Rajesh D Prajapati, Vadodara V. The DCIT ,Central Circle-3, Vadodara

ITA 1049/AHD/2019

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9563 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-12-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 23-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 68; 271(1)(c); 143(3)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.1049/Ahd/2019 Assessment Year :2007-08 Rajesh D. Prajapati Satynaryan Bhavan Refinery Road Gorwa, Vadodara. PAN : AGRPP 8517 E Vs. DCIT, Cent.Cir.3 Vadodara. Assessee by : Shri Manish J. Shah, AR Revenue by : Shri Ashok Kumar Suthar, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 0 7 / 1 2 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 1 3 / 1 2 / 2 0 2 3 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad(in short referred to as “ld.CIT(A)”), dated 7.5.2019 confirming the penalty imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961 ("the Act" for short) pertaining to Assessment Year 2007-08. 2. The grounds raised by the assessee are as under: On the facts and in the circumstances of the case, the learned CIT(A) erred on facts and on law in levying a penalty of Rs.92600/- under section 271(1)( c) of the Income Tax Act, 1961. The learned CIT(A) failed to appreciate the facts and circumstances of the case in its proper perspectives. ITA No.1049/Ahd/2019 2 Your appellant did furnish all the material and information necessary for the purposes of assessing income of your appellant Income assessed other than the income returned by your appellant be not made base for levying penalty. Therefore in the interest of justice your appellant prays that the penalty levied U/s.271(1)(c) of the Act, be deleted.” 3. At the outset, ld.counsel for the assessee pointed out that the penalty levied in the present case related to the agriculture income returned by the assessee and treated therefore as exempt from tax , not found to be genuine by the Revenue authorities and treated as other income of the assessee liable to tax. 4. Briefly elucidating the facts of the case the ld.counsel for the assessee pointed out that the assessee had returned net agriculture income of Rs.9,16,424/- which the assessing officer (AO),in his assessment framed under section 143(3) of the Act, had treated as genuine to the extent of Rs.4,66,424/- and allowed exemption only to the said extent. The balance of Rs.4,50,000/- was treated as business income and subjected to tax. The matter was carried in appeal before the ld.CIT(A) who deleted addition of Rs.4,50,000/-. Thereafter, the matter travelled to the ITAT, who set aside the assessment proceedings to the file of the AO to verify the claim of the assessee and pass a speaking order. Thereafter, in pursuance of direction of the ITAT, the AO passed fresh assessment order, and noting that the assessee was unable to prove the sale of even a single rupee of agriculture product, he held that gross agriculture receipts of the assessee to the tune of Rs.12,08,450/- were ingenuine and taxed the same as unexplained credit under section 68 of the Act. The matter was carried in appeal before the ld.CIT(A) who restricted the addition to the tune of Rs.2,75,000/- estimating the agricultural income to be treated as ingenuine being 30% of the net agriculture income ITA No.1049/Ahd/2019 3 returned by the assessee of Rs.9,16,424/-. It is on this addition confirmed by the ld.CIT(A) to the extent of Rs.2,75,000/- that penalty, for concealing/ furnishing inaccurate particulars of income, under section 271(1)(c) of the Act was levied by the AO to the extent of hundred percent of the tax sought to be evaded thereon, amounting to Rs.92,600/- and confirmed by the ld.CIT(A) in appeal. 5. The contention of the ld.counsel for the assessee before us was that agriculture income treated as unexplained credits in the hands of the assessee was not based on any concrete evidence or finding, but was a mere estimation, and the assessee in such circumstances cannot be charged with having concealed/ furnished any inaccurate particulars of income so as to levy penalty under section 271(1)(c) of the Act. For the proposition that no penalty can be levied for addition made based on estimation he placed reliance on the decision of the ITAT, Rajkot Bench in the case of Krishnamohan Ramawadh Singh Vs. ITO, ITA No.379/RJT/2018 order dated 14.9.2022.Copy of the said order was placed before us. 6. The ld.DR heavily relied on the order of the ld.CIT(A) and referred to the finding at para 5.1 to 5.3 of the order as under: “5.1 It is the case of the appellant that he had been earning agriculture income which had been accepted by the Department in earlier years. The appellant has pointed to various discrepancies in the observation of the AO and has contended that the addition denying the claimed agriculture income was based on mere suspicion and surmises and has quoted various judgements to contend that in such cases, penalty u/s 271(l)(e) cannot be imposed, The submission of the appellant has already been reproduced before. 5.2 It may be true that for the additions made in the assessment orders by way of disallowance by rejecting the appellant's submission on the basis of the Suspicion and surmises cannot be basis for penalty u/s 271(1)(c), but at the same time it cannot be the ITA No.1049/Ahd/2019 4 defence Of the appellant that in the past years, the agriculture income had been accepted and in this year also the agriculture income has been accepted and only 25% of the agriculture income claimed has been disallowed by the CIT(A)-12, Ahmedabad. From the perusal of the CIT(A)’s order dated 25/1/2017, it is noted that "on the other hand, however, the appellant has though given before me in a tabular format the total land holding of the appellant, the details as to which lands are irrigated, how much area was under which crop etc. but has not attempted to justify the quantity of agricultural produce allegedly sold by him with the details as to the normal yield of crop in the area so as to remove or dispel possibility of any suspicion by the AO, Similarly, the discrepancy in the bills of agriculture produce as noted and tabulated by theAO in para 7.2 of the assessment order has remained conspicuously unexplained not only before the AO but even before me. The AO is justified though, and therefore, in his conclusion that agriculture income as disclosed by the appellant does not deserve to be accepted. The fact that the appellant has been regularly showing agriculture income of equivalent amounts and that appellant is holding agriculture land are at the same time compelling factors ...... After considering these facts and the totality of factsand circumstances and after noting that the agriculture expenses shown by the appellant We less than 25% of the agriculture receipts which is on the lower side compared to normally expected expenditure in the range of at least 4&5% of the gross receipt. It would serve the ends of justice if 30% of the agriculture income disclosed by the appellant is held not fully substantiated and therefore required to be brought to tax. Thus, addition to the extent of Rs.2,17,239/- rounded off - is upheld. 5.3 From the perusal of the penalty order and the order of the CIT(A), it is evident that the entire agriculture income claimed was treated as unexplained cash credit u/s 68 by the AQ and the penalty proceedings u/s 271(l](c) was initiated and that it was the Ld, CIT(A) who held 30% of the agricultural income disclosed by the appellant as not fully substantiated and therefore required to be brought to tax. Thus, it will not be correct to hold that the penalty proceedings is on the amount which is an addition as a result of any suspicion and surmises as far as the AO is concerned, I am also of the considered view that though the agriculture income disclosed by the appellant in earlier years might have been accepted by the-Department, as the res judicate does not apply in the Income-tax proceedings, and the addition made by the AO Is based on concrete evidences because the appellant did not substantiate his claim of receipt of gross agriculture yield, the appellant is not protected and is guilty of concealment of income. The claim of agricultural income is a case of furnishing inaccurate particulars of income. Thus, the case is definitely a case of concealment of income by way of inaccurate particulars of income. Therefore, the AO was justified in imposing the penalty. During the ITA No.1049/Ahd/2019 5 appeal proceedings against the said penalty order, the appellant has relied on various case laws without ma-king out; as to how his case is covered by those judgements. The appellant has not even made out as to how the AO was not justified in accepting his evidences and explanations. Under the circumstances, 1 find no basis to interfere with the penalty order. The penalty of Rs.92,600/- is confirmed.” 7. Ld.DR contended that estimation of ingenuine income was resorted to since assessee was unable to furnish any evidence of receipt of agricultural income and therefore the charge on the assessee of concealing particulars of income for levying penalty was justified. 8. We have heard both the parties. The issue before us is regarding levy of penalty for concealment of income and furnishing inaccurate particulars of income pertaining to the agriculture income to the tune of Rs.2,75,000/- which were not found to be genuine by the Revenue authorities,and therefore, treated as unexplained credit, and added to the income of the assessee under section 68 of the Act. To adjudicate the issue, the facts leading to the impugned addition are pertinent. With respect to the same, the findings of the ld.CIT(A) in quantum appeal confirming the addition of agriculture income under section 68 of the Act to the tune of Rs.2,75,000/-are relevant. A copy of the appeal order dated 25.1.2017 was placed before us, and the relevant finding of the ld.CIT(A) confirming the addition to the tune of Rs.2,75,000/- at para-2 is as under: ITA No.1049/Ahd/2019 6 ITA No.1049/Ahd/2019 7 9. A perusal of the above reveals that while the ld.CIT(A) did not agree with the findingsof the AO that no agriculture income had been earned by the assessee considering the fact that in the past also the assessee had returned agriculture income which had been accepted by the Department, and the assessee has sufficient land holding to evidence agriculture income earned , but at the same time he noted that the assessee had not filed sufficient evidence to prove the quantum of agriculture income earned by it; that documentary evidence filed by it to prove the sale of agriculture products did not help the case of the assessee at all, and therefore, he held that though the assessee did earn agriculture income but since sufficient evidence have not been filed, therefore, he estimated agriculture income tobe 70% of that actually returned by the assessee, and accordingly made disallowance of 30% of net agriculture income. Clearly, it is not a clear cut case of the Revenue authorities finding the assessee to have concealed or furnished inaccurate particulars of income to the extent of Rs.2,75,000/-; on the contrary, the Ld.CIT(A) has found that the assessee has land holding for earning agricultural income and has also found the assessee to have returned such income in the past also which has been accepted by the department. It is only on account of lack of proper evidence to support the earning of agricultural income that the Ld.CIT(A) has estimated the ingenuine agricultural income @30% of the net income , which estimation is also without any proper basis. ITA No.1049/Ahd/2019 8 10. In the light of the above we hold, that the facts of the case do not justify charging the assessee with having concealed or furnished inaccurate particulars of income to the tune of Rs.2,75,000/- within the meaning of section 271(1)(c) of the Act. The levy of the impugned penalty, we hold, is wholly unjustified. The AO is accordingly directed to delete the penalty levied of Rs.92,600/-. The grounds of appeal of the assessee are allowed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 13 th December, 2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 13/12/2023