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TMI Blog2016 (9) TMI 1662X X X X Extracts X X X X X X X X Extracts X X X X ..... me from bank deposits - As per AO even though the fixed deposits were frozen, interest was accruing to the assessee on those deposits and therefore, it will be liable to be taxed - HELD THAT:- There is a great element of uncertainty for realizing the interest as well as the bank deposits by the assessee. Even if she realizes the same, it would be after a period of number of years and probably at that time re-assessment may not be possible due to limitation and thus the assessee would not be able to claim refund of the tax paid if the deposits are forfeited. As interest income of the assessee can be recognized only when there is no uncertainty and a significant scope to receive the same. Therefore, accrued interest on the bank deposit frozen by the DVAC, wing of the Govt. of Tamilnadu cannot be treated as interest income of the assessee during the relevant assessment year - direct AO to delete the interest income while computing the total taxable income of the assessee. Revision u/s 263 - wealth tax assessment - Commissioner invoked his powers u/s 25 of the Wealth Tax Act by stating that the wealth tax assessment is found to be erroneous insofar as it is prejudicial to the interests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Commissioner of Wealth Tax (Central), Chennai dated 13.03.2002 in C. No. 1741(1)/2001-02/C.II passed under section 25(2) of the Wealth Tax Act, 1957. Since these two appeals pertain to the same assessee, they are clubbed, heard together and disposed off by this common order for the sake of convenience. ITA No. 1288/Mds/2008: (A.Y. 2000-01): 2. The assessee has raised several grounds in her appeal, however, the cruxes of the issues are as follows:- "The learned Commissioner of Income Tax (Appeals) has erred in confirming the order of the learned Assessing Officer who had treated the agricultural income of Rs. 21,66,959 as income from other sources. ii) The learned Commissioner of Income Tax (Appeals) has erred in confirming the order of the learned Assessing Officer who has disallowed Rs.60,000/- being municipal tax while determining rental income." iii) The learned Commissioner of Income Tax (Appeals) has erred in confirming the order of the learned Assessing Officer who had assessed the accrued interest income of the assessee from bank deposit for Rs.36,10,000/- when those deposits were frozen by the DVAC wing of the Government of Tamilnadu. 3. Since the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate from the VAO. vii) Just because the CIT and the Tribunal for the assessment years 1987-88 to 1992-03 has held that during those years the assessee was earning agricultural income, it cannot be automatically and conclusively established that the agricultural operations continued to be earned by the assessee even during the relevant financial year 1999-2000. The principles of res judicata do not apply in the income-tax proceedings. 4.3 With the above observations, the learned Commissioner of Income Tax (Appeals) confirmed the order of the learned Assessing Officer by making addition of Rs. 21,66,959/- by treating the claim of the "agricultural income" of the assessee as "income from other sources". 5. Before us, the learned Authorized Representative argued by stating that the assessee had submitted the details of her agricultural activities before the learned Commissioner of Income Tax (Appeals). The details of the submissions made before the learned Commissioner of Income Tax (Appeals) are reproduced herein below for reference:- "During the assessment proceedings the assessee had furnished complete details and particulars of agricultural income before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning agricultural income, therefore there was no scope for making disallowance of the declared agricultural income. It was further submitted that the learned Commissioner of Income Tax (Appeals) in his order had elaborately analyzed the extent of agricultural land held by the assessee and the agricultural operations carried out by the assessee in her agricultural land. The learned Authorized Representative also pointed out that the Chennai Bench of the Tribunal in ITA No. 1230/1997 for the assessment year 1993-94 had also upheld the order of the learned Commissioner of Income Tax (Appeals) wherein he had estimated the agricultural income of the assessee as Rs. 9,50,000/-. The relevant portion of the orders is extracted herein below for reference: "34. Ground No. 3.1 Regarding agricultural income: 35. We have heard the rival submissions and perused the materials on record. The Assessing Officer was directed by the Commissioner of Income Tax (Appeals) to furnish the remand report relating to the assessment year 1994-95 in the appellate proceedings of this assessment year. The Assessing Officer has furnished the remand report dated 25.03.1999. The Assessing Officer confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural income of Rs. 21,66,959/- and furnished some details regarding the same, the Revenue should have examined these facts and if cannot accept to the quantum of income declared by the assessee at least they should have estimated the agricultural income of the assessee, considering the earlier decisions and facts during the relevant assessment year. It is evident from the order of the Revenue authorities that they have not made any attempt to do so, but has vindictively proceeded to treat the "agricultural income" declared by the assessee as" income from other source". The learned Assessing Officer has observed in his order that the assessee has only filed certain sale receipts regarding sale of agricultural produce but, did not furnish any evidence relating to agricultural operations such as tilling, sowing, planting, vouchers for purchase of fertilizers/pesticides and details of wages paid. However, from the facts available on record, it cannot be denied that there was no agricultural operation or agricultural income earned by the assessee because the assessee has produced the details of sale receipts, landholding and other details which is apparent from the order of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be taxed. Accordingly, the learned Assessing Officer computed the taxable interest at Rs. 36,10,000/- and brought it under the ambit of tax. 8.2 On appeal, the learned Commissioner of Income Tax (Appeals) endorsed the view of the learned Assessing Officer and confirmed his order by citing the following additional reasons:- i) The assessee had followed cash system of accounting with regard to interest income while as she was following mercantile system of accounting in respect of her other income, which shows that the assessee is following hybrid system which is not permitted as per the provisions of the Act. ii)There is no evidence on record to show that due to attachment effected by DVAC the bank deposits standing in the assessee's name ran the potent risk of getting those deposits forfeited by the Government. iii) The appellant was merely prohibited from operating the bank deposits by withdrawing or enchasing the same during the pendency of DVAC proceedings. iv) Though there is some element of uncertainty as to when the DVAC would conclude its proceedings, there is no risk and also there cannot be any presumption that the appellant had lost the ownership of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee. WTA No. 20/Mds/2008: (A.Y. 1997-98): 13. Brief facts of the case are that Wealth Tax assessment in the case of the assessee was completed for the assessment year 1997-98 on 27.03.2000 under section 16(5) r.w.s. 17 of the Wealth Tax Act determining the net wealth of Rs. 4,67,13,000/- . Thereafter based on the 263 order passed under the provisions of the Income Tax Act dated 12.02.2002, the learned Commissioner invoked his powers under section 25 of the Wealth Tax Act by stating that the wealth tax assessment is found to be erroneous insofar as it is prejudicial to the interests of the Revenue. By referring to the 263 order under the provisions of the Income Tax Act, the learned Commissioner in his order under section 25 of the Wealth Tax Act observed that the Wealth Tax Officer has omitted to include the value of the following assets: i) Investment in construction of residential property at Poes Garden source from unexplained income Rs. 58.52 lakhs. ii) Construction of farm house in Hyderabad Rs. 11.72 lakhs. iii) Gold jewellery valued at 185.82 lakhs instead of Rs. 383.12 lakhs as revealed from DVAC report. iv) Tata Seira car Rs. 4,01,131/-, Maru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal, which cannot be condoned. 17.1 We have perused the written submission filed by the assessee and for reference the same is extracted herein below: "The Appellant was CM of Tamil Nadu from 14.05.2001 to 21.09.2001. For a brief period 21.09.2001 to 02.03.2002 she was not the CM and from 02.03.2002 to 12.05.2006 she was again the CM. From 1996 onwards she has been facing numerous vexatious litigations from politically foisted cases for more than two decades. Therefore her full attention was focused on not only carrying out the functions as Chief Minister but had also to defend almost 31 vexatious litigations. TANSI land case, disproportionate assets case, Pleasant Stay Hotel Case, Colour TV Case, Gift case and prosecution launched by Income tax Department, regarding Wealth-tax were some of the cases spanning over two decades which required the Appellant's constant, continuous full time attention. TANSI land case launched against her continued for the period from 1999 to March, 2002. Thus when the impugned order was supposed to have been delivered to the address of the Appellant, she was fully occupied in defending the case. She had also taken over as CM requirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed the appeal immediately. In the circumstances, the delay in filing the appeal occurred for the above reasons beyond' her control the Appellant not being aware of the service of the order and in view of the various activities occupied her attention during the interregnum. The delay was neither willful nor wanton and beyond her control. As soon she became aware of passing of the order immediately she had taken steps to get the certified copy and file an appeal thereafter. She always would like to comply with the provisions of the Act implicitly. As held by the Madras High Court in the case of as well as the Madras High Court in the case of Areava T & D India Ltd, the tribunal while exercising discretion in condonation of delay should adopt a pragmatic approach. In construing a sufficient cause, principle advancing justice is the prime importance. As held by the Supreme Court Improvement Trust Vs Ujaygar Singh it has to be examined whether the conduct behaviour and attitude of the appellant had been absolutely callous and negligent in prosecuting the matter. In that case also the Petitioner was not aware of the order. As soon as he was made aware, he had taken all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." Further the Hon'ble Supreme Court in case of Vedabhai v/s Santaram, 253 ITR 798 had observed that inordinate delay calls for cautions approach. This means there should be no malafide or dilatory tactics. "Sufficient cause" should receive liberal construction to advance substantial justice. We also derive strength from the recent decision of the Hon'ble Apex Court in the case Maniben Devraj Shah Vs. M.C.G. Brihanmumbai reported in AIR 2012 (SC) 1629 wherein it was held that "the Limitation Act has not been enacted with the object of destroying the rights of the parties but to ensure that they approach the Court for vindication of their rights without unreasonable delay. No hard and fast rule can be laid down for deciding the application for condonation of delay but over the years the Court has advocated that a liberal approach should be adopted in such matters so that substantive rights of the parties are not defeated merely because of delay." In the case of the assessee the delay is not willful and had sufficient cause. Accordingly, in the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, the CIT wants to re-open the concluded assessment through the proceedings u/s.263. What can be the subject matter of reassessment can be done only by reopening of the assessment and not by revision u/s.263. This is because there is no assessment regarding the item considered in the DVAC report. When there is no assessment itself, the question of revision u/s.263 does not arise on this issue. In the present case if there is escapement of assessment on this issue and it should have been brought to assessment by virtue of sec.147 and 148 of the Act and not under section 263 of the I.T. Act and the revisionary power u/s.263 cannot be exercised for escapement of income. We take support from the judgement in the case of Bidar Sahakar Sakkare Karkhane Ltd. Vs. State of Karnataka (1985) (58 STC 65).. Further we rely on the judgment in the case of H. Kenche gowda VS. State of Karnataka(1988)(174 /TR 389). 125. Regarding the merit, the CIT has observed in his revisionary order to consider the cost of construction for addition. As we discussed earlier, this has already been a subject matter of appeal before the CIT(A) for earlier assessment year and he has already adjudicated th ..... 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