The ITO, Ward-3, Navsari V. Shri Ravjibhai Kanjibhai Patel(HUF), Navsari

ITA 120/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73039 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: NILESH N PATEL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 120 /AHD/2011 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER, WRD-3, NAVSARI V/S SHRI RAVJIBHAI KANJIBHAI PATEL (HUF) 22-A, ALKA SOCIETY, CHHAPARA ROAD, NAVSARI. (APPELLANT) (RESPONDENT) PAN: AAHHP0336F APPELLANT BY : SHRI J.P. JHANGID, SR. D.R . RESPONDENT BY : SHRI NILESH N. PATEL ( )/ ORDER DATE OF HEARING : 20-02-201 4 DATE OF PRONOUNCEMENT : 07 -03-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), VALSAD DATED 22.10.2010 FOR A.Y. 2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS AN HUF WHICH DURING THE YEAR HAD DER IVED INCOME FROM AGRICULTURE AND INTEREST. ASSESSEE FILED ITS RETUR N OF INCOME FOR A.Y. 2007-08 ON 31.03.2008 DECLARING TOTAL INCOME OF RS. 1,31,89 0/- AND AGRICULTURE INCOME OF RS. 15,62,330/-. THE CASE WAS SELECTED FOR SCRU TINY AND THEREAFTER THE ITA NO 120/AHD/2011 . A.Y. 2 007-08. 2 ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORD ER DATED 09.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 16,94,22 0/-. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CI T(A). CIT(A) VIDE ORDER DATED 22.10.2010 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NOW IN APPEAL B EFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE HONBLE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 15,62,330/- MADE ON ACCOUNT OF TAXABLE INCOME CAMOUFLAGED IN THE GUISE OF SO CALLED AGRICULTURAL INCOME. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE 7/12 EXTRACT FURNISHED BY THE ASSESSEE. A.O. NOTICED FRO M THE CHART OF LAND HOLDING (REPRODUCED AT PAGE 2 TO 4 OF THE ASSESSMENT ORDER) THAT THE NAME OF THE ASSESSEE WAS NOT APPEARING AS THE LAND HOLDER AND T HEREFORE THE ASSESSEE HUF DID NOT HAVE ANY AGRICULTURE LAND. HE ALSO NOT ICED THAT ALL THE LANDS BELONG TO SHRI RAMNIKBHAI RAVJIBHAI PATEL AND ARVIN DBHAI RAVJIBHAI PATEL WHO WERE THE COPARCENERS OF THE HUF. THE A.O. WAS THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE HUF DID NOT HAVE ANY AGRICU LTURE LAND IT CANNOT HAVE EARNED ANY AGRICULTURAL INCOME. HE WAS FURTHER OF T HE VIEW THAT SINCE THE AGRICULTURE LAND BELONGED TO SHRI RAMNIKBHAI PATEL AND SHRI ARVINDBHAI PATEL IN THEIR INDIVIDUAL CAPACITY, THE AGRICULTURE INCOM E SHOWN BY THE ASSESSEE HUF CANNOT BE CONSIDERED AS INCOME OF HUF BUT HAS T O BE CONSIDERED AS INCOME OF INDIVIDUALS IN WHOSE NAME THE LAND APPEAR S. HE THEREFORE CONSIDERED THE AGRICULTURE INCOME OF RS. 15,62,330/ - SHOWN BY THE ASSESSEE TO BE FROM UNKNOWN SOURCES AND FURTHER NOTED THAT T HE ASSESSEE HAD CAMOUFLAGED INCOME FROM SOURCES IN THE GUISE OF SO CALLED AGRICULTURE INCOME TO AVOID THE PAYMENT OF TAX. HE ACCORDINGLY ADDED RS. 15,62,330/- AS TAXABLE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE A.O. BY H OLDING AS UNDER:- 6.3 I HAVE GONE CAREFULLY THROUGH THE OBSERVATION OF THE A.O. IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAISED BY THE A.R. OF THE APPELLANT IN THE WRITTEN SUBMISSION. IT IS OBSERVED FROM THE FAC TS ITA NO 120/AHD/2011 . A.Y. 2 007-08. 3 OF THE CASE THAT THE APPELLANT HUF COMPRISED OF FOU R MEMBERS AND THE FAMILY HAD INHERITED CERTAIN ANCESTRAL AGRICULTURAL LAND FROM SHRI KANJIBHAI B. PATEL AND THE MAIN OCCUPATION OF THE HUF WAS AGRICULTURAL ACTIVITIES ONLY. OVER A PERIOD OF TIME , THEY HAD PURCHASED MORE AGRICULTURAL LAND FROM ACCUMULATED FUNDS OF THE FAMILY. THE SURPLUS FUND O F THE FAMILY WAS INVESTED TO EARN INTEREST INCOME AND RETURN OF INCOME WAS FILED SHOWING INTEREST INC OME AND AGRICULTURAL INCOME. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAD NEVER DISPUTED THE NATURE OF INCOME AS AGRICULTURA L INCOME AND THE GENUINENESS OF AGRICULTURAL INCOME. THE APPELLANT HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SUBMITTED FULL DETAILS OF AGRICULTURAL INCOME AND EXPENDITURE AND ALSO EXPLAINED THE DETAILS OF VARIOUS CROPS TAKEN DURING THE YEAR AND THE ASSESSING OFFICER NEVER DENIED THE NATURE OF INCOME AS AGRICULTURAL INCOME. THE ASSESSING OFFICE R TREATED THE AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES ONLY ON THE GROUND THAT THE AGRICULTU RAL LAND WERE HELD IN THE NAME OF ITS COPARCENERS AND NOT IN THE NAME OF HUF ITSELF. THE APPELLANT HA D EXPLAINED THAT THE AGRICULTURAL LAND WERE HELD IN THE NAME OF COPARCENERS FOR THE REASON THAT AS PER THE RULES AND REGULATIONS, THE DOCUMENTS OF OWNERSHIP OF LAND COULD BE REGISTERED IN THE NAME O F A LIVING PERSON ONLY WHERE HIS PHOTOGRAPHS AND THUMB IMPRESSIONS WERE REQUIRED. I FIND FORCE IN TH E ARGUMENTS OF THE A.R. THAT THE DOCUMENTS OF OWNERSHIP OF LAND CAN BE REGISTERED IN THE NAME OF A LIVING PERSONS ONLY AND ALSO IT IS PERMISSIBLE TO MAKE INVESTMENT OF HUF FUND IN THE NAME/S OF THE CO PARCENERS. THE EVIDENCES SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, BY WAY OF STATEMENT OF ACCOUNTS SUGGESTED THAT THE LANDS WERE EITHER ANCESTRAL OR THE INVESTMENT W ERE MADE OUT OF A COMMON FAMILY FUND OF RAVJIBHAI KANJIBHAI PATEL (HUF) AND THE OWNERSHIP OF ALL AGRI CULTURAL LANDS WERE HELD BY A JOINT FAMILY. THE A.O. FAILED TO ESTABLISH WITH EVIDENCE THAT THE ACT UAL OWNERSHIP OF THE AGRICULTURAL LAND WERE NOT THA T OF THE HUF BUT THAT OF THE COPARCENERS IN THEIR IND IVIDUAL CAPACITY. THE SOURCE OF INVESTMENT OVER A PERIOD OF LAST FEW YEARS WAS ALSO IDENTIFIABLE AS T HAT OF AGRICULTURE INCOME OF THE HUF AND THE A.O. ALSO FAILED TO ESTABLISH THAT THE INVESTMENT FOR LA ND WAS MADE BY RESPECTIVE INDIVIDUALS OUT OF THEIR PERSONAL SOURCE OF INCOME. EVEN IN PARA 4.3 OF HE A SSESSMENT ORDER, THE A.O. HIMSELF ADMITTED THAT THE SAID INCOME OF RS. 15,62,330/- WAS AGRICULTURE INCO ME. UNDER THESE CIRCUMSTANCES, I DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF THE A.O. TO HOLD THE SAID AGRICULTURAL INCOME OF RS. 15,62,330/- AS NON AGRICULTURE INCOME MERELY FOR THE REASON THAT THE A GRICULTURAL LANDS WERE HELD IN THE NAMES OF COPARCENERS AND MORE PARTICULARLY SO IN ABSENCE OF ANY CLEAR EVIDENCE TO ESTABLISH THAT THE SAID AGRICULTURE LANDS WERE HELD BY THE COPARCENERS OUT OF THEIR PERSONAL SOURCE OF INCOME. I THEREFORE, DIRECT THE ASSESSING OFFICER TO ACCEPT THE AGRICULT URE INCOME OF RS. 15,62,330/- AND DELETE THE ADDITI ON OF THE SAID AMOUNT AS INCOME FROM OTHER SOURCES. TH E APPELLANT'S GROUND NO.1 TO 3 ARE ALLOWED. 5. AGGRIEVED BY THE ORDER OF A.O, THE REVENUE IS NO W IN APPEAL BEFORE US. ITA NO 120/AHD/2011 . A.Y. 2 007-08. 4 6. BEFORE US, THE LD. D.R. TOOK US THROUGH THE CHA RT OF LAND HOLDING REPRODUCED BY THE A.O. ON PAGE 2 TO 4 OF THE ORDER. FROM THE C HART HE POINTED OUT OF THE 28 PIECES OF LAND, ONLY ONE PIECE OF LAND AT VILLAG E UNN WAS SHOWN TO BE OF THE ASSESSEE AND IN THE CASE OF ALL OTHER LAND, THE NAME OF LAND HOLDERS AS APPEARING IN THE 7/12 EXTRACT WERE OF THE COPARCENE RS. HE THEREFORE SUBMITTED THAT WITHOUT AGRICULTURE LAND IT IS NOT P OSSIBLE TO HAVE AGRICULTURE INCOME AND SINCE THE ASSESSEE DOES NOT OWN LAND, TH ERE CANNOT BE AGRICULTURAL INCOME. HE FURTHER SUBMITTED THAT ASSE SSEE HAS NOT DISCHARGED ITS ONUS OF PROVING THAT THE LAND THOUGH APPEARING IN THE NAME OF THE COPARCENERS BUT IT ACTUALLY BELONGED TO HUF AND HAD BEEN ACQUIRED FROM THE FUNDS OF HUF. . HE THUS SUPPORTED THE ORDER OF A.O. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT SHRI RAVJIBHAI KANJIBHAI PATEL WAS THE SON OF SHRI KANJIBHAI DUDABHAI PATEL. SHRI KANJIBHAI PATEL WAS HOLDING AGRICULTURAL LAND SINCE 1956-57 AND THE MAIN OCCUPATION OF THE FAMILY WAS AGRICULTURE. IN THE YEAR 1984, THERE WAS A PARTITION OF THE FAMILY OF KANJIBHAI DUDHABHAI PATEL AND DUE TO PARTITION, IN VILLAGE FORM NO. 6 (HAKKPA TRAK) ENTRY OF NAME OF THE DESCENDANT OF SHRI KANJIBHAI DUDHABHAI PATEL WAS EN TERED ON 17.04.1994. HE FURTHER SUBMITTED THAT FROM THE YEAR 1984 TO 199 7 THE FAMILY HAD ONLY ONE PROPERTY OF ABOUT 30 BIGHAS OF LAND. FROM THE YEAR 96-97 ONWARDS, THE FAMILY HAD PURCHASED AGRICULTURE LAND FROM THE COMMON FUND OF THE FAMILY. HE ALSO PLACED ON RECORD, THE DETAILS OF INCOME OF THE ASSE SSEE FROM FINANCIAL YEAR 1997-98 ONWARDS. FROM THE CHART, HE POINTED OUT AN D SUBMITTED THAT THE MAIN SOURCE OF INCOME OF THE ASSESSEE WAS FROM AGRI CULTURE ACTIVITIES AND INTEST INCOME AND THE AFORESAID INCOME WAS USED BY ASSESSEE FOR THE PURCHASE OF ADDITIONAL LAND. HE FURTHER SUBMITTED THAT THE LAND WAS PURCHASED IN THE NAME OF THE INDIVIDUAL NAMES OF TH E COPARCENERS FOR CONVENIENCE AND FURTHER DUE TO THE FACT THAT ACCORD ING TO THE STAMP DUTY AND REGISTRATION ACT, PROPERTY COULD BE PURCHASED IN NA ME OF A LIVING PERSON AND SINCE HUF IS AN ARTIFICIAL PERSON, THE PROPERTY CAN NOT BE REGISTERED IN THE NAME OF HUF. HE FURTHER SUBMITTED THAT THOUGH THE L AND WERE IN THE NAME OF INDIVIDUAL COPARCENERS BUT IN THEIR INCOME-TAX RETU RNS, THE INDIVIDUALS HAVE ITA NO 120/AHD/2011 . A.Y. 2 007-08. 5 NOT SHOWN ANY AGRICULTURAL INCOME BUT ON THE CONTRA RY THE AGRICULTURE INCOME WAS SHOWN IN THE HAND OF ASSESSEE WHICH ALSO PROVES THAT THE AGRICULTURE INCOME BELONGS TO THE ASSESSEE. IN SUPPORT, HE ALS O PLACED ON RECORD, THE COPY OF THE RETURN OF SHRI RAMNIKBHAI PATEL AND ARV INDBHAI PATEL FOR PAST YEARS. HE THEREFORE SUBMITTED THAT CIT(A) HAS RIGH TLY DELETED THE ADDITION MADE BY A.O. AND THUS SUPPORTED THE ORDER OF CIT(A ). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US, THE ISSUE IN THE PRESENT APPEAL IS ABOUT THE AGRICULTURE INCOME OF THE ASSESSEE. BEFORE US, THE LD. A.R. HAS SUBMITTED THAT THE HUF COMPRISED OF 4 CO-PARCENERS AND FAMILY HAD INHERITED CERTAIN AGRICULTURE LAND FROM SHRI KANJIBHAI PATEL AND THE MAIN OCCUPATION OF THE ASSE SSEE HUF WAS AGRICULTURAL ACTIVITY. IN ADDITION TO THE INHERIT ED LAND, IT IS THE SUBMISSION THAT THE ASSESSEE HAD PURCHASED FURTHER AGRICULTURE LAND S FROM ACCUMULATED FUNDS OF THE ASSESSEE. THE ASSESSEE HAD ALSO SUBMIT TED THAT THE AGRICULTURE LANDS WERE IN THE NAME OF COPARCENERS FOR THE REAS ON THAT AS PER THE STAMP DUTY AND REGISTRATION ACT, THE DOCUMENT OF OWNERSHI P OF LAND COULD BE REGISTERED IN THE NAME OF LIVING PERSON ONLY. THE A FORESAID SUBMISSIONS OF ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE BY BR INGING ANY MATERIAL ON RECORD. WE FURTHER FIND THAT CIT(A) HAS GIVEN A FIN DING THAT THE LANDS WERE EITHER ANCESTRAL OR WERE PURCHASED OUT OF THE COMM ON FAMILY FUND OF RAVJIBHAI KANJIBHAI PATEL HUF AND THE OWNERSHIP OF ALL AGRICULTURE LAND WAS HELD BY JOINT FAMILY. HE HAS FURTHER NOTED THAT A. O. HAS FAILED TO ESTABLISH WITH EVIDENCE THAT THE ACTUAL OWNERSHIP OF AGRICULTURE L AND WAS NOT OF HUF BUT THAT OF COPARCENERS IN THEIR INDIVIDUAL CAPACITY. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE FINDINGS OF CIT(A), NOR HAS BROUGHT ANY CONTRARY MATERIAL ON RECORD IN ITS SUPPORT. FURTHER ON THE BASIS OF DETA ILS OF INCOME FURNISHED, IT IS SEEN THAT ASSESSEE WAS HAVING AGRICULTURAL INCOME I N THE PAST. FURTHER IT IS NOT A CASE WHERE THE INCOME FROM AGRICULTURE HAS BE EN SHOWN BY THE ASSESSEE HUF AND ALSO BY THE INDIVIDUAL COPARCENERS , IN WHOSE NAME THE LAND APPEARS. CONSIDERING THE TOTALITY OF THE AFOR ESAID FACTS, WE FIND NO ITA NO 120/AHD/2011 . A.Y. 2 007-08. 6 REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND TH EREFORE UPHELD THE ORDER OF CIT(A) AND THUS DISMISS THE GROUND OF REVENUE. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 03 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD