Rajnarayan Prasad Singh, Guwahati V. Assistant Commissioner of Income Tax, Circle-Shillong, Shillong

ITA 142/GTY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6226 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 05-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NIRMAL SINGH DUGGAR
• Keywords: Unexplained cash credit; Additional evidence; Capital receipt; Onus to prove
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI ECOURT, ATKOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A. L. SAINI, AM ./ITA NO.142/GAU/2019 ( [ [ / ASSESSMENT YEAR: 2015-16) RAJNARAYAN PRASAD SINGH, GUWAHATI BOOK PALACE, 1, H.B. ROAD, PAN BAZAR, GUWAHATI, ASSAM-781001. VS. ACIT, CIRCLE-SHILLONG ./ ./PAN/GIR NO.: ALAPS9012K (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI NIRMAL SINGH DUGGAR, AR RESPONDENT BY :SHRI AMITAVA SEN, JCIT, SR. DR / DATE OF HEARING : 08/09/2020 /DATE OF PRONOUNCEMENT : 16/09/2020 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2015- 16, IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS),SHILLONG, IN APPEAL NO.CIT(A)/SHG/10116/2017-18, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 28.12.2017. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMING THE ALLEGED ADDITION MADE U/S 68 OF THE I.T. ACT, 1961 OF RS. 17,95,000/- TREATED AS GUISE UNEXPLAINED CASH CREDIT FOR AGRICULTURE INCOME ASWELL AS WHILE ACCEPTED ALSO AGRICULTURE INCOME IS CONTRARY TO LAW AND FACTS OF THE CASE, WHERE THEAPPELLANT ASSESSEE IS HAVING SUBSTANTIAL AGRICULTURELANDAND ALSO SUBMITTED THE RECEIPTS FOR 'CULTIVATION-MAL GUJARICESS' AS WELL AS CERTIFICATE FROM ANCHAL ADHIKARI, GOVERNMENT OF BIHAR, LALGANJ (VAISHALI), FORTHE AGRICULTURE ITA NO.127/GAU/2019 JDB FINANCE ASSESSMENT YEAR:2014-15 2 INCOME BEFORE THE LD. CIT (APPEALS) ASWELL AS BEFORE THE LD. ACIT, CIRCLE, SHILLONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO NOT CONSIDERED THE AFFIDAVIT FILED FOR AGRICULTURE INCOME ASAN ADDITIONAL EVIDENCE. 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEES CASE WAS SELECTED FOR LIMITED SCRUTINY FOR THE REASON THAT HIGH CASH ON HAND SHOWN IN BALANCE SHEET AS COMPARED TO PRECEDING YEAR AND RETURN OF INCOME FILED AFTER 07.01.2016. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE DERIVED INCOME FROM HIS PROPRIETORSHIP FIRM M/S BOOK PALACE SITUATED AT PALTAN BAZAR, GUWAHATI AND HAD A TURNOVER OF RS.1,94,46,220/- ON WHICH A NET PROFIT OF RS.38,12,289/- (19.60%) WAS DECLARED.BESIDES, THE ASSESSEE ALSO HAD AGRICULTURAL INCOME OF RS.17,95,000/- AND INCOME FROM OTHER SOURCES NAMELY INTEREST OF RS.59,052/-. THE HIGH CASH ON HAND SHOWN IN BALANCE SHEET WAS THE REASON FOR SELECTION OF ASSESSEE`S CASE FOR LIMITED SCRUTINY THEREFORE THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. IN RESPONSE, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE INCREASE IN CASH BALANCE WAS MAINLY DUE TO RECEIPT OF CASH FROM AGRICULTURAL INCOME OF ABOUT 17 LAKHS AND SALE OF SCHOOL BOOKS DURING THE MONTH OF MARCH WHICH WERE USUALLY PAID BY THE CUSTOMERS IN CASH. THE ASSESSEE WAS FURTHER ASKED TO GIVE DETAILS AND SUBSTANTIATE AGRICULTURAL INCOME BY PRODUCING ALL EVIDENTIARY DOCUMENTS RELATING TO ALLEGED CULTIVATION OF LAND. IN RESPONSE, THE ASSESSEE PRODUCED A CERTIFICATE ISSUED BY THE ANCHAL (WARD) OFFICE, LALGANJ VAISHALI, BIHAR AND LAND HOLDING CERTIFICATE. THE ASSESSING OFFICER HAS REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT MERESTATEMENT OF LAND PURCHASE /HOLDING IS NOT SUFFICIENT. THERE WAS UNSUPPORTED CLAIM OF CULTIVATING THE LAND AND ASSESSEE DID NOT DEMONSTRATE THAT HE WAS DOING AGRICULTURAL ACTIVITIES AND THERE WAS NO EVIDENCE THAT ASSESSEE HAD OBTAINED AGRICULTURAL INCOME.THEREFORE, THE ASSESSING OFFICER MADE ADDITION OF RS. 17,95,000/- UNDER SECTION 68 OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER.AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.127/GAU/2019 JDB FINANCE ASSESSMENT YEAR:2014-15 3 5. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD CIT(A). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. LEARNED DR SUBMITS BEFORE US THAT ASSESSEE`S SUBMISSION ON NET AGRICULTURE INCOME WAS FACILE AND VAGUE AS THE ASSESSEE DID NOT PRODUCE BEFORE THE ASSESSING OFFICER THE REQUISITE DETAILS/DOCUMENTS, SUCH AS, QUALITY OF THE LAND, MEASUREMENT OF THE LAND, PLOUGHING CHARGES, CROPS CULTIVATED, BILLS OFPURCHASING SEEDS, FERTILIZERS, PESTICIDES ETC. IF THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNTS THEN HE SHOULD AT LEAST SUBMIT BILLS AND VOUCHERS OF PURCHASING SEEDS, FERTILIZERS, PESTICIDES ETC. BEFORE THE ASSESSING OFFICER BUT THE ASSESSEE FAILED TO DO SO. THEREFORE, ASSESSING OFFICER HAS RIGHTLY TREATED AS UNEXPLAINED CASH CREDITS IN THE BOOKS OFACCOUNT OF THE ASSESSEE IN TERMS OF SECTION 68 OF THE ACT, AS NO EVIDENCE HAD BEEN ADDUCED IN RESPECT OF ACQUISITION OF LAND OR IN RESPECT OF THE CLAIM OF PERFORMING AGRICULTURAL OPERATIONS THEREUPON. THE LD. DR FURTHER POINTED OUT THAT ASSESSEE HAS FAILED TO FURNISH EVEN A SHRED OF DOCUMENTS EVIDENCES FOR THE ALLEGED AGRICULTURAL OPERATIONS, HENCE A SUM OF RS. 17,95,000/- CLAIMED AS NET AGRICULTURE INCOME IS NOTHING BUT THE UNDISCLOSED INCOME OF THE ASSESSEE. PER CONTRA, LD COUNSEL SUBMITS BEFORE THE BENCH THAT THE ASSESSEE PRODUCED A CERTIFICATE ISSUED BY THE ANCHAL (WARD) OFFICE, LALGANJ VAISHALI, BIHAR AND LAND HOLDING CERTIFICATE. THE ASSESSEE ALSO SUBMITTED OWN AFFIDAVIT. THE LD COUNSEL ALSO SUBMITS THAT ASSESSEE FURNISHED CERTIFICATE FROM ANCHAL ADHIKARI OF THE AREA WHO ALSO CERTIFIED THE EXACT AMOUNT OF AGRICULTURAL INCOME EARNED BY ASSESSEE AT RS.17,95,000/-. ITA NO.127/GAU/2019 JDB FINANCE ASSESSMENT YEAR:2014-15 4 6. WE NOTE THAT IN THIS ASSESSMENT YEAR THE ASSESSEE SAID TO HAVE BEEN RECEIVED AGRICULTURAL INCOME OF RS.17,95,000/- SO THE ASSESSING OFFICER ASKED THE ASSESSEE TO ADDUCE EVIDENCES TO SUBSTANTIATE THE CLAIM OF AGRICULTURAL INCOME FOR WHICH THE ASSESSEE PRODUCED A CERTIFICATE ISSUED BY THE ANCHAL ADHIKARI, GOVERNMENT OF BIHAR, LALGANJ (VAISHALI) AND LAND HOLDING CERTIFICATE. THE ASSESSING OFFICER NOTED THAT OTHER THAN THESE TWO CERTIFICATES NO OTHER EVIDENCES WERE PRODUCED BY THE ASSESSEE EVEN THOUGH REPEATEDLY ASKED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER NOTED THAT EVEN THOUGH CONSIDERABLE TIME WAS GIVEN TO THE ASSESSEE TO PRODUCE THE DETAILS/DOCUMENTS SUCH AS QUALITY OF THE LAND, MEASUREMENT OF THE LAND, PLOUGHING CHARGES, CROPS CULTIVATED, BILLS OF PURCHASING SEEDS, FERTILIZERS, PESTICIDES AND BOOKS OF ACCOUNTS MAINTAINED FOR THE AGRICULTURAL OPERATION ETC BUT THESE DOCUMENTS WERE NOT PRODUCED BY THE ASSESSEE, THEREFORE, ASSESSING OFFICER TREATED IT AS UNEXPLAINED AND MADE ADDITION. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. IT IS A SETTLED LAW THAT ALL RECEIPTS ARE NOT TAXABLE AND IF THE ASSESSING OFFICER INTENDS TO TAX ANY RECEIPT AS INCOME, THEN HE HAS TO SHOW THAT IT IS EITHER A REVENUE RECEIPT OR CAPITAL RECEIPT AND IT IS TAXABLE BY THE PROVISIONS OF THE INCOME TAX ACT 1961. HOWEVER, THIS RULE IS NOT APPLICABLE WHEN THE ASSESSEE CLAIMS THAT THE RECEIPT IS EXEMPT FROM TAXATION. FOR THIS PROPOSITION, WE RELY ON THE JUDGMENT OF THE CONSTITUTIONAL BENCH DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI VS. DILIP KUMAR & COMPANY & OTHERS IN CIVIL APPEAL NO.3327 OF 2007 WHEREIN THE HONBLE SUPREME COURT HAS HELD AS FOLLOWS: 52. TO SUM UP, WE ANSWER THE REFERENCE HOLDING AS UNDER: (1) EXEMPTION NOTIFICATION SHOULD BE INTERPRETED STRICTLY; THE BURDEN OF PROVING APPLICABILITY WOULD BE ON THE ASSESSEE TO SHOW THAT HIS CASE COMES WITHIN THE PARAMETERS OF THE EXEMPTION CLAUSE OR EXEMPTION NOTIFICATION. (2) WHEN THERE IS AMBIGUITY IN EXEMPTION NOTIFICATION WHICH IS SUBJECT TO STRICT INTERPRETATION, THE BENEFIT OF SUCH AMBIGUITY CANNOT BE CLAIMED BY THE SUBJECT/ASSESSEE AND IT MUST BE INTERPRETED IN FAVOUR OF THE REVENUE. (3) THE RATIO IN SUN EXPORT CASE (SUPRA) IS NOT CORRECT AND ALL THE DECISIONS WHICH TOOK SIMILAR VIEW AS IN SUN EXPORT CASE (SUPRA) STANDS OVERRULED. ITA NO.127/GAU/2019 JDB FINANCE ASSESSMENT YEAR:2014-15 5 SO, SINCE THE ASSESSEE IN THIS CASE HAS CLAIMED TO HAVE RECEIVED RS.17,95,000/- AS INCOME FROM AGRICULTURE, THE ONUS TO PROVE THE SAID RECEIPT AS EXEMPT BEING AGRICULTURAL INCOME WAS ON THE ASSESSEE AND THE ASSESSEE WAS NOT PRODUCED ANY EVIDENCES OTHER THAN THE CERTIFICATE ISSUED BY THE ANCHAL ADHIKARI, GOVERNMENT OF BIHAR, LALGANJ (VAISHALI) AND LAND HOLDING CERTIFICATE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCES TO SHOW THAT THERE WAS AGRICULTURAL ACTIVITY CARRIED OUT IN THE LAND.THE ASSESSING OFFICER AS WELL AS THE CIT(A) DID NOT ACCEPT THE CLAIM OF THE ASSESSEE,SINCE THE ASSESSEE FAILED TO PROVE THE INCOME FROM AGRICULTURE WHICH IS EXEMPT. 7. WE NOTE THAT WHILE ADJUDICATING THE ASSESSEE`S APPEAL, THE LD CIT(A) HAS OBSERVED AS FOLLOWS: 5.3 I HAVE CAREFULLY CONSIDERED THE MATTER. ASSESSEE HAD CLAIMED TO EARN SUBSTANTIAL AMOUNT OF AGRICULTURAL INCOME WHICH IS EXEMPT FROM PAYMENT OF INCOME-TAX. THE ONLY EVIDENCES PRODUCED IN SUPPORT OF THE CLAIM ARE CERTIFICATE FROM ANCHAL ADHIKARI OF THE AREA AND EVIDENCES OF PAYMENT OF MAL GUZARICESS AS WELL AS ASSESSEE'S OWN AFFIDAVIT. AS STATED BY THE AO, ASSESSEE HAD NOT PRODUCED ANY OTHER SHRED OF EVIDENCE. MERE POSSESSION OF LAND IS NO PROOF OF EARNING AGRICULTURAL INCOME. IT IS NOT UNDERSTOOD AS TO HOW THE ANCHAL ADHIKARI OF THE AREA COULD CERTIFY THE EXACT AMOUNT OF AGRICULTURAL INCOME EARNED BY ASSESSEE. IN ORDER TO EARN NET AGRICULTURAL INCOME OF RS.17,95,000/-, ASSESSEE'S TOTAL TURNOVER MUST RUN INTO A CRORE OR MORE. TO GET SUCH AMOUNT OF RECEIPT, ASSESSEE MUST BE INCURRING SUBSTANTIAL INPUT LIKE LABOUR, FERTILIZERS, PESTICIDES ETC. HE MIGHT BE USING MACHINES LIKE TRACTORS FOR TILLING THE LAND. HE MUST BE INCURRING SUBSTANTIAL AMOUNT FOR PAYMENT OF LABOUR. APPELLANT IS RUNNING A BOOKSTORE IN GUWAHATI FROM WHERE HE WAS EARNING SUBSTANTIAL AMOUNT OF INCOME. IT IS NOT UNDERSTOOD AS TO HOW HE WAS MANAGING THE AGRICULTURAL OPERATION IN BIHAR. APPELLANT EVEN FAILED TO GIVE DETAILS OF CROP GROWN BY HIM. IF APPELLANT'S CONTENTION IS ACCEPTED, ANY PERSON OWNING SUBSTANTIAL SIZE OF LAND WILL CLAIM ANY AMOUNT OF AGRICULTURAL INCOME WHICH IS EXEMPT FROM PAYMENT OF TAX. IN ABSENCE OF ANY EVIDENCE SUPPORTING THE CONTENTION OF ACTUALLY CARRYING OUT AGRICULTURAL OPERATION, THE CLAIM OF ASSESSEE CANNOT BE ACCEPTED. 5.3.1 A/R ALSO ARGUED THAT IN THE COMPUTATION OF INCOME, THE A.O STILL INCLUDED A SUM OF RS.17,95,000/- AS AGRICULTURAL INCOME. THIS IS AN INSIPID ARGUMENT BECAUSE THE A.O, IN A DETAILED DISCUSSION HAD TREATED THE SUM OF RS.17,95,000/- AS UNEXPLAINED CASH CREDIT. THUS, WE NOTE THAT MERE POSSESSION OF LAND IS NO PROOF OF EARNING AGRICULTURAL INCOME. IT IS NOT UNDERSTOOD AS TO HOW THE ANCHAL ADHIKARI OF THE AREA COULD CERTIFY THE EXACT AMOUNT OF AGRICULTURAL INCOME EARNED BY ASSESSEE AT RS.17,95,000/-. IN ORDER TO EARN ITA NO.127/GAU/2019 JDB FINANCE ASSESSMENT YEAR:2014-15 6 NET AGRICULTURAL INCOME OF RS.17,95,000/-, ASSESSEE HAS FAILED TO DEMONSTRATE THE TOTAL TURNOVER BEFORE EXPENSES, WHICH WAS REQUIRED BY THE ASSESSING OFFICER AND LD CIT(A), THUS ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM. HENCE, THE VIEW OF THE AUTHORITIES BELOW ARE LEGALLY TENABLE AND THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 16.09.2020 SD/- ( A.T. VARKEY ) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 16/09/2020 RS COPY OF THE ORDER FORWARDED TO: 1. JDB FINANCE 2. DCIT, CIRCLE-3, GUWAHATI 3. C.I.T(A)- 4. C.I.T.- GUWAHATI. 5. CIT(DR), GAUHATIBENCH, GUWAHATI. 6. GUARD FILE. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY / DDO/ H.O.O ITAT, GAUHATI BENCH