Case Law Details
Patnala Srinivas Vs ITO (Telangana High Court)
In the case of Patnala Srinivas vs. ITO, the Telangana High Court dismissed the assessee’s appeal concerning the addition of ₹2,25,000 as unexplained income under Section 69A of the Income Tax Act, 1961. The assessee, engaged in the supply of building materials, had declared this amount as agricultural income in his tax return for AY 2000-01. However, the Assessing Officer, based on an inspection report, found that the land was plotted for development and not under cultivation. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) upheld this finding, referencing revenue department reports confirming that no agricultural activity had taken place on the land. The assessee’s failure to provide any supporting evidence further weakened his claim.
The High Court ruled that Section 69A may not directly apply but agreed with the tax authorities that the income could not be classified as agricultural. It noted that factual findings based on site inspections and official records confirmed the land’s non-agricultural use. Since no substantial question of law was involved, the court declined to interfere, affirming the lower authorities’ decision. Consequently, the appeal was dismissed, rejecting the exemption claim for agricultural income.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Mr. A.V.A.Siva Kartikeya, learned counsel for the appellant.
Mr. J.V.Prasad, learned Senior Standing Counsel for Income Tax Department for the respondent.
2. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act’) has been filed by the assessee. The subject matter of the appeal pertains to assessment year 2000-01. The appeal was admitted on following substantial question of law:
“Whether the Assessing Officer has rightly invoked Section 69A of the Income Tax Act, 1961 and made an addition of Rs.2,25,000/-, which was the amount returned by the assessee as an agricultural income?”
3. Facts giving rise to filing of this appeal briefly stated are that the assessee is carrying on the business of supplying building construction material. The assessee filed the return of income for the assessment year 2000-01 on 20.05.2002, in which the assessee disclosed his income for business as Rs.82,450/- and agricultural income of Rs.2,25,000/-. The Assessing Officer completed the assessment under Section 143(3) of the Act and determined the income of the assessee at Rs.3,07,450/-. The Assessing Officer by an order dated 30.11.2004 made an addition under Section 69A of the Act of Rs.2,25,000/- as agricultural income.
4. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals)-VI, Hyderabad. The Commissioner of Income Tax (Appeals) by an order dated 17.03.2005, inter alia held that no basis has been disclosed by the assessee for his share of income as Rs.2,25,000/-. The Commissioner of Income Tax (Appeals) also took note of the letters dated 23.09.2004 and 28.09.2004 issued by Executive Officer, Hayathnagar Mandal, Ranga Reddy District and Deputy Collector and Mandal Revenue Officer, Hayathnagar Mandal, Rang,a Reddy District respectively and recorded a finding that no crops were grown on the said land and the same was shown as plots in the land revenue records. Accordingly, the appeal was dismissed.
5. Being aggrieved, the assessee filed an appeal before the Income Tax Appellate Tribunal, Hyderabad Bench B’. The Income Tax Appellate Tribunal by an order dated 19.01.2007 has affirmed the order passed by the Commissioner of Income Tax (Appeals) and has dismissed the appeal. Hence, this appeal.
6. Learned counsel for the assessee submitted that the Income Tax Appellate Tribunal ought to have appreciated that Section 69A of the Act had no application to the obtaining factual matrix of the case in as much as the assessee had disclosed a sum of Rs.2,25,000/- as his agricultural income. It is further submitted that the Mandal Revenue Officer had given a report for financial year 2001-02 in respect of agricultural income of the assessee and therefore for the previous year, it could not be held that the land in question has already been plotted and no agricultural operation is carried out. Therefore, it is contended that the finding recorded by the Income Tax Appellate Tribunal is perverse.
7. On the other hand, learned Senior Standing Counsel for the Revenue has submitted that no substantial question of law arises for consideration in this appeal and the matter is concluded against the assessee by findings of fact.
8. We have considered the rival submissions made on both sides and have perused the record.
9. Section 69A of the Act deals with unexplained money. We find substance in the submission made by learned counsel for the assessee that provisions of Section 69A of the Act per se may not apply to the case of the assessee. The issue which requires consideration in this appeal is whether the assessee carried out any agricultural operations for the assessment year 2000-01. The Inspector of Income Tax deputed by Assessing Officer for spot enquiry has reported after visiting the land that the same has been marked into plots and is not used for cultivation. The material collected by the Assessing Officer during the course of the enquiry was forwarded to the assessee and his comments were sought for. However, the assessee did not offer any explanation. The Commissioner of Income Tax (Appeals) has taken into account the letters dated 23.09.2004 and 28.09.2004 issued by Executive Officer, Hayathnagar Mandal, Ranga Reddy District and Deputy Collector and Mandal Revenue Officer, Hayathnagar Mandal, Ranga Reddy District respectively, in which it is stated that no crops were grown on the land and the same was shown as plots in the land revenue records. The Income Tax Appellate Tribunal has also found that the assessee has failed to establish that the land in question was under cultivation. Thus, the authorities under the Act, on the basis of meticulous appreciation of evidence on record have found that the land in question was already plotted and no agricultural operations were carried out by the assessee. Therefore, the claim of agricultural income is not tenable. The aforesaid findings of fact are based on meticulous appreciation of evidence on record and by no stretch of imagination can be said to be perverse. It is well settled in law that this Court in exercise of powers under Section 260A of the Act cannot interfere with the finding of fact until and unless the same is demonstrated to be perverse. (see Syeda Rahimunnisa vs. Malan Di by LRs (2o16) 10 SCC 315 and Principal Commissioner of Income Tax, Bangalore vs. Softbrands India Private Limited (2018 406 ITR 513).
10. In view of preceding analysis, the substantial question of law framed by this Court is answered against the assessee and in favour of the Revenue.
11. In the result, we do not find any merit in the appeal. The same fails and is hereby dismissed.
Miscellaneous applications, if any pending, shall stand closed. There shall be no order as to costs.
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