S Vijayalakshmi, Kurnool, Kurnool vs Assessee

This is an assessee's appeal filed against the order of the Commissioner of Income Tax(Appeals), Kurnool, dated 28-01-2015 on the following ground(s):

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" The learned CIT(Appeals) erred in confirming the penalty u/s. 271(1)(c) on estimated Agricultural income of Rs. 2,50,000/-."

2. The brief facts of the case that the assessee is an individual deriving income from dairy and agriculture. For the Assessment Year (AY) 2007-08 file the return of income on 31-03-2008 admitting income of Rs. 4,42,000/- apart from agricultural income of Rs. 5,00,000/- for rate purpose under the provisions of the Income Tax Act, 1961 [Act]. The return of income was processed u/s. 143(1). Subsequently, a notice u/s. 148 was issued on 01-12-2009. In response to this, the appellant submitted that the original return of income filed on 31-03-2008 may be treated as return filed in response to the notice issued u/s. 148.

3. Against this, the assessment was completed u/s. 143(3) r.w.s 147 by the Addl. Commissioner of Income Tax, Kurnool vide order dt. 31-12- 2010 at a total income of Rs. 49,57,351/-While doing so, the Assessing Officer (AO) made addition under the head 'Long Term Capital Gains' of Rs. 42,14,381/- and also made an addition on account of agriculture income of Rs. 3,00,000/- treating the agricultural income as not genuine. Being aggrieved by this, the appeal was filed before the CIT(A) who dismissed the same. On further appeal before this Hon'ble ITAT, Hyderabad in ITA No. 1117/Hyd/2013 vide order dt. 16-01-2015, restored the issue of addition under the head 'Capital Gains' to the file of AO for fresh adjudication and on the issue of agriculture income, the Hon'ble Tribunal restricted the addition on account of agriculture income to Rs. 2.5 Lakhs by holding as under:

"Assessee was only offering incomes of Rs. 60,000/-, Rs. 78,200/- and Rs. 1,75,700/- in the earlier three years on the agricultural land. Even though it was submitted that the land holding has not changed in the years, the income has suddenly jumped from Rs. 1.75 Lakhs to Rs. 5 Lakhs in the impugned Assessment Year (AY). Considering the :- 3 -: I.T.A. No. 233/Hyd/2015 S. Vijayalakshmi

submissions for assessee and past record, we are of the opinion that agricultural income can be determined at Rs. 2,50,000/-. Consequently, Assessing Officer is directed to restrict the amount to Rs. 2,50,000/- only".

4. While matter stood thus, the Ld. AO vide order dt. 21-03-2013 levied a penalty of Rs. 12,35,744/- u/s. 271(1)(c) on the additions of both Long Term Capital Gains and disallowance of agriculture income of Rs. 3 Lakhs. On appeal before the Hon'ble CIT(A), the penalty attributable to the Long Term Capital Gain was deleted and whereas the penalty attributable to the agriculture income was sustained vide order dt. 28-01-2015. Aggrieved by this order, the appellant had come up with the present appeal.

5. It was argued on behalf of the appellant that no penalty is leviable in the case of estimation of agriculture income and no details filed before the lower authorities are found to be false or inaccurate. Hence, the penalty cannot be sustained. On the other hand, the Ld.DR supported the orders of the lower authorities.

6. We heard the rival parties and perused the orders of lower authorities. We note that the Hon'ble Tribunal confirmed the addition on account of agriculture income only on estimate basis and neither is the case of AO that the appellant had filed certain details, which are found to be false, consequent to which the addition was made. Simply because the appellant failed to furnish the information as required by the AO it does not mean that the appellant had filed inaccurate particulars of income. We find that the department is not in possession of any incriminating material or evidence to suggest any inflation of agriculture income by the appellant. The addition was made on account of agriculture income by the AO only on estimate basis. Even this :- 4 -: I.T.A. No. 233/Hyd/2015 S. Vijayalakshmi

Hon'ble Tribunal restricted the addition to Rs. 2.5 Lakhs only on estimate basis. It is settled principle of law that in the case of addition made on estimate basis the penalty u/s. 271(1)(c) cannot be levied. Hence, we allow the appeal filed by the appellant.

Order pronounced in open Court on 22nd May, 2015

Sd/- Sd/-

(ASHA VIJAYARAGHAVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 22nd May, 2015

TNMM

Copy to :

1. S. Vijayalakshmi, W/o. K.V. Subba Reddy, Flat No. 203, Alankar Plaza, Kurnool-518 001.

2. Dy. Commissioner of Income Tax-1, Kurnool

3. CIT(Appeals), Kurnool

4. CIT, Kurnool

5. D.R. ITAT, Hyderabad