J.A.Bindra, V. ACIT,Cir.-1, Nashik,

ITA 145/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56445 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 145 AND 146/PN/2009 A.Y. 2002-03 AND 2002-03 J.A. BINDRA AMRIT VILLA, NEAR BYTCO COLLEGE NASIK PUNE ROAD, NASIK ROAD 422 101 PAN AEJPB 4641 R APPELLANT VS. ASSTT. CIT CIR. 1, NASIK RESPONDENT I.T.A. NO. 147/PN/2009 A.Y. 2003-04 D.A. BINDRA AMRIT VILLA, NEAR BYTCO COLLEGE NASIK PUNE ROAD, NASIK ROAD 422 101 PAN AGKPB 9502 A APPELLANT VS. ASSTT. CIT CIR. 1, NASIK RESPONDENT APPELLANTS BY : SHRI M.K. KULKARNI ASSESSEE BY : SHRI K.K. OZHA DATE OF HEARING: 29-8-2011 DATE OF PRONOUNCEMENT: 30-8-2011 ORDER PER SHAILENDRA KUMAR YADAV, JM ALL THESE APPEALS PERTAIN TO THE SAME GROUP OF ASSESSEE. SO THESE WERE HEARD TOGETHER AND ARE BEIN G 2 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. ITA NO. 145/PN/2009 FOR A.Y. 2002-03 2. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE CONFIRMATION OF PENALTY U/S 271B OF THE ACT. THE A SSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION AND IS A C&F AGENT AND DISTRIBUTOR OF MANIKGARH CEMENT. THE ASS ESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNTS. HOWEVER, HE I S ASSESSED U/S 44AE OF THE ACT. DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN ADDITION TO THE BUSINESS RECEIPTS SHOWN BY THE ASSESSEE TOWA RDS SALES COMMISSION OF RS. 17,63,130/- AND C&F COMMISS ION OF RS. 11,75,420/-, THE ASSESSEE HAS ALSO RECEIVED LOADING AND UNLOADING CHARGES AMOUNTING TO RS. 41,25,110/-. THE ASSESSING OFFICER THEREFORE INITIATED AND LEVIED PE NALTY U/S 271B OF THE ACT AMOUNTING TO RS. 35,528/- ON BUSINE SS RECEIPTS OTHER THAN THE TRANSPORTATION BUSINESS INC OME WHICH WAS DECLARED BY THE ASSESSEE U/S 44AE OF THE ACT. 3. IN APPEAL, THE CIT(A) FOUND THAT AS PER ASSESSIN G OFFICER, THE ASSESSEE RECEIVED GROSS BUSINESS RECEI PTS TOWARDS LOADING AND UNLOADING CHARGES AMOUNTING TO RS. 41,25,110/-. THEREFORE, IT WAS AN UNDISPUTED FACT THAT THE BUSINESS RECEIPTS OF THE ASSESSEE TOWARDS SALES COMMISSION, C&F COMMISSION AND LOADING AND UNLOADIN G CHARGES EXCEEDED RS. 40.00 LAKHS. IT WAS ALSO OBSE RVED BY 3 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP THE CIT(A) THAT THE ASSESSING OFFICER HAS NOT INITI ATED PENALTY PROCEEDINGS U/S 271A OF THE ACT FOR NON- MAINTENANCE OF BOOKS OF ACCOUNTS. HOWEVER, HE INI TIATED PENALTY U/S 271B OF THE ACT FOR DEFAULT COMMITTED B Y THE ASSESSEE FOR NOT AUDITING BOOKS OF ACCOUNTS WHICH H E WAS REQUIRED TO MAINTAIN AND GET THEM AUDITED AS REQUIR ED BY THE PROVISIONS OF SECTION 44AB OF THE ACT. ACCORDIN GLY, HE CONFIRMED THE PENALTY. 2.1. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE TURNOVER OF THE ASSESSEE IN RESPECT OF SALES COMMIS SION AND C&F COMMISSION WAS ONLY RS. 17,63,130/- AND RS. 11,75,420/- WHICH IS FAR LESS THAN RS. 40.00 LAKHS AND HENCE THE ASSESSEE WAS NOT LIABLE TO GET HIS ACCOUN TS AUDITED. SINCE, THE ASSESSEE WAS NOT MAINTAINING B OOKS OF ACCOUNTS AND HENCE THE QUESTION OF AUDITING THE SAM E DOES NOT ARISE. ACCORDINGLY, PENALTY U/S 271B OF THE ACT IS NOT LEVIABLE. 2.2. BEFORE US, NOW THE QUESTION IS WHETHER WHOLE A MOUNT RECEIVED RS. 41,25,110/- ON ACCOUNT OF LOADING AND UNLOADING CHARGES COMES WITHIN THE CLUTCHES OF PROV ISIONS OF SECTION 271B OF THE ACT. ACCORDING TO THE ASSES SEE, THE RECEIPT OF LOADING AND UNLOADING CHARGES CANNOT BE CONSIDERED AS BUSINESS RECEIPTS. BUT NEITHER OF TH E PARTY HAD MADE IT CLEAR WHETHER THE RECEIPTS OF RS. 31,25 ,110/- TO BE INCLUDED IN TOTAL RECEIPTS SO AS TO ATTRACT T HE 4 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP PROVISIONS OF SECTION 44AB OF THE ACT OR INCOME ELE MENT FROM THIS RECEIPT TO BE INCLUDED IN TURNOVER. IN TH E ABSENCE OF SUCH BREAK UP OF RECEIPTS WITH REGARDS TO TOTAL RECEIPTS THE ISSUE AT HAND CANNOT BE DECIDED. SO, WE RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE MATTER IN LIGHT OF ABOVE DISCUSSION A FTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. ACCORDINGLY, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 146/PN/2009 FOR A.Y. 2002-03 3. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF THE CIT(A) NASIK CONFIRMING THE PENALTY U/ S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER HAS MAD E THE ADDITION OF RS. 13,10,742/-. IN APPEAL, THE CIT(A) GRANTED RELIEF OF RS. 10,04,265/- AND CONFIRMED THE BALANCE OF RS. 3,06,477/-. THE ASSESSING OFFICER LEVIED THE PENAL TY OF RS. 93,782/- U/S 271(1)(C) OF THE ACT WHICH WAS RESTRIC TED TO RS. 36,112/- BY THE CIT(A). SAME HAS BEEN OPPOSED ON BEHALF OF THE ASSESSEE. ON THE OTHER HAND, THE LEA RNED DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER ON THE ISSUE. 3.1. IT IS UNDISPUTED FACT THAT THE ADDITION PARTLY CONFIRMED BY THE CIT(A) TO THE EXTENT OF RS. 3,06,477/- WAS O N VARIOUS COUNTS SUCH AS DISALLOWANCE OF STATUTORY DE DUCTION FROM HOUSE PROPERTY INCOME CLAIMED BY THE ASSESSEE AT RS. 36,112/- AND DISALLOWANCE OF VARIOUS BUSINESS EXPEN SES AMOUNTING TO RS. 2,70,365/- SUCH AS 25% DEPRECIATIO N ON 5 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP CARS FOR ALLEGED PERSONAL USE, 25% OUT OF FUEL AND REPAIRS AND MAINTENANCE OF VEHICLES FOR ALLEGED PERSONAL US E AND PART OF ADMINISTRATIVE EXPENSES, PART OF PAYMENT OF INDIAN RAILWAY, PART OF TEA AND TIPS TO COOLIES, ETC. THE NATURE OF DISALLOWANCE OF ABOVE EXPENSES AMOUNTED TO RS. 2,70,365/- IS SUCH WHICH DOES NOT CONCLUSIVELY PROV E THE ADDITION MADE BY THE ASSESSING OFFICER AS THE SAME WAS MADE ON ESTIMATE BASIS FOR WANT OF SOME EVIDENCE. SO THE CIT(A) WAS JUSTIFIED IN NOT LEVYING THE PENALTY ON SUCH DISALLOWANCES. FURTHER, THE CIT(A) OBSERVED THAT T HE ASSESSEE CLAIMED EXPENDITURE OF GODOWN RENT IN RESP ECT OF THE GODOWN OWNED BY HIM FROM GROSS BUSINESS RECEIPT S AND HAS SHOWN THE SAME UNDER THE HEAD INCOME FROM HOUS E PROPERTY AND CLAIMED NOTIONAL STATUTORY DEDUCTION OF 25% AMOUNTING TO RS. 36,112/- FROM THE SAID GROSS RENT CLAIMED BY THE ASSESSEE. THE CIT(A) OBSERVED THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME BY CLAIMING SUCH DEDUCTION AS THE ASSESSEE HAS CLAIMED THE PAYMENT OF GODOWN RENT TO HIMSELF. HENCE THE PENALT Y U/S 271(1)(C) ON THIS ADDITION WAS CONFIRMED BY THE CIT (A). 3.2. WE FIND THAT THE ASSESSEE HAS CLAIMED EXPENDI TURE ON GODOWN RENT IN RESPECT OF THE GODOWN OWNED BY HIM F ROM GROSS BUSINESS RECEIPTS AND HAS SHOWN THE SAME UNDE R THE INCOME FROM HOUSE PROPERTY AND CLAIMED NOTIONAL STA TUTORY DEDUCTION OF 25% AMOUNTING TO RS. 36,112/-. THE AS SESSEE 6 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP HAS CLAIMED BUSINESS EXPENDITURE, AND AT THE SAME T IME, INCOME WAS OFFERED AS HOUSE PROPERTY. UNSUBSTANTIAT ED NOTIONAL DEDUCTION CANNOT BE SOUND BASIS FOR PENALT Y IN QUESTION. TAKING ALL THE FACTS AND CIRCUMSTANCES IN TO CONSIDERATION, IT IS NOT A FIT CASE FOR LEVY OF PEN ALTY. SO THE SAME IS DIRECTED TO BE DELETED. ACCORDINGLY, THIS APPEAL IS ALLOWED. I.T.A. NO. 147/PN/2009 FOR A.Y. 2003-04 4. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE CIT(A) NASIK DATED 28-11-2008 WHEREIN CONFIRMATION OF ADDITION OF RS. 75,000/- OUT OF AGR ICULTURAL INCOME HAS BEEN OPPOSED. THE ASSESSEE APART FROM HIS TRANSPORT BUSINESS HAS ALSO DECLARED INCOME FROM AGRICULTURE TO RS. 3,00,000/- ON ESTIMATED BASIS. THE ASSESSING OFFICER HAS ACCEPTED THE AGRICULTURAL INC OME TO THE EXTENT OF RS. 2,25,000/- AND TAXED RS. 75,000/- AS INCOME FROM UNDISCLOSED SOURCES WHICH WAS CONFIRMED BY THE CIT(A). THE SAME HAS BEEN OPPOSED BEFORE US. 4.1. THE ASSESSEE CLAIMED TO HAVE AGRICULTURAL HOLD INGS WHICH HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFIC ER. THE ASSESSEE IS CLAIMED TO HAVE PRODUCED VEGETABLES , MANGOES IN HIS LAND HOLDING. THE STAND OF THE ASSE SSEE IS SUMMARIZED IN PARA 4 OF CIT(A)S ORDER AS UNDER: '4. THE APPELLANT IS AN OWNER OF AGRICULTURAL LAND FROM LAST 10 YEARS AND EVEN CULTIVATES THE SAID LAND FROM LAST 1 0 YEARS. 7 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP THE INCOME FROM AGRICULTURE VARIES FROM YEAR TO YEA R DEPENDING UPON THE CLIMATIC CONDITIONS AND THE CROP PATTERNS. DURING THE FINANCIAL YEAR 2002.2003 DUE TO FAVOURAB LE CLIMATIC CONDITIONS THE APPELLANT COULD HAVE A BUMP ER CROP OF MANGOES WITH GOOD QUALITY GIVES HIM BUMPER PROFITS. IN ADDITION TO IT AS THE APPELLANT DRAWS BOTH THE 'KHA RIP' AND 'RAABI' CROPS WHICH GIVES HIM ADDITIONAL PROFITS OV ER AND ABOVE REGULAR INCOME RESULTING IN ADDITION TO HIS A GRICULTURAL INCOME. 5. SIR ASSESSING AUTHORITY IS NOT JUST IN COMPARING AN ASSESSMENT OF ASSESSMENT YEAR 2001.2002 WITH THE ASSESSMENT YEAR 2003.2004 WHICH IS HAVING A GAP OF TWO YEARS AND FOR A SOURCE OF INCOME (AGRICULTURAL INCO ME) WHICH IS PREDOMINANTLY DEPEND UPON THE NATURE AND THE CROP P ATTERNS. THE APPELLANT DUE TO CONSTRAINT OF STRAIN IN HIS FA MILY RELATIONS COULD NOT PRODUCE THE 7/12 EXTRACTS OF THE ALL HIS LAND HOLDINGS WHILE HIS ASSESSMENT WAS IN PROGRESS FOR T HE A. Y.2001.2002. BUT DURING THE A. Y.2003.2004 THE APPELLANT PRODUCE D THE 7/12 EXTRACTS OF ALL HIS HOLDINGS AND EVEN STATED T HE FACILITIES OF IRRIGATION AND PATTERNS OF CROP WHILE , ASSESSME NT WAS UNDER CONSIDERATION. 6. THE QUALITY OF LAND, THE FACILITIES AVAILABLE FO R THE IRRIGATION, THE PATTERNS OF CROPS AND THE CLIMATIC CONDITIONS A ND MARKET AVAILABILITY GENERALLY DECIDES THE FATE OF THE AGRI CULTURAL PRODUCE AND INCOME THERETO, HENCE ITS NOT JUST TO C OMPARE THE INCOME OF AGRICULTURE FROM ONE YEAR TO THE YEAR BEF ORE THAT YEAR. 7. SIR, WITH THE PASSAGE OF TIME EVEN THE PRODUCER IMPROVES HIS SKILL AND MANAGEMENT FOR THE PRODUCE WHICH IS ALSO NOT CONSIDERED BY THE ASSESSING AUTHORITY. 8. SIR, THE ASSESSING AUTHORITY NEITHER PROVED THAT THE INCOME FROM AGRICULTURE, WHICH IS NOT ACCEPTABLE BY THE AU THORITY, IS HAVING ANY UNDISCLOSED SOURCE NOR THE AUTHORITY IS HAVING ANY REASON TO CONSIDER THE DISALLOWED INCOME AS A UNDIS CLOSED INCOME AND HENCE IT IS NOT JUST TO ACCOMMODATE THE DISALLOWED INCOME FROM AGRICULTURE UNDER GUISE OF UNDISCLOSED SOURCE OF INCOME. 8 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP 9. UNDER THE ABOVE CIRCUMSTANCES ITS MY HUMBLE REQU EST TO YOUR HONOUR TO PLEASE CONSIDER THE MATTER SYMPATHET ICALLY AND ALLOW THE AGRICULTURAL INCOME TO THE EXTENT OF RS.300000.' FURTHER, THE APPELLANT VIDE LETTER DATED 16/02/2006 SUBMITTED AS UNDER: 'SIR, THE CO-HOLDING OF AN APPELLANT IS S.NO. AREA PRODUCTS 759 43R VEGETABLES 758 02R MANGOES 333 3H 36R VEGETABLES 332 3H 83R VEGETABLES SIR, IF WE CONSIDER THE ABOVE HOLDING IN TOTAL IT I S 19.60 ACRES WITH JOINT OWNERS 3/4/5. SIR, GENERALLY THE CASH CROP SUCH AS VEGETABLES, GR ASS AND FRUITS FETCHES 60000 TO 75000 PER ACRE PER ANNUM, IF THE CLIMATIC CONDITIONS AND IRRIGATIONS FACILITIES ARE GOOD. AS THE CLIMATIC CONDITIONS WERE GOOD AND AS THE IRR IGATION FACILITIES WERE AVAILABLE TO ALL THE HOLDINGS, THE AVERAGE INCOME IF CONSIDERED TO THE EXTENT OF 67500 AS . ME AN OF 60000 AND 75000 THE TOTAL INCOME WILL BE 13,23,000/ 4 = 330750. THE APPELLANT OFFERED RS.3.00,OOOI- RS. THREE LACS] AS AN AGRICULTURAL INCOME WHICH HE REALLY FETCHED FROM HI S AGRICULTURAL ACTIVITIES WHEN THE NATURE AND THE INFRASTRUCTURE FACILITIES FAVOURED HIM, HENCE THE R EDUCTION IN AGRICULTURAL INCOME IS NOT ALL JUST, AND HENCE ITS MY HUMBLE REQUEST TO YOUR HONOUR TO PLEASE GRANT THE AGRICULT URAL INCOME TO THE EXTENT OF RS.300000 INSTEAD OF RS.225 000.' 4.2. THE ABOVE SUBMISSIONS WERE FORWARDED TO THE ASSESSING OFFICER. IN THIS BACKGROUND, THE STAND O F THE ASSESSEE IS THAT THE AGRICULTURAL PRODUCTS ARE SOLD LOCALLY AND THERE IS SAVINGS IN TRANSPORTATION AND LABOUR. THE LAND WAS IRRIGATED BY WELL WATER AND THERE WAS BUMPER CR OP OF MANGOES DURING THE YEAR. THE ASSESSEE TAKES TWO CRO PS IN A YEAR I.E. RABBI AND KHARIP. THE AGRICULTURAL LANDS OWNED BY 3 TO 5 MEMBERS ARE 19.60 ACRES AS CLAIMED BY THE ASSESSEE. THE AVERAGE LAND OWNED BY THE ASSESSEE I S AT THE MOST 5 ACRES AND THE CROPS GROWN ON SUBSTANTIAL LAN D IS OF 9 ITA NO. 145 TO 147/PN/2009 BINDRA GROUP VEGETABLES. THE REVENUE AUTHORITIES HAVE NOT DISPU TED THE LAND HOLDING OF THE ASSESSEE. TAKING INTO CONSIDER ATION THE FACTS AND CIRCUMSTANCES, THERE IS POSSIBILITY OF HA VING INCOME OF RS. 3,00,000/- FROM THE ABOVE SAID LAND H OLDING. ACCORDINGLY, THE ADDITION IS NOT WARRANTED. THE SA ME IS DIRECTED TO BE DELETED. ACCORDINGLY, THIS APPEAL IS ALLOWED. 5. IN THE RESULT, APPEAL IN ITA NO. 145/PN/2009 IS ALLOWED FOR STATISTICAL PURPOSES WHILE APPEALS IN I TA NO. 146 AND 147/PN/2009 ARE ALLOWED AS INDICATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST 2011. SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 30 TH AUGUST 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-I NASIK 4. THE CIT I NASIK 5. THE D.R, ITAT B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL