NIDIMUSILI RAMANA REDDY Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH

JUDGEMENT

(1.) The assessee is carrying on business in money lending, paddy milling and sale of rice. The assessment for the assessment year 1960-61 (accounting year ending 31/03/1960,) was completed on 31/12/1963. While making the assessment for the assessment year 1962-62, the ITO entertained doubts about the correctness of the quantity of paddy credited in the assessees account as yield from his own agricultural lands. He felt that the yield was in filleted. After making the assessment for the assessment year 1961-62, the ITO reopened the assessments for the assessment years 1958-59,1959-60 and 1960-61. For the assessment year 1961-61 with which we are concerned, the assessee had recorded in his books that he had milled 80 candies of paddy which was obtained from his books that he had milled 80 candies of paddy which was obtained from his own agricultural lands. The ITO observed that the assessee owned only about 36 acres of wet land and according to the adangal registers. The sworn deposition of the village karnam and explanation filed by the assessee in connection with the assessment year 1955-57, the assessee could have obtained only 30 candies of paddy for that year from his agricultural lands. there being no change in the circumstances for the assessment year 1960-61. The ITO had concluded that the assessee could have had only 30 candies of paddy available for milling form his own lands for that year also. As the assessee had shown in his books that 80 candies of paddy were available from his lands, the ITO inferred that the assessee should have purchased money at the rate of. Rs 310 per candy, he estimated the value of the paddy unaccounted for at Rs. 15,500 and included the same as the assessees income from "Other sources" in his order passed under s. 143 read with s. 147 of the I.T. Act.

(2.) On appeal before the AAC he held that the net yield from the lands would be 1 1/2 candies per acre after deducting the agricultural expenses and, accordingly, he estimated the net yield for 36 acres at 54 candies. Deducting four candies for personal consumption, he held that the assessee could from, found that the unaccounted paddy would be only 30 candies and not 50 candies as found by the ITO. He, accordingly, granted a relief of by limitation under s. 147(b) and that s. 147(a) was not applicable. The AAC observed that it had been proved that the claim made by the assessee about the yield of paddy from his own lands was excessive and, therefore. There was no substance in the assessee, s contention that s. 147(a) was not applicable and the assessment was not barred by limitation.

(3.) On further appeal, the Appellate Tribunal also held that the proceedings under s. 147(a) are valid since some of the primary facts for the purpose of judging as to whether the assessees yield from his agricultural lands as entered in his books of account, was correct had not been disclosed by the assessee to the department. The Tribunal observed that the only material which the assessee had placed before the ITO at the time of the original assessment was that he possessed some lands from which he had received some quantity of paddy, but he did not disclose the most material information regarding the extent of the land possessed by him and the nature of the land which are necessary for the ITO to find out whether the yield credited in the business accounts is correct or not. In this view. The Tribunal held, that the proceedings under s. 147(a) were valid. On merits, however, the Tribunal took note of the fact that the assessee had spent cash also for meeting agricultural expenses and, hence, restricted the addition to Rs. 6,500 as against the addition of Rs. 8.900 made by the AAC.