by assessee that cash balance of Rs.9,49,500 was available as on 31-03-2003; therefore, sufficient cash balance is available with the assessee for making a deposit of Rs.99,052 in the personal account of the assessee maintained with SBT - Assessing officer has not examined the availability of the cash balance as on 31-03-2003 Held that - Since the assessee has filed details of transactions and claims that sufficient funds are available, this Tribunal is of the considered opinion that the details filed by the assessee needs to be examined by the assessing officer Matter remanded back to the Assessing officer. Addition as income from other sources - Selling of trees which were grown spontaneously for which there is no cost of acquisition - Sale consideration received on sale of the trees which were grown spontaneously without any human aid Held that - Trees were grown spontaneously in the property purchased in the year 2001 - As per judgment in the case of Suman Tea & Plywood Industries (P) Ltd 1997 (3) TMI 81 - CALCUTTA High Court , wherein it has been held that sale of trees grown spontaneously as not taxable - Receipt on sale of trees grown spontaneously has to be treated as capital in nature and since there is no cost of acquisition, it cannot be assessed as taxable income - Calcutta High Court judgment in the case of Suman Tea & Plywood Industries (P) Ltd (supra) may be squarely applicable to the facts of the case Therefore, sale of trees grown spontaneously has to be treated as capital in nature and since there is no cost of acquisition, it is not liable for taxation. Estimation of agricultural income - The copies of the data said to be collected from the Agricultural Officer is not available on record. Details regarding varieties of banana cultivated are also not on record Held that - In the absence of the details of varieties of banana cultivation on the land, it is not known how the Agricultural Officer was able to provide the data. The price of each variety of banana would depend upon the prevailing market rate during the relevant assessment year. Moreover, when the assessee claims that he is maintaining the books of account for cultivation, without finding fault with the books of account maintained for cultivation, estimation of agricultural income may not be justified. Therefore, if at all there was any defect in the books of account, it is for the assessing officer to reject the same after examination and thereafter resort to estimation, if required. But without examining the books of account, solely on the basis of the data collected from the Agricultural Officer, the profit cannot be estimated. Accordingly, the matter needs to be re- considered. Hence, the issue is remitted back to the file of the assessing officer.

Summary

Issues Involved:
1. Addition of unexplained investments.
2. Addition of income from other sources.
3. Estimation of agricultural income.
4. Disallowance of depreciation.

Issue-wise Detailed Analysis:

1. Addition of Unexplained Investments:
The primary issue for the assessment year 2003-04 was the addition of Rs. 99,752 as unexplained investment. The assessee argued that this amount was deposited in a personal account and omitted from the books of account inadvertently. The Tribunal noted that the cash balance claimed by the assessee was not examined by the assessing officer. Consequently, the Tribunal set aside the lower authorities' orders and remitted the matter back to the assessing officer for verification of the details of personal transactions and cash balance.

For the assessment years 2004-05 and 2005-06, similar issues arose regarding deposits of Rs. 1 lakh and Rs. 2,48,179, respectively. The Tribunal, considering the identical nature of the facts and arguments, remitted these matters back to the assessing officer for re-examination.

2. Addition of Income from Other Sources:
For the assessment years 2003-04 and 2004-05, the addition of Rs. 92,000 and Rs. 1,75,000, respectively, as income from other sources was contested. The assessee claimed these amounts were from the sale of spontaneously grown trees, which should not be taxable as they had no cost of acquisition. The Tribunal referred to the Calcutta High Court judgment in CIT vs. Suman Tea & Plywood Industries (P) Ltd and other relevant judgments, concluding that such sales should be treated as capital receipts and not taxable due to the absence of cost of acquisition. Thus, the assessee's appeal on this ground was allowed.

3. Estimation of Agricultural Income:
For the assessment year 2006-07, the issue was the addition of Rs. 1,03,396 as other income and the estimation of agricultural income. The Tribunal noted that the assessing officer relied on data from the Agricultural Officer at Idukki without examining the assessee's books of account. The Tribunal directed the assessing officer to reconsider the issue after verifying the books of account maintained by the assessee.

The same issue arose for the assessment years 2007-08, 2008-09, and 2009-10, where the Tribunal followed the decision for the assessment year 2006-07 and remitted the matters back to the assessing officer for re-examination.

4. Disallowance of Depreciation:
For the assessment years 2008-09 and 2009-10, the issue was the disallowance of depreciation on the building, which the assessee claimed was used for business purposes related to hospitality and boating services. The assessing officer disallowed the depreciation on the ground that no income was disclosed from the building. The Tribunal found that the claim of the building being used for business purposes was not examined by the lower authorities. Therefore, the Tribunal remitted the matter back to the assessing officer to verify the claim and decide the issue afresh.

Conclusion:
The Tribunal allowed all the appeals of the assessee for statistical purposes, remitting various issues back to the assessing officer for re-examination and verification in accordance with the law, ensuring reasonable opportunity of hearing to the assessee. The order was pronounced in the open court on 31st July 2013.