Mohd. Ahamad, Sonebhadra V. ITO, Ward - 3(3), Sonebhadra

ITA 1/VNS/2022

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1735 (ITAT-VARANASI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 03-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT ‘SMC’ BENCH, VARANASI BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA No.122/VNS/2020 Assessment Year: 2015-16 Shri. Mohd Ahamad, Pagia, Karma Road, Sonbhadra- 231216 PAN-BKXPA2899B v. Income Tax Officer, Ward-III(3), Chandi Tiraha, Robertsganj Sonbhadra- 231216 (Appellant) (Respondent) ITA No.01/VNS/2022 Assessment Year: 2016-17 Shri. Mohd Ahamad, Pagia, Karma Road, Sonbhadra- 231216 PAN-BKXPA2899B v. Income Tax Officer, Ward-3(3), Sonbhadra (Appellant) (Respondent) Appellant by: Sh. K.R. Singh, Advocate Respondent by: Sh. A.K. Singh, Sr. D.R. Date of hearing: 26.05.2022 Date of pronouncement: 03.06.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: These two appeals by the assessee are directed against the two separate orders of CIT(A) dated 04.03.2020 and 01.10.2021 for the assessment years 2015- 16 and 2016-17 respectively. 2. The appeal for the assessment year 2015-16 is taken up as a lead case. The assessee has raised common grounds in these appeals except the quantum of addition. The grounds raised for A.Y. 2015-16 reads as under:- “1. The Ld. CIT(Appeals) erred on facts and in the law in not adjudicating the transaction relating to personal agricultural proceeds of Tomato and Onion not concerned to trading transactions. The dismissal of appeal is restive and impugned order dated 4.3.2020 is unreasonable and bereft of the facts and evidences filed on the record. The confirmation of trading transactions on Rs. 1,19,16,791/- instead of declared trading receipt Rs. 32,45,900/- is entirely against the materials on the records. ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 2 a. The The Ld. CIT(Appeals) erred in not adjudicating the agricultural proceeds of the family members of the appellant assessee produced by them amounted to Rs. 51,99,600/- on the area measured 38.466 Bigha out of 51 Bigha land owned by their father Sanaulla and has wrongly confirmed as trading transactions. b. The Ld. CIT(Appeals) erred in not adjudicating the agricultural proceeds of assessee and his brother Mohd Abrar produced by them on their own land measuring about three Bigha and proceeds amounted to Rs. 3,05,000/- and has wrongly confirmed as trading transactions. c. The Ld. CIT(Appeals) erred in not adjudicating the agricultural proceeds of much closed neighbor farmer amounted to Rs. about 19,00,000/- not concerned to trading transaction. 2. The Ld. CIT(Appeals) erred in not taking in care and adjudicating the transaction of cash repetition, interest and receipt from LIC in the banks amounted to Rs. 12,66,291/- and wrongly confirmed as trading receipts. 3. The appellant craves leave to add, alter, amend, abrogate or modify any grounds of appeal.” . 3. The assessee stated to be an agriculturist and also dealing in wholesale agriculture produce as per the license under U.P. Krishi Utpadan Mandi Samiti Adhiniyam. The assessee filed his return of income on 15.07.2016 declaring total income of Rs. 2,68,740/- under section 44AD of the Income Tax Act. The case was selected for limited scrutiny in respect of larger cash deposits in the saving bank account of the assessee in comparison to the turnover declared by the assessee. During the assessment proceedings, the Assessing Officer noted that a total of Rs. 1,19,16,791/- was deposited in the three saving bank accounts of the assessee with Allahabad Bank, Punjab National Bank and State Bank of India whereas the assessee has declared the income under section 44AD on the total turnover of Rs. 32,45,900/-. The assessee explained the reasons for the turnover declared by the assessee as the other amount is the sale proceeds of his own agriculture produce i.e. Tomato & Onion as well as his family members produce. The Assessing Officer did not accept this contention and made the addition by taking the total deposits in the bank account as turnover of the assessee and computed the income by ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 3 applying a net profit rate as declared by the assessee. Thus an addition of Rs. 7,16,778/- was made by the Assessing Officer to the total income of the assessee. 4. The assessee challenged the action of the Assessing Officer before the CIT(A) and contended that the assessee is basically an agriculturist. He has four brothers and father of the assessee are doing farming and growing Tomato and Onion on their land measuring 38.466 Bigha land owned by the father. The assessee also produced the land record showing the ownership of the land as well as crop growing on the land as recorded by the Land Revenue Department. The assessee further explained that assessee used to sell Tomato of other farmers with his own proceeds and for this purpose, he has got license under U.P. Krishi Utpadan Mandi Samiti Adhiniyam. Thus the turnover declared by the assessee of 32,45,900/- as per the sale register kept and maintained in accordance with R-9 issued by the Mandi Samiti. The CIT(A) was not impressed with the contention and explanation of the assessee and confirmed the addition made by the Assessing Officer. 5. Before the Tribunal, the learned AR of the assessee has reiterated his contention as raised by the authorities below and submitted that the bank deposits are out of sale proceeds of the Tomato and Onion of the five family members of the assessee on agricultural land. The turnover declared by the assessee is duly recorded in the register maintained under R-9 issued by the Mandi Samiti. Some of the amounts about Rs. 19,00,000/- belongs to the other farmers who sold their agriculture produce through the assessee. The learned AR has further contended that the Assessing Officer has also not considered the transactions relating to the cash repetition, interest on saving account and LIC receipts which comes to Rs. 12,66,291/-. Thus he has contended that the Assessing Officer was not justified in taking the entire deposits in the bank accounts as turnover of the assessee by ignoring the other facts to show the source of the deposits, therefore, the assessee ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 4 has rightly declared the income under presumptive provision of section 44AD of the Income Tax Act. The Assessing Officer has not disturbed the net profit rate declared by the assessee hence, the addition made by the Assessing Officer is liable to be deleted. 6. On the other hand, learned DR has submitted that the assessee has not produced any record or books of accounts to show that the deposits in the bank account is not representing the sale proceeds of the assessee in the business of wholesale trading of agriculture produce. The assessee has only made verbal submissions without support of any record therefore, once the turnover of the assessee is found to be more than One Crore, the assessee is under obligation to maintain the books of accounts under section 44AA of the Income Tax Act. The assessee has not produced any record in support of the claim except R-9 which does not contain any details of name and address of the persons on whose behalf the trading was done by the assessee. No confirmation about the transactions of the other family members sale proceeds. The learned DR has further contended that even if the assessee has sold the agriculture produce of the other family members, how the sale proceeds would be deposited in the bank account of the assessee. He has relied upon the orders of the authorities below. 7. I have considered the rival submission as well as relevant material on record. The assessee declared the turnover of Rs. 32,28,791/- for the assessment year 2015-16 whereas the total deposited in three bank accounts of the assessee are as under:- 1. Allahabad Bank Rs. 34,53,000/- 2. Punjab National Bank Rs. 61,35,000/- 3. State Bank of India Rs. 23,28,791/- Total Rs. 1,19,16,791/- ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 5 8. The only dispute in these appeals is computation of the turnover by the Assessing Officer as the total deposits in the bank accounts as against the turnover declared by the assessee at Rs. 32,45,900/-. Since the Assessing Officer took the deposits in the bank account as the turnover of the assessee from wholesale trading in the agriculture produce. The assessee himself has declared the business income as he is having the license for wholesale trading in the agriculture produce. The assessee explained that the amount over and above the sale proceeds declared by the assessee represents the assessee’s own sale proceeds of agriculture produce as well as his family members and some of the amounts belong to the other farmers who sold their agriculture produce through the assessee. The details of the deposits representing the sale proceeds of Tomato and Onion and other sources as stated by the assessee are as under:- “That the total deposits in bank accounts does not relates to his trading receipt only but rather there are five categories of transactions. These are produced as under:- a) Rs. 51,99,600/- is deposits from the sale proceeds of tomato and onion belong to the five members of the family. b) Rs. 32,45,900./- is deposit of the trading done by the appellant as per R-9. c) Rs. 1,52,500/- and Rs. 1,52,500/- belongs to him and his brother Mohd Abrar from sale of produce of their own land. d) Rs. 19,00,000/- of deposits relate to the agricultural sale proceeds of neighbor agriculturist. For this no. R-9 is maintained and these farmers have been paid in cash by the appellant. e) Rs. 12,66,291/- relates to the cash repetition, interest on saving a/c and LIC receipt.” 9. As a matter of fact the assessee has not produced any documentary evidence to show that certain deposits relate to the agriculture sale proceeds of neighbouring agriculturist and therefore, in the absence of any confirmation or documentary evidence, it is against the preponderance of probability that the sale proceeds of the agriculturists would be deposited in the bank account of the assessee. Similarly, the sale proceeds of the family members of the assessee is also ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 6 unlikely to be deposited in the bank account of the assessee. Thus the assessee’s own sale proceeds of Tomato and Onion as well as the withdrawal of cash which can be utilized for the subsequent deposits in the bank account, the interest on the saving bank account and LIC receipts as claimed by the assessee cannot be treated as part of the turnover of the assessee. The assessee though produce land holding record as well as the affidavit in support of the claim however, neither the Assessing Officer nor the CIT(A) has taken any step to verify these facts or to determine the quantity of the Tomato and Onion production in the land holding of the assessee and sale proceeds of the same. Hence, taking the entire deposits in the bank account without considering the sale proceeds of the assessee’s own agriculture produce and the source of deposit representing the interest and LIC receipt is not justified. 10. Accordingly, in the facts and circumstances of the case and in the interest of justice, the impugned order is set aside and the matter is remanded to the record of the Assessing Officer to re-adjudicate the same after considering the quantity and sale proceeds of the Tomato and Onion produced by the assessee from his own land holding as well as the interest income and LIC receipt which cannot be part of the turnover. The record of the land holding and the agriculture produce on the land belonging to the assessee is required to be verified and examined by the Assessing Officer and then to decide the issue afresh. Needless to say an appropriate opportunity of hearing be given to the assessee before passing the fresh order. 11. For the Assessment Year 2016-17 An identical issue is raised by the assessee. In view of the finding for the assessment year 2015-16, the matter is set aside to the record of the Assessing Officer with the same directions. ITA No.122/VNS/2020 ITA No. 01/VNS/2022 Mohd Ahamad 7 12. In the result, both the appeals of the assessee are partly allowed. Order pronounced in the open Court on 03.06.2022. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 03/06/2022 Varanasi/Allahabad Sh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A),Varanasi 4. CIT 5. DR By order Sr. P.S.