Wp/7016/2004 Of V.sunanda v. The Cheif Commissioner Of Income Tax-1

HON’BLE SRI JUSTICE BILAL NAZKI AND HON’BLE SRI JUSTICE D APPARAO Thursday, the 9[th] day of March, 2006 W.P.No.7016 of 2004 & I.T.T.A.No.453 of 2005 Between: Smt.V.Sunanda .. Petitioner and 1. The Chief Commissioner of Income Tax-1,Hyderabad and another. . Respondents. COMMON ORDER (Per Hon’ble Sri Justice D.Apparao): The assessee filed appeal against the orders of the Income Tax AppellateTribunal, Hyderabad, dated 15-12-2003 in dismissing the appeals, and confirming the orders of theCommissioner of Income Tax (Appeals)-V, Hyderabad, rejecting her claimtowards agricultural income. 2. She sought a Writ of Certiorari when her claim for waiver of interestlevied under Sections 234-A and 234-B of the Income Tax Act, 1961 (forbrevity ‘the Act, 1961’), was rejected by the Chief Commissioner of Income Tax, Hyderabad by order dated 10-03-2004. 3. Since common points are involved in these two appeals, they aretaken up together and disposed of by way of common order. 4. Smt.V.Sunanda is an Income Tax assessee. She filed Income Taxreturns on 08-01-1999 for the assessment years 1996-97, 1997-98 and1998-99 before the Income Tax Officer declaring income, among otherthings, a huge agricultural income for several years, since 1982-83, on theground that her grandfather Sri Vithal Pawar purchased Ac.28-20 guntasof agricultural lands in the year 1981 and the same were leased out fromtime to time and she was getting agricultural income annually, but it waskept with him as she was a minor. Her grandfather informed this beforehis death in 1996, with an advice to get registration as soon as possiblefor the sake of valid title deeds. Till his death, Mr.Vithal Paar was alonelooking after the agricultural lands and the related transactions with thecultivators, utilization of funds and accruals thereon. Though she gotmarried in 1993, only after 1996 her husband had taken care of affairs ofincome and got the lands registered in the year 1998. 5. The Income Tax Officer as well as appellate authority consideredthe plea of the appellant by referring to the Pahani and other voluminousoral and documentary evidence and opined that “the story of purchase ofthe lease lands of Ac.28.20 guntas in 1981 by Sri Ramesh Pawar towards“Sthreedhan” to Smt.Sunanda, is totally false. Further, the leaseagreements purported to have been executed since 1982 to 1999 arefabricated, created and filed before Income-tax authorities in the course ofassessment proceedings with a malafide intention to explain the sourcesfor the investments made in the hands of the assessee.” The investmentsmade by the assessee during the financial year relevant for theassessment years 1996-97, 1997-98 and 1998-99 have therefore noknown sources and therefore to be treated as “unexplained investments”in the hands of the assessee. The conduct of the assessee clearlyestablishes the fact that she was making an ill-advised attempt to look forsources to explain away her investments in later years by filing I.T. & 6. 7. 8. 9. W.T. returns for more than 10 years at a time, to legalize the source ofnon-existing agricultural income. This sort of plea was necessitated in view of her unexplainedinvestments towards capital in the firms run in the name and style M/s.Swamy Ayyappa Transport, M/s.Kalyani Wines, Karimnagar, andM/s.Vijaya Picture Palace, Godavarikhani and also in purchase of plot atHyderabad. The authorities have consistently held that the claim of theassessee as to the kaul amount received from various alleged lesseesfrom the year 1981 onwards is not supported by any valid evidence. Therewas nothing on record to suggest that there was sale of agriculturalproduce by the lessees. 6. 7. 8. 9. W.T. returns for more than 10 years at a time, to legalize the source ofnon-existing agricultural income. This sort of plea was necessitated in view of her unexplainedinvestments towards capital in the firms run in the name and style M/s.Swamy Ayyappa Transport, M/s.Kalyani Wines, Karimnagar, andM/s.Vijaya Picture Palace, Godavarikhani and also in purchase of plot atHyderabad. The authorities have consistently held that the claim of theassessee as to the kaul amount received from various alleged lesseesfrom the year 1981 onwards is not supported by any valid evidence. Therewas nothing on record to suggest that there was sale of agriculturalproduce by the lessees. The Income Tax Officer and later, the Commissioner for IncomeTax (Appeals) and finally, the Income Tax Appellate Tribunal haveconsistently held that her plea that she got agricultural income for severalyears from agricultural lands was disbelieved. The authorities below haveappreciated the facts and law, after exhaustively considering the evidenceplaced in this regard. The findings cannot be said to be perverse or basedupon the facts which could never be reasonably entertained. The learned counsel for the appellant contends that the authoritieswere erred in holding that the lands do not belong to the appellant whichwere registered in the year 1998 and also by virtue of Section 5 (a) of theA.P. Record of Rights in Land and Pattadar Pass Books Act, 1971 (forbrevity ‘the Act, 1971’). Evidently, no Certificate as contemplated under Section 5 (a) of theAct, 1971, was given in favour of her grandfather or in favour of theappellant making transfer of the title. Even assuming without admittingthat such a transfer had taken place, it would no way show that either sheor her grandfather had earned agricultural income for all these years from1983 onwards and the same was handed over to the assessee. 11. 12. determination in the appeal, such a question cannot framed for thepurpose of determination. When the appellant contends that documents oftitle were executed in her favour in the year 1996, the question of fallingback on pattadar pass book will not arise, even the pattadar passbooksaid to have been given to her was only in the year 1998. Therefore, itcannot be said that she had agricultural income derived from Ac.28-20guntas of agricultural land. The authorities have found that her plea thatshe was given huge amounts of Rs.25,00,000/- towards agriculturalincome cannot be believed. We are in agreement with the said findings ofthe fact and it does not call for any interference. The Income Tax Officer also levied interest under Sections 234-Aand 234-B of the Income Tax Act. During the pendency of the appealbefore the Income Tax Appellate Tribunal, she filed a petition before theChief Commissioner of Income Tax, Hyderabad, for waiver of interestimposed against her on the ground that she herself filed Income Taxreturns on 08-01-1999 voluntarily, without being detected by the IncomeTax department. Since she was not aware of agricultural income, she hasnot filed the returns earlier. She further stated that the Assessing Officererred in levying the interest, therefore, requested either to waive or reducethe interest or levy a nominal amount. She also stated that sheundertakes to withdraw the appeal pending before Income Tax AppellateTribunal against the assessment of investment as income from‘undisclosed sources’ and also pay the entire tax outstanding due. TheChief Commissioner of Income Tax, by the impugned order dated 10-03-2004, refused to waive interest on the ground that the departmentdetected the concealed income earned by the assessee which she did notdisclose at the time of filing of returns. Against which she filedW.P.No.7016 of 2004 for Writ of Certiorari for quashing the said order. The learned counsel for the appellant contended that levying ofinterest under Section 234-A and 234-B of the Act, 1961 for theassessment years 1996-97, 1997-98 and 1998-99 is bad under law on the ground of non-application of mind and non-appreciation of fact in regard to title and income over the agriculturallands. 13. Evidently, the Income Tax Officer levied interest under Section 234-A and 234-B of the Act, 1961 in the very order passed by him on theground that the appellant made unexplained investments under Section69-A of the Act, 1961. The said amounts were included in the demandnotices. The Supreme Court in COMMISSIONER OF INCOME TAX v.RANCHI CLUB LIMITED opined that the interest to be calculated withrespective income declared in returns and not on the income assessed. Itwas further held that unless there was specific direction in theassessment order, interest was not leviable through notice of demand. 14. Coming to the facts of the present case, this aspect was dealt bythe Chief Commissioner of Income Tax. As earlier pointed out the IncomeTax Officer levied interest on the income declared in return, with aspecific direction in the very assessment order. Therefore, thesecontentions do not sustain. There are no questions of law or fact that arisefor determination in the appeal as well as in the Writ. 15. In the result, both the appeal as well as the writ petition aredismissed. However, no costs. ______________________ (BILAL NAZKI, J) ______________________ March 9, 2006 (D.APPARAO,J) KVR