Golden Tree Plantation Ltd., Ahmedabad V. The Income Tax Officer, Ward-2(1)(1), Ahmedabad

CO 13/AHD/2016

AI Insights

The case involves multiple appeals and cross objections between the Income Tax Officer (ITO) and M/s. Golden Tree Plantation Ltd. concerning the assessment year 2012-13. The primary issues revolved around the disallowance of certain income and the validity of penalties imposed. The ITO challenged the CIT(A)'s decision to delete disallowances made on account of unaccounted sales of teak trees and income from other sources. The assessee contested the penalties and the additions made under section 68 of the Income Tax Act, 1961. The Tribunal examined the documentation and arguments presented by both parties, focusing on the nature of the income derived from teak trees and the applicability of penalties.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131431 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 8 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-10-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 04-02-2016
• Other Referred Cases: National Thermal Power vs. CIT, Bharat Machinery and Hardware Mart vs. CIT, Haryana Warehousing Corporation vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Corroborative evidences; TDS
• Section: 68; 271(1)(c); 143(1); 271B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Suchitra Kamble, Judicial Member And Shri Waseem Ahmed, Accountant Member Th e ITO, Ward-2(1 )(1) Ah medabad (Appellant) Vs M/s. Golden Tree Plantation Ltd. LG-11 2, Shefali Shop ping Cen tre, Paldi Char Rasta, Paldi, Ahmedabad PAN: AABCG544 1R (Resp ondent) M/s. Golden Tree Plantation Ltd. LG-112, Sh efali Sho pping Centre, Pald i Char Rasta, Paldi, Ahmedabad PAN: AABC G5441R (Appellant) Vs The ITO, Ward-2(1)(1) Ah med abad (Resp ondent) ITA No. 3655/Ahd/2015 Assessment Year 2012-13 C.O. No. 13/Ahd/2016 (in ITA No. 3655/Ahd/2015) Assessment Year 2012-13 ITA No. 1664/Ahd/2018 Assessment Year 2012-13 I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 2 M/s. Golden Tree Plantation Ltd. LG-112, Sh efali Sho pping Centre, Pald i Char Rasta, Paldi, Ahmedabad PAN: AABC G5441R (Appellant) Vs The ITO, Ward-2(1)(1) Ah med abad (Resp ondent) Asses see b y : Shri S. N. Sopa rkar, A.R. Revenue by : M s. S aumy a Pa ndey , Sr. D. R. Date of hearing : 12-09 -2 023 Date of pronouncement : 06-10 -2 023 आदेश/ORDER PER BENCH:- ITA No. 3655/Ahd/2015 filed by Revenue vide order dated 16-10- 2015, 1664/Ahd/2018 filed by the assessee vide order dated 07-05-2018 and Cross Objection 13/Ahd/2018 filed by the assessee vide order dated 16-10- 2015 are against the orders passed by CIT(A), Ahmedabad for assessment year 2012-13. 2. The grounds of appeals are as under:- ITA No. 3655/Ahd/2015 filed by Revenue (A.Y. 2012-13) “1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance made by the AO on account of unaccounted sale of teak trees amounting to Rs. 2,02,50,270/-, without properly appreciating the facts of the case and the material brought on record. I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 3 2. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs.1,72,92,000/- made on account of income from other sources, without properly appreciating the facts of the case and the material brought on record. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. 4. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 5. The appellant craves leave to amend or alter any ground or add a new.” C.O. No. 13/Ahd/2016 filed by assessee (A.Y. 2012-13) “1. In law and in the facts and circumstances of the respondent's case the learned CITIA) has grossly erred in dismissing Ground No. 1 of the respondent's appeal challenging the validity of the assessment order impugned before him. 2 In law and in the facts and circumstances of the respondent's case the learned CIT(A) has grossly erred in sustaining the addition of Rs.6,02,985 (out of the addition of Rs 1,78,94,985 made by the learned Assessing Officer u/s. 68 of the Income-tax Act, 1961) on the ground that unlike the remaining amount of Rs.1,72,92,000 (which represented the respondent's liability to its Members and for which reason it was not the respondent's income at all) the remaining amount of Rs.6,02,985 was not the respondent's liability to its Members, and was, therefore the respondent's income. He ought to have appreciated, inter alia, that in any case, since it was agricultural in nature, it was not assessable at all. 3. In law and in the facts and circumstances of the respondent's case, the learned CIT(A) has grossly erred in sustaining the addition of Rs.2,87,317 made by the learned Assessing Officer on account of interest on bank deposits. He ought to have appreciated, inter alia that as explained by the respondent in its written submissions before I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 4 him the impugned amount went to partly meet the expenses of maintenance of the teak trees during the period of delay in obtaining permission of the Forest Authorities to sell them where after only they could be sold for the benefit of the respondent's Members and could not, therefore, be treated as the respondent's income. 4. In law and in the facts and circumstances of the respondent's case, the learned CIT(A) has grossly erred in dismissing Ground No 6 of the respondent's appeal on the ground that no appeal lay against initiation of penalty proceedings u/s 271(1)(c) He ought to have appreciated. inter alia, that in the peculiar facts and circumstances of the respondent's case, there being absolutely no warrant/justification for initiating the penalty proceedings, he ought to have ordered for their being dropped, thereby saving both the appellant and the Department from long drawn unnecessary litigation. 5. In law and in the facts and circumstances of the respondent's case, the learned CIT(A) has grossly erred in dismissing Ground No 7 of the respondent's appeal on the ground that no appeal lay against initiation of penalty proceedings u/s 271B He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the respondent's case, there being absolutely no warrant/justification for initiating the penalty proceedings, he ought to have ordered for their being dropped, thereby saving both the appellant and the Department from long drawn unnecessary litigation. 6. In law and in the facts and circumstances of the respondent's case, the learned CIT(A) has grossly erred in dismissing Ground No 8 of the respondent's appeal before him on the ground that levy of interest u/s 234B, 234D and 234A was mandatory. He ought to have appreciated. inter alia, that the respondent had challenged the very levy of interest under those provisions and, in the peculiar facts and circumstances of its case, even if the additions to its returned income came to be ultimately sustained, the ratio of the decision of the Gujarat High Court in Bharat Machinery and Hardware Mart's case (136 ITR 875) and of the decision of the ITAT Delhi Bench in Haryana Warehousing Corporation v DCIT 1252 ITR (AT) 34] was attracted and the levy deserved to be cancelled. I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 5 7. The respondent craves leave to add, amend and/or alter the ground or grounds of Cross-objections either before or at the time of hearing.” Additional Grounds of C.O. filed by the assessee “Appellant craves leave to raise this additional ground of appeal before the Hon'ble ITAT. This is a legal ground and therefore as per the decision of Hon'ble Supreme Court in the case of National Thermal Power (229 ITR 383) it can be raised before the Hon'ble ITAT. 1. Ld. CIT (A) erred in law and on facts in holding ground raised before him regarding sale of teak tree as agriculture income as grown on agricultural land as infructuous and does not require any adjudication. Ld. CIT (A) ought to have adjudicated this contention and held income from teak tree as agriculture income. It be so held now. 2. Ld. CIT (A) ought not to have made any addition as net results of capital WIP expenditure for teak trees and total deposits received from members is loss and accordingly there should not be any addition and corresponding loss ought to be allowed as set off in subsequent years. It be so held now. Appellant also craves leave to add, amend, alter, change, delete and edit the above ground of appeal before or at the time of the hearing of the appeal.” ITA No. 1664/Ahd/2018 filed by assessee (A.Y. 2012-13) “1. In the law and in facts and circumstances of the case the Ld CIT(A) has erred in confirming penalty u/s 271(1)(c) for Rs 2,75, 103/- when no such penalty us 271(1)(c) is leviable. 2. In the law and in facts and circumstances of the case. Ld CIT(A) has erred in not appreciating the fact that there is complete I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 6 lack of satisfaction recorded by the Assessing Officer regarding nature of offence, i.e. concealment or furnishing of inaccurate particulars of income on the part of the appellant. The Assessing officer has levied penalty for concealment of particulars of Income/ furnishing inaccurate particulars of income which clearly indicates absence of proper satisfaction recorded by Assessing Officer in Penalty Order u/s 271(1)(c) which makes order bad in law. 3. In the law and in facts and circumstances of the case, Ld. CIT(A) has erred in confirming penalty on addition of Rs 2,87,317/- made towards Interest Income without appreciating bonafide contention of Appellant that interest income was compensatory of the expenses incurred towards maintenance of teak trees till the time permission was received from the forest department to sale the same and there is no profit motive in the scheme carried out by Appellant under the name and style of "Golden Tree Plantation Scheme" 4. In the law and in facts and circumstances of the case, Ld. CIT(A) has erred in confirming penalty on the addition of Rs.6,02,985/- made towards sale of firewood or damaged wood without appreciating the fact that such sales proceeds represents part of sale of teak trees and same does not represent any taxable income of Appellant Company. 5. The appellant craves leave to add to, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” 3. We are taking up ITA 3655/Ahd/2015 for assessment year 2012-13 filed by the Revenue. 4. Return of income was filed on 21-09-2012 declaring total income at Rs. Nil. The return was processed u/s. 143(1) and subsequently notice u/s. 143(2) of the Act was issued and served on the assessee. In response to the notices, the Authorized Representative and Chartered Accountant of the assessee company attended the hearing from time to time and furnished I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 7 written submissions. The Assessing Officer observed that during the course of assessment proceedings, the assessee’s audited accounts were called for the year under consideration which were filed by the assessee company except tax audit report which was not obtained since the company had reported no receipt of income in its profit and loss account for the year under consideration. The Assessing Officer observed that the assessee company had shown outstanding liability under the head other current liabilities payable to members on account of teak tress amounting to Rs. 1,94,985/- as against Rs. nil as on 31-03-2011. The assessee company claimed TDS credit in respect of interest income of Rs. 1,40,785/- as per 26AS Form for the year under consideration. The Assessing Officer further observed that assessee company has not included any receipts from the above two revenue streams in its profit and loss account. The assessee company had been engaged in the business of growing teak tree on behalf of its members and the company had launched a plantation scheme in the name and style of golden tree plantation scheme in the financial year 1996 and mobilized huge funds from enrolled members in multiple of Rs. 550 per teak tree. As per the scheme, the company had engaged into lease agreement with land owners for 15 years for plantation and maintenance of teak trees against payment of lease rent by way of interest free advances. After taking into account, the assessee’s contention, the Assessing Officer rejected the books and the tax treatment given by the assessee company and thereafter made an addition of Rs. 2,02,50,270/- as unaccounted sale of teak tress and also addition of Rs. 1,78,94,985/- relating to income from other sources specifically that of amount of credited in bank account and books of account of assessee as well as interest income amounting to Rs. 2,87,370/-. I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 8 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. As regards the ground no. 1 relating to disallowance on account of unaccounted sale of teak trees amounting to Rs. 2,02,50,270/-, the ld. Departmental Representative submitted that the Assessing Officer has rightly made an addition as the assessee failed to explain the discrepancy in number of teak trees standing during the year under consideration. The ld. Departmental Representative submitted that as per director’s report there were 1,69,000 teak trees standing on 31-01-2011 and as per the insurance policy the number of teak trees standing is shown at Rs. 1,55,131/- whereas the valuation report dated 08-09-2012 shows as such standing trees at 80,130. The ld. Departmental Representative further submitted that the Assessing Officer has rightly held that the sale proceeds of 755 per teak tree at Rs. 600 per tree works to be Rs. 4.5 crores and against the aforesaid sale proceeds, the assessee has shown cost per plant at Rs. 548 per tree on the basis of cost capitalized under the head capital WIP per plantation of the agricultural operation at Rs. 7,17,55,896/- and capital purchase expenses at Rs. 1,33,21,402/- totaling to Rs. 8,50,77,298/- for 1,55,131 teak trees as per insurance policy. The sale cost per teak tree is not verifiable in absence of any supporting evidence filed by the assessee and sales estimates at Rs. 330 per teak tree being 60% of cost per tree claimed by the assessee. 7. The ld. Authorized Representative relied upon the order of the CIT(A). I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 9 8. We have heard both the sides and perused all the relevant materials available on record. The finding given by the ld. CIT(A) that the entire teak trees were sold during the year appears to be correct and the contention of the ld. Departmental Representative that the documents were not provided based on the assessment order is not supported by the findings given by the CIT(A) as well as the submissions made by the assessee during the assessment proceedings. There is no discrepancy as such pointed out by the Assessing Officer related to the valuation of the teak tree given by the assessee as per the various documents. The so called discrepancy pointed out by the ld. Departmental Representative about the insurance policy report as well as valuation report is for the particular data entry and cannot be applied without any verification of the actual teak trees and its price per tree. The documents shows that the assessee has given all the details including the price adopted for sale rate as well the purchase price and therefore the findings given by the CIT(A) are correct and there is no need to interfere with the findings of the ld. CIT(A), thus ground no. 1 of Revenue’s appeal is dismissed. 9. As regards ground no. 2 relating to disallowance of Rs. 1,72,92,000/- made on account of income from other sources, the ld. Departmental Representative submitted that the amount credited in bank account and books of accounts is not justifiable as the books in fact the accounting and tax treatment of the assessee company was rejected by the Assessing Officer. The Ld. Departmental Representative further submitted that the same amount of Rs. 1,78,94,985/- was not received by assessee as payment for the sale of teak trees and there is unexplained credit in assessee’s bank I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 10 and books of accounts chargeable to tax u/s. 68 of the Act. The ld. Departmental Representative relied upon the assessment order. 10. The ld. Authorized Representative submitted that the CIT(A) has rightly giving a finding that the company received about Rs. 6,02,985/- on sale of miscellaneous items in the form of damaged firewood as well as the company was not formed for earning profits and entire sale proceeds of the plants were to be handed over to the certificate holders of the plant which is the obligation of the company. In the subsequent year, the assessee company obtained promotion of cutting and sale of the balance trees from the office of deputy conservator, forest department and therefore all the details were there before the Assessing Officer as well as before the ld. CIT(A). The ld. Authorized Representative further submitted the rejection of accounting method and the books without any reason is not justifiable. The Assessing Officer himself is relying on the accounts for making the addition. 11. We have heard rival contentions and perused all the materials available on record. It is pertinent to note that the deletion of disallowance of Rs. 1,72,92,000/- made on account of income from other sources is based on the details given by the assessee not only before the CIT(A) as well as before the Assessing Officer as well. There is no reasoning given for rejecting the books of account and tax treatment given by the assessee company. In fact, no discrepancy has been pointed out by the Assessing Officer by rejecting the same. The assessee has given a reconciled order identification vis-à-vis the original agreements made to the purchase and I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 11 sale of teak tree during the year through various documents including the scheme as well as the summary of capital work in progress, allotment letters given to member along with the sampling certificate, register, showing money received from members permission received from tax department for sale of teak trees and all the relevant documents related to the same. Therefore, the CIT(A) has rightly deleted the said addition in respect of amount credited in bank account. Thus, Ground No. 2 of revenue’s appeal is dismissed. 12. As relates to cross objection filed by the assessee, ground nos. 1 and 4 to 7 as well as additional grounds are related to challenging the validity of the assessment order, interest, penalty. The ld. Authorized Representative submitted that in fact, the agricultural income is not taxable and therefore the assessment order itself is not justified. The said contention of the ld. Authorized Representative related to cross objection relating to validity of assessment order is not justifiable and the company is not agriculturist but it is a corporation and therefore the income derived does not appears to be agricultural income. Therefore, ground nos. 1 and 4 to 7 as well additional grounds of the cross objection filed by the assessee are dismissed. 13. As regards ground no. 2 of cross objection relates to confirming addition of Rs. 6,02,985/- made u/s. 68 of the Act, the CIT(A) has given a categorical finding and therefore there is no requirement of interfering the said finding. As relates to addition of Rs. 2,87,370/- made on account of interest of bank deposits is also not justifiable and hence dismissed. Hence ground no. 2 of cross objection of the assessee is dismissed. I.T.A Nos. 3655/Ahd/2015, CO 13/Ahd/2016 (In 3655/Ahd/2015 ) & 1664/Ahd/2018 A.Y. 2012-13 Page No. ITO vs. M/s. Golden Tree Plantation Ltd. 12 14. ITA No. 1664/Ahd/2018 for A.Y. 2012-13 filed by the assessee, the same is related to the penalty u/s. 271(1)(c) of the Act. From the perusal of the records, it appears that there is no concealment of particulars of income for furnishing of inaccurate particulars of income on the part of the assessee. In fact, all the relevant documents were present before the Assessing Officer as well as before the CIT(A) and therefore the penalty u/s. 271(1)(c) does not sustain hence ITA 1664/Ahd/2018 is allowed. 15. In the result, ITA No. 3655/Ahd/2015 filed by revenue and C.O. No 13/Ahd/2016 filed by assessee are dismissed and ITA No. 1664/Ahd/2018 filed by the assessee is allowed. Order pronounced in the open court on 06-10-2023 Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 06/10/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद