Shri Govindbhai Kalidas Patel, Anand V. The Income tax Officer,Ward-1, Nadiad

ITA 1046/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5732 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DIVETIA
• Assessee Lawyers: K M MAHESH
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Corroborative evidences
• Section: 144

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M SHRI GOVINDBHAI KALIDAS PATEL, NR. CHABUTARI, AT & PO :KANJODA, TAL. NADIAD. VS. INCOME-TAX OFFICER, WARD-1, NADIAD. (APPELLANT) .. (RESPONDENT) REVENUE BY :- SHRI S. N. DIVETIA, AR ASSESSEE BY:- SHRI K. M. MAHESH, SR.DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- (1) THE LD. CIT(A)-IV, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING ORDER PASSED BY THE ITO IN THE NAME OF A PPELLANT DESPITE HIS DEATH. (2) THE LD. CIT(A)-IV, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING ORDER PASSED BY ITO U/S 144 TREATING AGR ICULTURAL INCOME OF RS.4 LAC AS INCOME FROM UNDISCLOSED SOURC ES. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RE TURN OF INCOME AT NIL INCOME WITH AGRICULTURAL INCOME OF RS.4,50,000/-. T HE AO SENT SEVERAL NOTICES AS MENTIONED BY HIM IN THE ASSESSMENT ORDER REQUIRING HIM TO PROVIDE FOLLOWING DETAILS:- (1) A BRIEF NOTE OF YOUR BUSINESS ACTIVITY ITA NO.1046/AHD/2010 ASST. YEAR :2003-04 2 (2) DETAILS OF FAMILY MEMBERS AND HOUSE HOLD EXPENSES. (3) COPIES OF ALL BANK ACCOUNTS FOR THE PERIOD 01 .04.2002 TO 31.03.2003; (4) IN RESPECT OF INCOME, AND AGRICULTURAL INCOME OF RS .4,50,000/-, FOLLOWING DETAILS WITH DOCUMENTARY EVIDENCES:- (A) A COPY OF 7/12 EXTRACT, FORM NO.8A IN SUPPORT OF YO UR LAND HOLDINGS; (B) DETAILS OF AGRICULTURAL CROPS CULTIVATED BY YOU ALO NG WITH COPIES OF BILLS FOR SALE OF AGRICULTURAL PRODUCE DURING TH E YEAR UNDER CONSIDERATION; (C) DETAILS OF EXPENSES INCURRED BY YOU FOR PRODUCING T HE AGRICULTURAL PRODUCES. ALSO, FURNISH COPIES OF BILL S VOUCHERS FOR PURCHASE OF SEEDS, FERTILIZERS, WATER, ETC. (D) ANY OTHER SUPPORTING EVIDENCES SHOWING AGRICULTURAL INCOME EARNED BY YOU. HOWEVER, NO RESPONSE WAS RECEIVED FROM THE ASSESSEE . ACCORDINGLY THE AO HAVING BEEN NOT SATISFIED WHETHER ASSESSEE HAS E ARNED AGRICULTURAL INCOME OR NOT, HELD THAT HE MIGHT HAVE AGRICULTURAL INCOME OF RS.50,000/- ONLY AND PROPOSED THE ADDITION OF RS.4 LACS AS INCO ME FROM NON- AGRICULTURAL ACTIVITIES I.E. INCOME FROM OTHER SOUR CES. UNFORTUNATELY DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE HAD EXPIRED AND HIS SON REPRESENTED HIS FATHER BEFORE THE AO. 3. BEFORE LD. CIT(A) IT WAS CONTENDED THAT ASSESSEE HAD 15 BIGHAS OF AGRICULTURAL LAND AND ANOTHER 20 BIGHAS WERE TAKEN ON LEASE. THE BURDEN WAS SOUGHT TO BE SHIFTED TO THE AO TO PROVE THAT AS SESSEE HAD ANY NON- AGRICULTURAL INCOME. THE LD. CIT(A) REJECTED THIS C ONTENTION AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER :- 3 5. I HAVE CAREFULLY CONSIDERED FACTS OF THE CASE A ND APPELLANT'S SUBMISSIONS. THE CONTENTION REGARDING ASSESSMENT BE ING BAD IN LAW ETC DUE TO ITS FRAMING IN THE NAME OF LATE SHRI GOVINDB HAI K, PATEL, DESPITE AO BEING AWARE OF HIS DEATH IS TAKEN UP FIRST- WHEN THE ASSESSMENT PROCEEDINGS COMMENCED, SHRI G.K. PATEL WAS ALIVE AN D THE NOTICE WAS DULY SERVED ON HIM ON 17.3.2005. EVEN IN RESPONSE T O VARIOUS NOTICES ISSUED BY THE AO IN APPELLANT'S NAME WHICH WERE DUL Y SERVED, THERE WAS NO INTIMATION TO THE AO BY SHRI G.K. PATEL'S LEGAL HEIR THAT SHRI G.K. PATEL HAD EXPIRED ON 11.7.2005. LETTER DATED 5.1.20 06 SEEKING ADJOURNMENT DID NOT CLEARLY MENTION THE FACT ABOUT APPELLANT'S DEATH OR DATE OF HIS DEATH. IN THIS SITUATION, FT CANNOT BE SAID THAT THE AO WAS AWARE OF APPELLANT'S DEATH. AS PER SECTION 159(2)(A ), ANY PROCEEDINGS TAKEN AGAINST THE DECEASED BEFORE HIS DEATH ARE DEE MED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESENTATIVE AND MAY BE C ONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT IS STOOD ON THE DATE OF DEATH. IN THE PRESENT CASE, THE LEGAL REPRESENTATIV E WAS WELL AWARE OF THE PROCEEDINGS AGAINST THE APPELLANT, SINCE HE SOUGHT ADJOURNMENT ON 25.1.2006. WHEN THE LEGAL REPRESENTATIVE ATTENDED T O THE NOTICES ISSUED IN THE NAME OF LATE APPELLANT, THERE CANNOT BE ANY GRI EVANCE THAT THE LEGAL REPRESENTATIVE DID NOT GET OPPORTUNITY TO REPRESENT THE CASE BEFORE THE AO. IN THE CASE OF PRABHAVATI GUPTA 231, ITR 188 (M P), FACTS WERE THAT THE LEGAL REPRESENTATIVE DID NOT GET ANY OPPORTUNIT Y DURING ASSESSMENT PROCEEDINGS AFTER DEATH OF THE ASSESSEE. CONTENTION OF THE APPELLANT IS THEREFORE NOT ACCEPTABLE AND IT IS HELD THAT THE AS SESSMENT WAS FRAMED IN ACCORDANCE WITH LAW. I NOW TAKE UP APPELLANT'S CONT ENTION THAT IF A PERSON HAS ONLY AGRICULTURAL INCOME AND NO OTHER IN COME, ADDITION CANNOT BE MADE TO HIS TOTAL INCOME UNLESS AND UNTIL OTHER SOURCE OF TAXABLE INCOME IS PROVEN BY THE AO. IF SALE RECEIPT S CLAIMED TO BE DERIVED FROM AGRICULTURE ARE NOT SUBSTANTIATED TO BE FROM A GRICULTURE, THE SAME WOULD REPRESENT UNEXPLAINED CASH CREDITS. AS HELD I N THE CASE OF CIT VS. DEVIPRASAD VISHWANATH PRASAD (1969) 72 TTR 194 (SC) ; CIT VS. MADHAV NAGAR COTTON MILLS LTD. (1976) 104 ITR 493 ( BOM); ROSHAN D HATTI VS. CIT (1977) 107 ITR 938 (SC) & CIT VS. DAL URAM PANNALAL MODI (1981) 129 ITR 398 (MP), WHERE THERE IS AN 'UN EXPLAINED CASH CREDIT, IT IS OPEN TO THE AO TO HOLD THAT IT IS INC OME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE ASSESSING OFFICER TO SHO W THAT INCOME IS FROM ANY PARTICULAR SOURCE. FURTHER, IT WAS HELD IN THE CASE OF CIT VS. DURGAPRASAD MORE (1969) 72 ITR 807 (SC) THAT FOR TH E PURPOSE OF BRINGING SUCH AMOUNT TO TAX, ENQUIRY WHETHER THE IN COME IS FROM BUSINESS ACTIVITY OR FROM OTHER SOURCES IS NOT RELEVANT AND ONCE IT IS FOUND THAT THE RECEIPT BY THE ASSESSEE WAS INCOME OF THE ASSESSES, JT WAS NOT NECESSARY FOR THE REVENUE TO LOCATE ITS EXACT SOURCES. THIS C ONTENTION OF THE APPELLANT IS THEREFORE NOT TENABLE. NOW, I TAKE UP APPELLANT'S CONTENTION 4 REGARDING AGRICULTURAL INCOME BEING GENUINE ON THE BASIS OF EVIDENCES FILED. I AM IN AGREEMENT WITH THE AO THAT MERE LAND HOLDING IS NOT SUFFICIENT TO PROVE GENUINENESS OF AGRICULTURAL INC OME. REGARDING EVIDENCES IN RESPECT OF SALE OF AGRICULTURAL PRODUC E, PROPRIETORS OF SHAKTI ENTERPRISE & PIYUSH TRADING CO, TO WHOM SALES WERE CLAIMED TO BE MADE, HAVE THROUGH AFFIDAVITS ON OATH, CATEGORICALL Y DENIED THE SALE TRANSACTIONS OF RS,6,59,531/-EXCEPT FOR SALE OF RS. 11,830/- ON 19-10- .2002 TO SHAKTI ENTERPRISE. APPELLANT'S CONTENTION REGARDING HANDWRITING ON BILLS ETC. BEING SAME OR THE REGISTRATION NUMBER TO BE OF 1995 IS NOT ACCEPTABLE, SINCE THE BILLS IN QUESTION WERE SUBMIT TED BY THE APPELLANT AND NOT THE PARTIES, WHO HAVE CATEGORICALLY DENIED THE TRANSACTIONS. EVEN DURING CROSS EXAMINATION, SHAKTI ENTERPRISE AFFIRME D ITS AFFIDAVIT THAT ONLY SALE TRANSACTION WITH THE APPELLANT WAS OF RS. 11,830/-. SUFFICIENT OPPORTUNITY TO CROSS EXAMINE PIYUSH TRADING CO. WAS PROVIDED TO THE APPELLANT, AS DISCUSSED IN PARAS 3,1 & 3.2 OF THIS ORDER, WHICH WAS NOT AVAILED OF BY THE APPELLANT. ON 25.1.2010, SHRI PIY USH R, PATEL, PROPRIETOR OF PIYUSH TRADING CO AGAIN CATEGORICALLY CONFIRMED THAT HE GOT LICENSE IN 2006-07 ONLY AND HAD NOT DONE ANY BU SINESS WITH SHRI G.K. PATEL I.E. THE APPELLANT. IN THIS SITUATION, AOS A CTION IN TAXING RS.4,00,000/- AS INCOME FROM UNDISCLOSED SOURCES IS UPHELD. 4. BEFORE US THE LD. AR SUBMITTED THAT ONCE ASSESSE E DOES NOT HAVE ANY OTHER SOURCES OF INCOME THEN THE ADDITION AS IN COME FROM UNDISCLOSED SOURCES CANNOT BE MADE AND FURTHER ADEQ UATE OPPORTUNITIES ARE NOT PROVIDED TO THE ASSESSEE TO SUPPORT THE CLA IM OF AGRICULTURAL INCOME. THE LD. AR ALSO SUBMITTED THAT ASSESSEE HAS EXPIRED AND, THEREFORE, LEGAL HEIR IS FORMALLY BROUGHT ON RECORD . 5. THE LD. DR ON THE OTHER HAND SUBMITTED THAT IF A SSESSEE HAD ONLY AGRICULTURAL INCOME AND HE HAS NOT CARRIED OUT NON- AGRICULTURAL INCOME THEN THERE WAS NO NEED FOR HIM TO FILE RETURN OF AG RICULTURAL INCOME. THERE IS NEITHER REQUIREMENT NOR MANDATE FOR AGRICULTURIS TS TO FILE RETURN OF INCOME UNLESS THEY HAVE NON-AGRICULTURAL ACTIVITIES WHICH MAY OR MAY NOT GET TAXABLE INCOME AND HENCE ASSESSEE HAS FAILED TO PROVIDE EVIDENCE IN SUPPORT OF THE CLAIM OF AGRICULTURAL INCOME INSPITE OF SEVERAL NOTICES 5 ISSUED BY THE AO. THEREFORE, THE AO WOULD BE JUSTIF IED IN RESORTING TO FAIR ESTIMATION. EVEN BEFORE THE TRIBUNAL NO EVIDEN CE HAS BEEN FILED IN SUPPORT OF THE CLAIM. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE MATTER IS REQ UIRED TO BE RESTORED TO THE FILE OF AO TO EXAMINE WHETHER ASSESSEE HAS AGRI CULTURAL LAND AS CLAIMED BY HIM OR HE HAS ACTUALLY TAKEN LAND ON LEA SE AS ARGUED BEFORE LD. CIT(A). WHETHER ANY AGRICULTURAL ACTIVITIES HAVE BE EN CARRIED OUT AND WHETHER THERE ARE EVIDENCES OF ANY SALE PROCEEDS OF AGRICULTURAL PRODUCE. WHAT WAS THE HISTORY OF THE CASE IN EARLIER YEARS A ND HOW MUCH AGRICULTURAL INCOME ASSESSEE HAD DECLARED AND ACCEP TED BY THE DEPARTMENT. FURTHER IF THERE IS NO NON-AGRICULTURAL ACTIVITY THEN WHAT PROMPTED THE ASSESSEE TO FILE THE RETURN OF INCOME. IN OUR CONSIDERED VIEW THE AUTHORITIES FOR THE PROPOSITION THAT IF THERE I S NO NON-AGRICULTURAL ACTIVITY THEN AGRICULTURAL INCOME CANNOT BE ESTIMAT ED AND ADDITION AS INCOME FROM OTHER SOURCES CANNOT BE MADE WOULD BE A PPLICABLE ONLY IN THE CASE OF PURE AGRICULTURISTS, WHO HAVE IN THE PA ST NEVER CARRIED OUT ANY NON-AGRICULTURAL ACTIVITY OR HELD ANY NON-AGRICULTU RAL SOURCES OF INCOME. MERELY BECAUSE INCOME FROM NON-AGRICULTURAL SOURCES IS SHOWN AS NIL DOES NOT MEAN THAT THERE WAS NO NON-AGRICULTURAL SO URCES OF INCOME IN EXISTENCE. THE ASSESSEE HAS TO ESTABLISH THAT IN FA CT HE IS A PURE AGRICULTURIST, EITHER IN THE PAST OR IN THE CURRENT YEAR AND DID NOT HAVE ANY NON-AGRICULTURAL SOURCE OF INCOME OR NON-AGRICULTUR AL ACTIVITY. IF ASSESSEE HAD ANY NON-AGRICULTURAL ACTIVITY THEN AO WOULD BE JUSTIFIED TO PRESUME THAT ASSESSEE HAD NON-AGRICULTURAL SOURCES AND IF C LAIM OF AGRICULTURAL INCOME IS NOT SUPPORTED WITH PROPER EVIDENCES TO TH E SATISFACTION OF AO THEN AO WOULD BE JUSTIFIED IN ESTIMATING NON-AGRICU LTURAL INCOME AS 6 INCOME FROM OTHER SOURCES. WITH THE ABOVE OBSERVATI ONS, WE RESTORE THE MATTER TO THE FILE OF AO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 16/7/2010 SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 16/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD