Shivajirao Vitthalrao Kamble, Solapur V. Income-tax Officer, Solapur

ITA 1496/PUN/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76173 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-10-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 24-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Unexplained expenditure; Gift; Salary income; Principle of natural justice
• Section: 10(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1496 AND 1497/PN/2011 (ASSTT.YEARS : 2000-01 AND 2003-04) SHIVAJIRAO VITTHALRAO KAMBLE, 2549, JAMGAON ROAD, BARSHI, DISTRICT SHOLAPUR-413 401 .. APPELLANT PAN NO.ABQPK 1873L VS. ITO, WARD-2(3), SOLAPUR .. RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI S.P. WALIMBE DATE OF HEARING : 02-01-2014 DATE OF PRONOUNCEMENT : 18-02-2014 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THE SEPARATE ORDERS DATED 31-12-2010 OF THE CIT(A)-III, PUNE RELATING TO ASSESSMENT YEARS 2000-01 AND 2003-04 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.1496/PN/2011 (A.Y. 2000-01) : 2. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING DID NOT PRESS GROUND OF APPEAL NO.1 FOR WHICH THE LD. DEPARTMENTA L REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, GROUND OF APPEAL NO.1 B Y THE ASSESSEE IS DISMISSED AS NOT PRESSED. 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE AT THE RELEVANT TIME WAS A MEMBER OF PARLIAMENT AND WAS IN RECEIPT OF M. P ALLOWANCE TAXABLE U/S.56 OF THE INCOME TAX ACT. IN RESPONSE TO NOTIC E U/S.148 THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME O F RS.19,950/- AND AGRICULTURAL INCOME OF RS.1,12,652/-. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE AS SESSEE WAS A MEMBER OF PARLIAMENT AND WAS IN RECEIPT OF SALARY IN FORM OF M.P ALLOWANCE. FROM THE CERTIFICATE ISSUED BY THE EXECUTIVE OFFICER, LO K SABHA SECRETARIAT, DELHI THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS R ECEIVED THE FOLLOWING AMOUNTS FOR THE IMPUGNED ASSESSMENT YEAR : 1. SALARY : RS.18,839.00 2. CONSTITUENCY ALLOWANCE : RS.37,677.00 3. OTHER EXPENSE ALLOWANCE : RS.11,774.00 ---------------- TOTAL : RS.68,290.00 ---------------- 3.1 IN ADDITION TO THE ABOVE, THE ASSESSEE HAS ALSO RECEIVED TA, DA AND REIMBURSEMENT OF EXPENSES INCURRED FOR TRAVELLING A S M.P AMOUNTING TO RS.1,21,857/-. THE ASSESSING OFFICER OBSERVED THAT IN COMPUTATION OF INCOME THE ASSESSEE HAS STATED THAT THE M.P ALLOWAN CES SO RECEIVED ARE EXEMPT U/S.10(17) AND THEREFORE THE SAME WERE NOT O FFERED FOR TAXATION. 3.2 THE ASSESSING OFFICER DREW THE ATTENTION OF THE ASSESSEE TO THE PROVISIONS OF SECTION 10(17) (I) AND 10(17)(III) AC CORDING TO WHICH THE DAILY ALLOWANCE AND OTHER ALLOWANCE OF RS.2,000/- PER MO NTH ARE EXEMPT. HE, THEREFORE, ASKED THE ASSESSEE TO GIVE THE DETAILS O F JOURNEYS PERFORMED AND THE SOURCE OF EXPENDITURE INCURRED FOR TRAVELLING I N HIS CAPACITY AS M.P. THE ASSESSEE VIDE HIS SUBMISSION DATED 23-11-2006 S TATED THAT HE IS IN RECEIPT OF RS.1,88,509/- AND THE SAME HAS BEEN SHOW N IN THE CAPITAL 3 ACCOUNT. IT WAS FURTHER STATED THAT THE TRAVELLING EXPENSES HAD BEEN MET OUT FROM HIS SONS FUNDS TO THE EXTENT OF RS.1,03,752/- . THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH CERTAIN OTHER INFORMA TION/EXPLANATION FROM TIME TO TIME WHICH THE ASSESSEE SUBMITTED. 3.3 FROM THE VARIOUS SUBMISSIONS MADE BY THE ASSESS EE THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED TA, DA AND AIR JOURNEY OF RS.37,974/- RS.12,000/- RS.71,883/- RESPECTIVELY TO TALLING TO RS.1,21,857/-. IT WAS ARGUED THAT THE REIMBURSEMENT AMOUNT ON ACCO UNT OF AIR JOURNEY AMOUNTS TO RS.71,883/- AND THE AMOUNTS MENTIONED UN DER HEAD TA AND DA ARE NOT TAXABLE. THE CLAIM OF THE ASSESSEE THA T THE EXPENDITURE WAS INITIALLY MET OUT OF FUNDS TAKEN FROM MINOR SON MAS TER SHRIPAD AMOUNTING TO RS.1,03,752/- WAS EXAMINED BY THE ASSESSING OFFI CER WHO FOUND THAT THIS AMOUNT WAS NOT SHOWN AS LIABILITY IN THE BAL ANCE SHEET OF THE ASSESSEE. ON BEING QUESTIONED BY THE ASSESSING OFF ICER, IT WAS EXPLAINED THAT MASTER SHRIPAD HAD DEBITED HIS CAPITAL ACCOUNT IN RESPECT OF THIS AMOUNT AND HAS NOT SHOWN AS RECEIVABLE IN HIS BAL ANCE SHEET. THE ASSESSING OFFICER OBSERVED THAT WHILE THE ASSESSEE HAS SHOWN LIABILITIES OF ALL OTHER MEMBERS OF HIS FAMILY INCLUDING MINORS, N O LIABILITY IN RESPECT OF AMOUNT TAKEN FROM MASTER SHRIPAD WAS SHOWN AS LIABI LITY. HE OBSERVED THAT THE INCOME BELONGING TO MINOR MEMBERS HAVE BEE N CLUBBED BY THE ASSESSEE AS HIS INCOME U/S.64 EXCEPT THE AGRICULTUR AL INCOME SHOWN IN THE CASE OF MASTER SHRIPAD AND HE HAD FULL CONTROL OVER THE INCOME SHOWN IN THE NAME OF HIS MINOR CHILDREN. 3.4 HE FURTHER OBSERVED THAT ALTHOUGH THE MINOR SON MASTER SHRIPAD HAD A BANK ACCOUNT, THE ASSESSEE DID NOT WITHDRAW THE C ASH FROM HIS BANK 4 ACCOUNT BUT CHOSE TO TAKE THE SAME FROM THE CAPITAL ACCOUNT OF MASTER SHRIPAD. ACCORDING TO THE ASSESSING OFFICER, THE A SSESSEE HAS FULL CONTROL OVER THE INCOME OF THE MINORS AND IT IS ONLY WHEN T HE ISSUE OF SOURCE OF EXPENDITURE CAME, THE ASSESSEE CAME WITH THE IDEA O F SHOWING DEBIT TO THE CAPITAL ACCOUNT OF MASTER SHRIPAD ON WHICH HE HAD F ULL CONTROL. THE ASSESSING OFFICER, THEREFORE, CAME TO THE CONCLUSIO N THAT THE EXPENDITURE AMOUNTING TO RS.1,03,572/- WAS MADE BY THE ASSESSEE OUT OF HIS INCOME FROM UNDISCLOSED SOURCE AND THE SUBSEQUENT RECONCIL IATION SHOWN WAS A COVER UP TO JUSTIFY THE SOURCE OF THE EXPENDITURE. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.1,03,572/- AS EXPEN DITURE INCURRED FROM UNDISCLOSED SOURCE OF INCOME. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSE SSEE HAD FILED THE BALANCE SHEET AS ON 31-03-2000 OF HIS SON MASTER SH RIPAD KAMBLE BEFORE THE ASSESSING OFFICER WHEREIN A DEBIT TO THE CAPITA L ACCOUNT OF RS.1,03,572/- IS SHOWN AS WITHDRAWAL. IT WAS ARGUE D THAT ONCE THE AMOUNT IS DEBITED TO THE CAPITAL ACCOUNT, THE QUESTION OF SHOWING THE SAME AMOUNT AS RECEIVABLE FROM THE ASSESSEE DOES NOT ARISE. IT WAS ARGUED THAT AS PER THE PRINCIPLES OF ACCOUNTING, ONCE THE WITHDRAWALS ARE DEBITED TO CAPITAL ACCOUNT, THE SAME WILL NEVER APPEAR AS RECEIVABLE I N THE ASSET SIDE OF THE BALANCE SHEET. IT WAS FURTHER ARGUED THAT HAD THE A SSESSEE TAKEN LOAN FROM HIS SON, THEN THE SAME AMOUNT WOULD HAVE APPEARED O N THE LIABILITY SIDE OF THE BALANCE SHEET OF THE ASSESSEE AS CREDITOR OR LO AN OF RS.1,03,572/- AND AT THE SAME TIME AS AMOUNT RECEIVABLE OR DEBTOR IN THE BALANCE SHEET OF HIS SON. IT WAS ARGUED THAT IN THE PRESENT CASE THE AS SESSEE HAS TAKEN THE SAID AMOUNT FROM THE SON ON NON-REFUNDABLE BASIS. IT WA S FURTHER ARGUED THAT THE AMOUNT WAS DEBITED TO CAPITAL ACCOUNT AND NO CO RRESPONDING ENTRY WAS 5 RECORDED IN HIS BOOKS OF ACCOUNT AND MERE ABSENCE O F CORRESPONDING ENTRY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WILL NOT DI SPROVE THE SOURCE DECLARED BY THE ASSESSEE. IT WAS ACCORDINGLY ARGUED THAT TH E TRAVELLING EXPENSES INCURRED OF RS.71,883/- AND OFFICE STATIONERY EXPEN SES OF RS.11,774/- AGGREGATING TO RS.83,667/- HAVE BEEN MET OUT OF TH E WITHDRAWALS FROM THE CAPITAL ACCOUNT OF THE ASSESSEE. 5. HOWEVER, THE CIT(A) WAS NOT CONVINCED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION MA DE BY THE ASSESSING OFFICER. WHILE DOING SO, HE OBSERVED THAT THE ASSE SSEE HAS NOT SHOWN THE AMOUNT OF RS.1,03,572/- RECEIVED FROM THE MINOR SON IN THE LIABILITY SIDE OF THE BALANCE SHEET ALTHOUGH LOAN FROM OTHER MINOR S HAVE BEEN REFLECTED IN THE BALANCE SHEET. THE ASSESSEE WAS NOT ABLE TO EX PLAIN AS TO WHY THE AMOUNTS CLAIMED TO HAVE BEEN UTILISED FROM HIS SON S ACCOUNT ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT OR IN THE BALANCE SHEET. ACCORDING TO HIM, THE CLAIM OF THE ASSESSEE THAT THE AMOUNT WAS RECEI VED FROM HIS SON IS ONLY AN AFTERTHOUGHT AFTER THE ASSESSEE WAS ASKED TO EXP LAIN THE SOURCE OF THE TRAVELLING EXPENSES AND OFFICE EXPENSES WHICH WERE SUBSEQUENTLY REIMBURSED BY THE GOVT. OF INDIA. HE, THEREFORE, T REATED THE AFFIDAVIT FILED BY THE ASSESSEE ON BEHALF OF HIS SON AS SELF-SERVIN G DOCUMENT AND ACCORDINGLY REJECTED THE SAME IN ABSENCE OF ANY COR ROBORATIVE EVIDENCE. 5.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM THE COM PUTATION OF INCOME OF 6 THE ASSESSEE, WE FIND THE ASSESSEE IN THE SAID COMP UTATION HAS DISCLOSED THE AGRICULTURAL INCOME OF MASTER SHRIPAD AT RS.81,777/ -. THE ASSESSING OFFICER HAS NOT DISPUTED THE AGRICULTURAL INCOME OF THE MINOR SON DECLARED IN THE COMPUTATION STATEMENT OF THE ASSESSEE. FURT HER, THE AMOUNT OF WITHDRAWAL OF RS.1,03,572/- FROM THE CAPITAL ACCOUN T OF MASTER SHRIPAD SHIVAJIRAO KAMBLE HAS ALSO NOT BEEN DISPUTED BY THE REVENUE. 6.1 IT IS THE CLAIM OF THE ASSESSEE THAT THIS WITHD RAWAL AMOUNT FROM THE SONS CAPITAL ACCOUNT HAS BEEN UTILISED TOWARDS THE EXPENSES WHICH HAS SUBSEQUENTLY BEEN REIMBURSED BY THE GOVT. OF INDIA . SINCE THE AMOUNT HAS BEEN SHOWN AS WITHDRAWAL FROM THE CAPITAL ACCOUNT, THERE IS NO QUESTION OF THIS BEING SHOWN IN THE ASSET SIDE OF THE BALANCE S HEET AS AMOUNT RECEIVABLE. SINCE THE ASSESSEE HAS FULL CONTROL OVER THE INCOME OF THE MINOR AND SINCE THE SAME HAS BEEN SHOWN AS WITHDRAWAL FROM THE CAPI TAL ACCOUNT, WE FIND SOME FORCE IN THE ARGUMENT ADVANCED BY THE LD. COUN SEL FOR THE ASSESSEE THAT THE LOWER AUTHORITIES HAVE UNNECESSARILY TRIED TO MAKE THE ADDITION BY SOME WAY OR THE OTHER ON THE GROUND THAT THE ASSESS EE HAS NOT SHOWN THE SAME AS LIABILITY IN HIS BALANCE SHEET. THE AMOU NT IN THE INSTANT CASE IS VERY SMALL. THE ASSESSEE HAS FULL CONTROL OVER THE AMOUNT WITHDRAWN FROM THE CAPITAL ACCOUNT OF HIS SON. THE AGRICULTURAL I NCOME SHOWN IN THE HANDS OF THE MINOR SON HAS NOT BEEN DISPUTED. FURTHER, N OTHING HAS BEEN BROUGHT ON RECORD AS TO WHETHER THE ENTIRE AMOUNT WAS SPENT AT A TIME AND THE AMOUNTS WERE REIMBURSED SUBSEQUENTLY OR IT WAS IN P ART. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CO NSIDERED OPINION THAT IT DOES NOT CALL FOR ANY ADDITION ESPECIALLY WHEN THE INCOM E OF THE MINOR SON IS NOT DISPUTED AND THE AMOUNTS WITHDRAWN FROM THE CAPITAL ACCOUNT ALSO IS NOT DISPUTED BY THE REVENUE. WE THEREFORE FIND MERIT I N THE SUBMISSION OF THE 7 LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT WITHDR AWN FROM THE CAPITAL ACCOUNT OF THE MINOR SON HAS BEEN SPENT TOWARDS THE TRAVELLING EXPENSES AND OTHER EXPENSES WHICH WERE SUBSEQUENTLY REIMBURS ED BY THE GOVT. OF INDIA. IN THIS VIEW OF THE MATTER, WE SET-ASIDE TH E ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION . 7. GROUND OF APPEAL NO.3 BY THE ASSESSEE READ AS UN DER : IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.6,075/- OUT O F THE ALLEGED UNEXPLAINED EXPENDITURE OF RS.1,09,857/- (TRAVELLING ALLOWANCE AND AIR FARE REIMBURSEMENT RECEIVED AS M.P.) MADE BY THE LD. ASSESSING OFFICER. THE AFORESAID ADDITION BEING ARBITRARY, PERVERSE AND LEGALLY UNSUSTAINABLE THE SAME MAY PLEASE BE DELETED. 7.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE WAS IN RECEIPT OF SALARY AND ALLOWANCES TO THE EXTENT OF RS.68,290/- AS PER THE CERTIFICATE ISSUED BY THE SECRETARY, LOK SABHA SECRETARIAT, NEW DELHI. BESIDES, AN INCOME OF RS.1,21,857/- WAS ALSO SHOWN TO HAVE BEEN RECEIVED AS REIMBURSEMENT OF EXPENSES, WHICH CONSISTED OF FOLLO WING AMOUNTS : REIMBURSEMENT OF AIRFARE : RS. 71,883/- TRAVELLING ALLOWANCE : RS. 37,974/- DAILY ALLOWANCE : RS. 12,000/- -------------------------- TOTAL ALLOWANCES : RS.1,21,857/- --------------------------- ACCORDING TO THE ASSESSING OFFICER, THE CLAIM OF TH E ASSESSEE REGARDING ACTUAL EXPENSES OUT OF THE ABOVE WAS ONLY TO THE EX TENT OF RS.71,883/-, I.E. ON ACCOUNT OF AIRFARE WHICH WAS REIMBURSED AND THER EFORE, THE OTHER TWO ALLOWANCES, I.E. TA/DA WOULD FORM PART OF THE M.P. ALLOWANCES AND LIABLE TO TAX U/S.56 OF THE I.T. ACT. ACCORDINGLY, THE NE T TAXABLE ALLOWANCES WERE COMPUTED AS UNDER, AFTER CONSIDERING THE EXEMPTION ALLOWABLE U/S.10(17) AS UNDER : 8 SALARY : RS.18,839/- CONSTITUENCY ALLOWANCE : RS.37,677/- OFFICE EXPENSES ALLOWANCES : RS.11,774/- ----------------- RS.68,290/- ADD: ALLOWANCES SHOWN IN THE REIMBURSEMENT STATEMENT I. D.A. RS.12,000/- II. T.A RS.37,974/- ------------------ RS.49,974/- --------------- TOTAL RS.1,18,264/- LESS : EXEMPTION U/S.10 I. U/S.10(17(I) RS.12,000/- II. U/S.10(17)(III) RS.24,000/- ---------------- RS.36,000/- ---------------- TOTAL OF ALLOWANCES RS.82,264/- ---------------- THUS, THE NET ALLOWANCES COMPUTED AT RS.82,264/- AF TER ALLOWING EXEMPTION OF RS.36,000/- AND AIR FARE OF RS.71,883/- AS ABOVE WAS ADDED TO INCOME OF THE ASSESSEE U/S.56 OF THE I.T. ACT. 8. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASS ESSEE HAD RECEIVED RS.1,18,264/- ON ACCOUNT OF SALARY, CONSTITUENCY AL LOWANCE, OFFICE EXPENSES, TA/DA ETC. DURING THE YEAR UNDER CONSIDER ATION, OUT OF WHICH THE ASSESSEE BROUGHT TO TAX THE SALARY TO THE EXTENT OF RS.15,239/- AND REMAINING ALLOWANCE HAVE BEEN CLAIMED AS EXEMPTION U/S.10(17), 10(14) R.W.S.2BB. HOWEVER, THE ASSESSING OFFICER TAXED AN AMOUNT OF RS.82,264/- OUT OF THE ABOVE U/S.56 OF THE I.T. ACT. IT WAS AR GUED THAT THE AMOUNT TAXED BY THE ASSESSING OFFICER IS ELIGIBLE FOR EXEMPTION U/S.10 OF THE I.T. ACT AS UNDER : SL.NO. PARTICULARS AMOUNT EXPLANATION FOR CLAIMING EXEMPTION 1 SALARY RECEIVED FROM PARLIAMENT 18,839/- BY VIRTUE OF THE PROVISIONS OF SEC.10(17)(III) OF THE ACT, SALARY EXEMPTED RS.600 PER MONTH FOR A PERIOD OF 6 MONTHS AGGREGATING TO 9 RS.3,600 AND REMAINING BALANCE OF RS.15,239/- IS TAXABLE. ACCORDINGLY, THE APPELLANT OFFERED THE SAID AMOUNT FOR TAXATION 2 OFFICE EXPENSES ALLOWANCES 11,774/- THIS AMOUNT WAS ACTUALLY EXPENDED FOR THE PURPOSE FOR WHICH IT WAS GRANTED, THEREFORE, EXEMPTED U/S.10(14)(I) R.W.R. 2BB(1)(A) OF THE ACT. SOURCE WAS AMOUNT WITHDRAWN FROM THE CAPITAL ACCOUNT OF THE SON. 3 TRAVELLING ALLOWANCES 37,794/- THIS AMOUNT WAS ACTU ALLY EXPENDED FOR THE PURPOSE FOR WHICH IT WAS GRANTED, THEREFORE, EXEMPTED U/S.10(14)(I) R.W.R. 2BB(1)(A) OF THE ACT. SOURCE WAS AMOUNT WITHDRAWN FROM THE CAPITAL ACCOUNT OF THE SON. 4 CONSTITUENCY ALLOWANCE 13,677/- CONSTITUENCY ALLWOANCE IS TOTALLY EXEMPTED U/S.10(17) OF THE ACT, HENCE THE LD.A.O. HAS WRONGLY TAXED RS.13,677/-. IT WAS ACCORDINGLY CONTENDED THAT OUT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER OF RS.82,264/-, ONLY AN AMOUNT OF RS.15,239/- OUT OF SALARY RECEIVED, IS TAXABLE AND REMAINING BALANCE O F RS.67,025/- IS TOTALLY EXEMPT AS DETAILED ABOVE. IT WAS ACCORDINGLY ARGUE D FOR DELETION OF THE ADDITION OF RS.67,025/-. MEANWHILE, IT WAS ALSO PO INTED OUT THAT WHILE THE A.O. HAS WRONGLY TAXED RS.1,03,752/- ON THE GROUND THAT THE EXPLANATION OFFERED BY THE ASSESSEE REGARDING SOURCES FOR REIMB URSEMENT EXPENSES IS NOT ACCEPTABLE, AT THE SAME TIME, HE HAS AGAIN TAXE D THE SAID SUM OF RS.82,264/- BEING THE REIMBURSEMENT GRANTED BY THE GOVT. OF INDIA, AS ABOVE. IT WAS ACCORDINGLY ARGUED THAT THIS CONSTIT UTES DOUBLE TAXATION OF SINGLE ITEM. 9. BASED ON ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS RECEIVED SALARY AND VARIOUS ALLOWANCES DURING THE YEAR, THE DETAILS OF WHICH ARE AS UNDER : I. SALARY : RS.18,839/- II. CONSTITUENCY ALLOWANCE : RS.37,677/- III. OFFICE EXPENSES ALLOWANCES : RS.11,774/- -------------- 10 RS.68,290/- -------------- A. AIRFARE : RS.71,883/- B. D.A. : RS.12,000/- C. T.A. : RS.37,974/- --------------- RS.1,21,857/- ---------------- 9.1 HE OBSERVED THAT FROM THE ABOVE THE ASSESSING O FFICER HAS EXCLUDED THE FOLLOWING AMOUNTS : I. U/S.10(17)(I) D.A. RS.12,000/- II. U/S.10(17)(III) (OUT OF CONSTITUENCY ALLOWANCE) RS.24,000/- III. U/S.10(14) AIRFARE RS.71,883/- ---------------- RS.1,07,883/- ---------------- 9.2 ACCORDINGLY THE ASSESSING OFFICER HAS BROUGHT T O TAX AN AMOUNT OF RS.82,264/- AS INCOME FROM OTHER SOURCES U/S.56 OF THE I.T. ACT. HE EXAMINED ITEM-WISE OF THE DETAILS. SO FAR AS THE SA LARY, CONSTITUENCY ALLOWANCE AND OFFICE EXPENSES AMOUNTING TO RS.68,29 0/- ARE CONCERNED, HE OBSERVED THAT THE ASSESSEE HAS CLAIMED BASIC EXEMPT ION OF RS.3600/- U/S.10(17(III) BUT NO SUCH EXEMPTION IS ALLOWABLE U NDER CLAUSE (3) OF SECTION 10(17) IN RESPECT OF THE SALARY FOR THE YEA R UNDER CONSIDERATION. SINCE THE BALANCE SALARY INCOME OF RS.15,239/- HAS ALREADY BEEN OFFERED AS INCOME IN THE RETURN OF INCOME, THEREFORE, HE HELD THAT ADDITION HAS TO BE MADE ON ACCOUNT OF SALARY TO THE EXTENT OF RS.3,600 /-. 9.3 SO FAR AS THE TRAVELLING ALLOWANCE AND REIMBURS EMENT OF AIR FARE IS CONCERNED HE OBSERVED THAT THE CLAIM OF AIR FARE OF RS.71,883/- IS EXEMPT AND HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, HOW EVER, ACCORDING TO THE CIT(A) U/S.10(14) R.W.S.2BB THE EXEMPTION CAN BE AL LOWED SUBJECT TO PROOF THAT IT WAS INCURRED IN PERFORMANCE OF DUTIES OF HI S OFFICE AND FOR THE 11 PURPOSE TO WHICH IT IS RECEIVED OR GRANTED. SINCE THE ASSESSEE HAS NOT SUBSTANTIATED THE SAME EITHER DURING THE ASSESSMENT PROCEEDING OR AT THE APPEAL STAGE TO SHOW THAT THE EXPENDITURE ON AIR FA RE WAS INCURRED WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF T HE DUTIES OF HIS OFFICE AS A MEMBER OF PARLIAMENT, THE SAME CANNOT BE ALLOWED. SIMILARLY, ACCORDING TO HIM THE TRAVELLING ALLOWANCE AMOUNTING TO RS.37, 974/- ALSO CANNOT BE ALLOWED EITHER U/S.10(17) OR 10(14) IN ABSENCE OF A NY EVIDENCE TO SUBSTANTIATE THAT THE EXPENDITURE WAS INCURRED WHOL LY AND EXCLUSIVELY IN THE PERFORMANCE OF HIS DUTIES AS A MEMBER OF PARLIAMENT . THUS, THE TOTAL AMOUNT OF (RS.37,974/- + RS.71,883/-) AMOUNTING TO RS.1,09,857/- WAS HELD BY THE CIT(A) AS NOT ALLOWABLE EXPENDITURE. HOWEVE R, SINCE HE HAS SUSTAINED AN ADDITION OF RS.1,03,782/- HE HELD THAT THE BALANCE AMOUNT OF RS.6,075/- BEING DIFFERENCE (BETWEEN RS.1,09,857/- - RS.1,03,782/- ) HAS TO BE ASSESSED AS TAXABLE ALLOWANCE. 9.4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN T HE INSTANT CASE THE LD.CIT(A) SUSTAINED ADDITION OF RS.1,09,857/- ON TH E GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE THAT THE AMOUNT RECEIVED TOWARDS TRAVELLING ALLOWANCE AND REIMBURSEMENT OF A IR FARE HAS NOT BEEN PROVED TO BE INCURRED WHOLLY, NECESSARILY AND EXCLU SIVELY IN THE PERFORMANCE OF THE DUTIES OF HIS OFFICE AS A MEMBER OF PARLIAMENT. SINCE HE HAS SUSTAINED AN AMOUNT OF RS.1,03,782/- WHICH W AS CLAIMED TO HAVE 12 BEEN SPENT INITIALLY AND WHICH WAS SUBSEQUENTLY REI MBURSED HE SUSTAINED THE BALANCE AMOUNT OF RS.6,075/- WHICH IS THE SUBJE CT MATTER OF APPEAL. THE AMOUNT OF RS.1,03,782/- SUSTAINED BY THE CIT(A) HAS ALREADY BEEN DELETED BY US IN THE PRECEDING PARAGRAPHS. 10.1 SO FAR AS THE ADDITION OF TAXABLE ALLOWANCE AM OUNTING TO RS.1,09,857/- (RS.37,974/- + RS.71,883/-), WE ARE O F THE CONSIDERED OPINION THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN ASKING THE ASSESSEE TO SUBSTANTIATE THE PROOF THAT THE EXPENDITURE ON AIR FARE AND THE TRAVELLING ALLOWANCE WAS INCURRED WHOLLY, NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF THE DUTIES OF HIS OFFICE AS A MEMBER OF PARLIAMENT. T HE ASSESSEE, BEING A MEMBER OF PARLIAMENT, HAS TO TRAVEL FROM NEW DELHI TO HIS CONSTITUENCY AND VICE VERSA ON A NUMBER OF OCCASIONS DURING A YE AR. THE BILLS AND VOUCHERS ARE VERIFIED BY THE LOK SABHA SECRETARIAT. NO ADVERSE COMMENTS FROM THE LOK SABHA SECRETARIAT HAS BEEN OBTAINED BY THE ASSESSING OFFICER OR THE CIT(A) THAT THE ASSESSEE HAS INCURRED THE E XPENDITURE FOR PERFORMANCE OTHER THAN PERFORMING HIS DUTIES AS A M EMBER OF PARLIAMENT. WHEN THE ASSESSEE AS A MEMBER OF PARLIAMENT GIVES A DECLARATION THAT THE EXPENDITURE INCURRED TOWARDS THE TRAVELLING ALLOWAN CE AND REIMBURSEMENT OF AIR FARE HAS BEEN INCURRED IN THE PERFORMANCE OF THE DUTIES OF HIS OFFICE AS MEMBER OF PARLIAMENT, THE SAME SHOULD NOT BE BRU SHED ASIDE AND BROUGHT TO TAX IN THE NAME OF TECHNICALITIES ESPECI ALLY IN ABSENCE OF ANY CONTRARY MATERIAL. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE T HE ADDITION OF RS.1,09,857/-. THE GROUND RAISED BY THE ASSESSEE I S ACCORDINGLY ALLOWED. 11. GROUND OF APPEAL NO.4 BEING GENERAL IN NATURE I S DISMISSED. 13 ITA NO.1497/PN/2011 : 12. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING DID NOT PRESS GROUND OF APPEAL NO. 1 AND 2 FOR WHICH THE LD. DEPA RTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND OF APPEAL NO.8 BEING GENERAL IN NATURE IS DISMISSED. 13. GROUND OF APPEAL NO.3 AND 4 BY THE ASSESSEE REL ATE TO ADDITION OF RS.6,10,550/- BY THE ASSESSING OFFICER TREATING AGR ICULTURAL INCOME AS NON- AGRICULTURAL INCOME. 13.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSE SSEE HAS SHOWN NET AGRICULTURAL INCOME AMOUNTING TO RS.11,73,973/- (OU T OF GROSS INCOME OF RS.16,23,050/-) WHICH THE ASSESSEE CLAIMED TO HAVE DERIVED ON CULTIVATION OF POMEGRANATES ON THE AGRICULTURAL LAND OWNED BY H IM. ON BEING ASKED, THE ASSESSEE FILED THE DETAILS OF AGRICULTURAL INCO ME OVER THE YEARS WHICH ARE AS UNDER : F.Y. NET AGRICULTURAL INCOME 1998-99 RS.81,124/- 1999-00 RS.1,12,652/- 2000-01 RS.1,87,804/- 2001-02 RS.4,35,750/- 2002-03 RS.11,73,993/- IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THERE WAS A SUDDEN AND ABNORMAL SPURT IN THE QUANTUM OF AGRICULTURAL INCOM E DISCLOSED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS COMPARED TO THE PRECEDING YEARS. ON BEING ASKED FOR THE REASON FOR SUCH A SUDDEN INCREA SE IN THE AGRICULTURAL 14 INCOME, THE ASSESSEE ATTRIBUTED THE SAME TO HIGHER YIELD ASSISTED BY AVAILABILITY OF WATER, HIGH FERTILITY OF THE LAND A ND EMPLOYING SCIENTIFIC METHOD OF CULTIVATION. THE CLAIM OF THE ASSESSEE W AS THAT FROM A PLANTATION OF ABOUT 2700 TREES, HE GOT A YIELD OF 80,423 KGS O F FRUIT WHICH, AT AN AVERAGE OF RS.20/- PER KG., FETCHED A GROSS RECEIPT S OF RS.16,23,050/-. IN SUPPORT, A CERTIFICATE WAS ALSO FURNISHED BY THE AS SESSEE ISSUED BY THE SUPDT. OF KARMAVEER KRISHI VIDYALAYA, BARSHI, NAMEL Y SHRI VIDHATE. HOWEVER, THE VARIOUS CLAIMS MADE BY THE ASSESSEE RE GARDING THE YIELD FROM THE TREES WERE NOT FOUND ACCEPTABLE BY THE ASSESSIN G OFFICER. ON THE BASIS OF EXTENSIVE ENQUIRIES CARRIED OUT IN THE LOCAL MAR KET, THE AGRICULTURAL UNIVERSITY, MAHATMA PHULE KRUSHI VIDHYAPEETH AND AL SO AFTER DEPUTING THE WARD INSPECTOR TO MAKE RELEVANT ENQUIRIES ABOUT THE YIELDING CAPACITY OF THE TREES, QUALITY OF FRUITS AND ITS MARKETABILITY ETC., THE ASSESSING OFFICER CAME TO CONCLUDE THAT THE MAXIMUM FRUITS A TREE CAN BEAR IN A YEAR RANGES FROM 100 TO 150. ON VERIFICATION OF THE SALE PATTIE S FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE F RUITS WERE SOLD FOR A PRICE RANGING FROM RS.2 TO 3 PER FRUIT. THUS, BY ADOPTING THE AVERAGE RATE OF RS.2.50 PER FRUIT, THE ASSESSING OFFICER CAME TO CO NCLUSION THAT THE MAXIMUM RECEIPTS FROM SALE OF FRUITS FROM 2700 TREE S AT THE RATE OF 150 FRUITS PER TREE, WOULD BE AT RS.10,12,500/- AS AGAI NST RS.16,23,050/- DISCLOSED BY THE ASSESSEE. ACCORDINGLY, THE DIFFERE NTIAL, AMOUNT, OF RS.6,10,550/-. (RS.16,23,050 -10,12,500) WAS TREATE D BY THE AO AS NON- AGRICULTURAL INCOME SHOWN IN THE GUISE OF AGRICULTU RAL INCOME WHO ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 15 13.2 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE A O HAS NOT FOUND A SINGLE MISTAKE ON VERIFICATION OF BOOKS OF ACCOUNTS , SALE BILLS, EXPENDITURE VOUCHERS, AND THEREFORE, THE REJECTION OF BOOK RESU LTS IS UNJUSTIFIED. IT WAS HIGHLIGHTED THAT THE INSPECTOR'S REPORT WHICH WAS R ELIED UPON BY THE AO WHILE MAKING THE ADDITION WAS NOT MADE AVAILABLE TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT FOR REBUTTING. SIMILARLY, THE DATA OBTAINED FROM MAHATMA PHULE KRUSHI VIDHYAPEETH REGARDING YIELD WA S ALSO NOT PROVIDED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT AND NO OPPORTUNITY WAS GIVEN FOR REBUTTAL OF THE SAME, THEREBY VIOLATING T HE PRINCIPLES OF NATURAL JUSTICE. THE ASSESSEE RELIED ON THE FOLLOWING DECI SIONS : (I) C. B. GAUTAM VS. UNION OF INDIA 199 ITR 530 (SC ) (II) JAIN FROZEN FOODS VS. ITO 196 ITR 724 (MAD) (III) KISHANCHAND CHELARAM VS. CIT 125 ITR 713 (SC) (IV) PONKUNNAM TRADERS VS. ITO 83 ITR 508 (KER) (V) C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) (VI) DHAKESWARI COTTON MILLS PVT. LTD., VS. CIT 27 I TR 126 (SC). 13.3 IT WAS FURTHER ARGUED THAT THE AO HAS NOT TAKE N COGNIZANCE OF THE CERTIFICATE OF HORTICULTURAL EXPERT, DATED: 03 RD DECEMBER 2005, WHICH CLEARLY INDICATES THE VARIOUS ASPECTS RELATING TO T HE NATURE OF ACTIVITIES CARRIED OUT AND YIELD THERE FROM. THE VARIOUS REASO NS SUBMITTED BEFORE THE ASSESSING OFFICER JUSTIFYING THE INCREASED PRODUCTI VITY FROM THE AGRICULTURAL LAND WAS ALSO NOT LOOKED INTO BY THE ASSESSING OFFI CER IN ITS PROPER PERSPECTIVE. THE ASSESSEE FURNISHED A COMPARATIVE C HART ON THE VARIOUS ASPECTS CONSIDERED BY THE ASSESSING OFFICER AND BY THE ASSESSEE WHILE ESTIMATING THE AGRICULTURAL INCOME, WHICH IS AS UND ER:- SR.NO. PARTICULARS AS PER ASSESSEES WORKING AS PER LD.AOS WORKING 1. TOTAL YIELD OF POMEGRANATE (DALIMB) 85423 KG (2700 TRESS X 31.63) 405000 NOS. (2700 TREES X150) 2. RATE OF SALE RS.19/KG RS.2.50/ NO. 16 3. TOTAL AMOUNT OF SALE (1 X 2) 16,23,050 10,12,500 4. AGRICULTURAL EXPENSES 4,49,058 4,49,058 5. NET AGRICULTURAL INCOME 11,73,992 5,63,442 6. AMOUNT DISALLOWED BY THE LD. A.O. INCOME TAXED AS NON-AGRICULTURAL INCOME 6,10,550 13.4 IT WAS CLAIMED THAT THE ASSESSEE SOLD POMEGRAN ATES (DALIMB) ON KG BASIS WHEREAS THE SALES ESTIMATION MADE BY THE AO I S ON THE BASIS OF NUMBER OF FRUITS. IT WAS ARGUED THAT THE SALE RATE ADOPTED BY THE ASSESSEE IS DULY SUPPORTED BY CASH MEMOS, WHEREAS, THE SALE RATE ADO PTED BY THE AO WAS WITHOUT ANY BASIS. FURTHER, THE AO HAS NOT PRO VIDED THE EVIDENCE REGARDING THE SALE RATE COLLECTED FROM THE MARKET AND HAS NOT GIVEN ANY OPPORTUNITY TO REBUT THE SAME IN THE ASSESSMENT PRO CEEDINGS, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 13.5 WITH REGARD TO THE EXTENT OF SALES MADE CLAIME D BY THE ASSESSEE, IT WAS ARGUED THAT VIDE ITS SUBMISSION DATED 12 TH DECEMBER 2005, THE APPELLANT HAD CLEARLY FURNISHED BEFORE THE ASSESSIN G OFFICER THAT THE CASH MEMOS PROVIDE THE REQUISITE DETAILS EXCEPT IN FEW C ASES THE NAME AND ADDRESS OF THE PURCHASER. THEREFORE, THE STAND TAK EN BY THE AO THAT, THE SALE OF POMEGRANATE (DALIMB) TO THE EXTENT OF RS.10 ,68,241 ARE NOT VERIFIABLE IS NOT CORRECT. REFERRING TO THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF R. B. JESARAM FATTECHAND VS. C IT 75 ITR 33 (BOM) IT WAS ARGUED THAT THE HONBLE COURT IN THE SAID DECIS ION HAS HELD THAT THE BOOKS OF ACCOUNTS CANNOT BE REJECTED MERELY BECAUSE THE ADDRESS OF THE PURCHASER IN THE CASH SALES WAS NOT MAINTAINED AND SUPPLIED ON DEMAND BY THE ITO. REFERRING TO THE DECISION OF THE ITAT JODH PUR BENCH IN THE CASE OF KAMAL KISHORE CHANDAK VS. ITO, REPORTED IN 103 TTJ 843 IT WAS ARGUED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THA T ASSESSEE HAVING 17 SUBMITTED COMPLETE DETAILS OF AGRICULTURAL HOLDING ALONG WITH THE ACTIVITIES CARRIED OUT BY HIM DURING THE RELEVANT PERIOD, WHIC H ARE DULY SUPPORTED BY REVENUE RECORD AND CERTIFICATE ISSUED BY THE AGRICU LTURAL OFFICER, PART OF THE AGRICULTURAL INCOME COULD NOT BE TREATED AS NON-AGR ICULTURAL INCOME AND NO ADHOC ADDITION COULD BE MADE. REFERRING TO THE DECI SION OF THE RAJKOT BENCH OF THE TRIBUNAL IN THE CASE OF SMT. BHANUBEN CHIMANLAL MALVIA VS. ITO REPORTED IN 100 TTJ 337 AND THE DECISION OF THE NAGPUR BENCH IN THE CASE OF ITO VS. RAJENDRA TIWARI ITAT NAGPUR BENCH 8 2 TTJ 347 (2003) IT WAS CONTENDED THAT THE ASSESSING OFFICER HAS ARBITRARILY MADE THE ADDITION BY TREATING THE AGRICULTURAL INCOME AS NON -AGRICULTURAL INCOME. 14. HOWEVER, THE LD.CIT(A) WAS NOT CONVINCED WITH T HE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE ADDITION M ADE BY THE ASSESSING OFFICER AMOUNTING TO RS.6,10,500/- BY TREATING THE AGRICULTURAL INCOME AS NON-AGRICULTURAL INCOME IS JUSTIFIED. THE RELEVANT OBSERVATION OF THE CIT(A) FROM PARA 5.2 TO 5.2.5 READ AS UNDER : 5.2 THE SUBMISSIONS OF THE APPELLANT ARE CAREFULLY EXA MINED WITH REFERENCE TO THE MATERIAL PLACED ON RECORD, AT THE OUTSET, IT IS TO BE MENTIONED THAT THERE WAS QUANTUM INCREASE IN THE NET AGRICULTURAL IN COME SHOWN FOR THE YEAR UNDER APPEAL AS AGAINST THE NET AGRICULTURAL INC OME DECLARED IN THE EARLIER YEARS AS UNDER: 5.2.1 AS COULD BE SEEN FROM THE ABOVE DETAILS FILED BY THE APPELLANT HIMSELF, THERE WAS AN ABNORMAL INCREASE IN THE AGRICULTURAL IN COME TO THE EXTENT OF ALMOST 300% DECLARED FOR THE YEAR VIS-A-VIS THE NET AGRICULTURAL INCOME DECLARED IN THE IMMEDIATELY PRECEDING YEAR AND EARL IER YEARS. IN TERMS OF QUANTITY ALSO, THERE WAS SUDDEN SPURT IN THE YIELD WHIC H WAS SHOWN AT 80,423 KGS AS AGAINST 44,703 KGS IN THE IMMEDIATELY PRE CEDING YEAR. IT IS NOT THE CASE OF THE APPELLANT THAT THE EXTENT OF THE AGR ICULTURAL LAND USED FOR PLANTING POMEGRANATE TREES HAS GONE UP DURING THE YEA R OR THE APPELLANT ACQUIRED NEW POMEGRANATE ORCHARDS YIELDING FRUITS DUR ING THE YEAR OR THERE WAS STEEP RISE IN THE PRICES OF POMEGRANATE FRUITS DURIN G THE YEAR. THE EXTENT OF LAND USED DURING THE YEAR REMAINED THE SAME AT 10.15 HECTARES AND THE PRICES OF POMEGRANATE SHOWED ONLY MARGINAL IN CREASE AS COMPARED TO LAST YEAR. THE ONLY CLAIM OF THE APPELLANT FOR SUC H ABNORMAL INCREASE IN THE AGRICULTURE INCOME IS THAT DURING THE YEAR THE P LANTS REACHED FIVE YEARS OF AGE AND FROM THE FIFTH YEAR ONWARDS THE POMEGRANA TE TREES PROVIDE MAXIMUM YIELD OF POMEGRANATES. BUT, IT IS GATHERED BY THE A.O. FROM THE DATA PUBLISHED BY MAHATMA PHULE KRISHI VIDYAPEETH, RA HURI ABOUT THE 18 YIELDING CAPACITY OF POMEGRANATE TREES THAT THE MAXI MUM FRUITS A TREE CAN BEAR IN A YEAR RANGES FROM 100 TO 150 OR IN TERM OF WEIGHT 15-20 KGS., THAT TOO UNDER BETTER MANAGEMENT PRACTICES AND SCIENTIFIC FARMING TECHNIQUES. AS OBSERVED BY THE ASSESSING OFFICER, THE FRUIT BEARING C APACITY IS INVERSELY PROPORTIONATE TO THE WEIGHT OF THE FRUIT I.E. IF TH E NUMBER OF FRUITS ARE MORE, THE WEIGHT OF EACH FRUIT WOULD BE LESS. THIS DATA IS A VAILABLE ON PUBLIC DOMAIN AND IS PERIODICALLY UPDATED BY THE SAID UNIVER SITY OF AGRICULTURE. IN THE CASE OF THE APPELLANT, IT WAS STATED THAT THE FARM WAS HAVING 2700 TREES AND EVEN PRESUMING THAT ALL THE TREES WERE OF THE SAME AGE OF FIVE YEARS AND YIELDING OPTIMUM FRUITS, THE MAXIMUM YIELD COULD BE ONLY 54,000 KGS. OF POMEGRANATES (27000 X 20). EVEN IF THE RATE IS CONSIDE RED AT RS.20/- PER KG., AS CLAIMED BY THE APPELLANT DURING THE YEAR, THE MAX IMUM GROSS RECEIPTS FROM THE SALE OF POMEGRANATE IS AT BEST TO THE EXTENT OF ONLY RS.10,80,000/-. IN FACT, AS POINTED OUT BY THE ASSESSING OFFICER, AS PER THE SALE PATTIES, THE SELLING RATE DURING THE YEAR WAS ONLY RS.2 TO 3 PER FR UIT WHICH IN TERMS OF WEIGHT IS ABOUT RS.10/- PER KG. THEREFORE, THE CLAIM MADE BY THE APPELLANT THAT HE EARNED GROSS AGRICULTURE INCOME OF RS. 16,23,0 50/- DOES NOT CARRY CONVICTION AND EVEN IF THE MAXIMUM YIELD OF POMEGRA NATES PER TREE AND THE BEST RATE PREVAILING DURING THE YEAR ARE CONSIDERED, THE GROSS AGRICULTURAL RECEIPTS IN THE CASE OF THE APPELLANT CANNOT EXCEED RS.10,80,000/-. IF THE RECURRING PRODUCTION COST OF RS. 4,49,058 SUCH AS LAND PREPARATION, INPUT APPLICATIONS, POWER AND LABOR, OTHER FARM OPERATIONS ETC.AS SHOWN BY THE APPELLANT ARE CONSIDERED, THE NET AGRICULTURAL INCOM E EARNED BY THE APPELLANT DURING THE YEAR WOULD BE MUCH LESS AND NOT CERTAINLY TO THE EXTENT OF RS.11,73,973/- AS SHOWN BY THE APPELLANT. WITH REGA RD TO THE CERTIFICATE OF HORTICULTURE EXPERT DATED 03 RD DECEMBER, 2005 FILED BEFORE THE ASSESSING OFFICER, THE SAID EXPERT VISITED THE FARM IN 2005 AND REPORTED THE CONDITIONS OF THE FARM AS ON THE DATE OF VISIT I.E. THREE YEARS A FTER THE YEAR UNDER CONSIDERATION. AS SEEN FROM THE CERTIFICATE, THE EXPE RT HAS ESTIMATED THE YIELD FROM THE FARM AT 80 TONNES, WHICH EXACTLY MATC HES WITH THE YIELD SHOWN BY THE APPELLANT, WITHOUT STATING ABOUT THE VAR IETY OF THE POMEGRANATE GROWN IN THE FARM, MAXIMUM YIELD OF A P ARTICULAR VARIETY, COMPARABLE YIELDS IN THE DISTRICT ETC. AND THEREFORE, THE ESTIMATE OF 80 TONNES IS NOT SCIENTIFIC AND WITHOUT PROPER BASIS. THERE FORE, THE CERTIFICATE OF THE SAID EXPERT CANNOT BE RELIED UPON FOR ESTIMATI NG THE AGRICULTURAL INCOME FROM THE FARM OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 5.2.2 FURTHER, IN THE CASE OF THE APPELLANT, ADMITTE DLY, SEPARATE BOOKS OF ACCOUNTS FOR AGRICULTURAL INCOME AND EXPENSES HAVE NO T BEEN MAINTAINED. IT IS ALSO AN ADMITTED FACT THAT OUT OF THE TOTAL GROSS RE CEIPTS OF RS.16,23,050/- CLAIMED BY THE APPELLANT, THE GROSS RECEIPTS TO THE EX TENT OF RS.10,68,241/- WERE SUPPORTED BY ONLY SELF MADE CASH MEMOS WHICH DID N OT CONTAIN NAME AND ADDRESS OF THE BUYERS. IN THE ABSENCE OF THESE DETAI LS AND PROPER BOOKS OF A/C, THE CLAIM OF THE APPELLANT THAT 70 TO 80% O F THE PRODUCE WAS SOLD AT THE FARM IN CASH TO LOCAL HAWKERS ETC CANNOT BE SUBJEC TED TO INDEPENDENT VERIFICATION. IT IS STRANGE THAT OUT OF CASH SALES OF R S.10,68,241/-, SALES TO THE EXTENT OF RS.8,80,201/- WERE MADE IN ONE MONTH I.E. JULY, 2002 WHEN OTHER SALES THROUGH COMMISSION AGENTS WERE MADE DURING THE PER IOD JULY 2002 TO OCTOBER 2002. ALL THESE ASPECTS INDICATE THAT SELF MA DE CASH MEMOS WERE PREPARED AT A STRETCH IN JULY, 2002 TO CLAIM THE INF LATED AGRICULTURAL INCOME. 5.2.3 ANOTHER IMPORTANT FEATURE TO BE NOTED IS THAT FROM THE NEXT YEAR ONWARDS, THERE WAS A DRASTIC FALL IN THE QUANTUM OF NE T AGRICULTURAL INCOME SHOWN BY THE APPELLANT, AS UNDER:- 19 F.Y. NET AGRICULTURAL INCOME DISCLOSED 2003-04 6,94,770 2004-05 6,74,026 2005-06 7,02,955 THE ONLY REASON STATED BY THE APPELLANT FOR SUCH A DRA STIC FALL IS THAT THE YIELD AND QUALITY OF THE FRUIT WAS AFFECTED DUE TO O ILY SPOT DECEASE IN THE SUBSEQUENT YEARS. IN SUPPORT OF THIS CLAIM, A CERTIFICAT E DATED 26/02/2009 FROM KARAMVEER KRUSHI TANTRA VIDYALAYA, BARSHI WAS FU RNISHED. AS SEEN FROM THE CERTIFICATE, THE PRINCIPAL OF THE VIDYALAY A VISITED FARM ONLY IN FEBRUARY 2009 AND HE CERTIFIED THAT THE CROP OF THE APPELLANT WAS ALSO AFFECTED BY THE SAID DECEASE IN THE YEAR 2004-05 AND 2005-06 I.E. HE VISITED THE FARM AFTER FIVE YEARS FROM THE YEAR IN WH ICH THE CROP WAS ALLEGEDLY AFFECTED BY THE SAID DISEASE AND THE CERTIFI CATE WAS ISSUED. EVEN OTHERWISE, IT IS NOT MENTIONED IN THE CERTIFICATE AS T O WHAT COULD BE THE MAXIMUM YIELD OF POMEGRANATE IN THE EARLIER YEARS AN D TO WHAT EXTENT THE CROP WAS DAMAGED BY THE SAID DECEASE. THE CERTIFICATE ONLY STATES THAT FROM THE FIFTH YEAR AND ONWARDS, POMEGRANATE TREES P RODUCE A LARGE NUMBER OF POMEGRANATES. BUT, NOWHERE IN THE CERTIFIC ATE, IS THE MAXIMUM YIELD PER TREE IN A YEAR IN THE AREA OF CULTIVATION INDICATED. THUS, THE CERTIFICATE IS TOO VAGUE TO BE RELIED UPON, PARTICUL ARLY, WHEN THE FARM OF THE APPELLANT WAS VISITED BY THE PRINCIPAL OF THE SAID INSTITUTION IN THE YEAR 2009. IN VIEW OF THE ABOVE, THE A.O. HAD NO OPTION BUT TO REASONABLY ESTIMATE THE AGRICULTURE INCOME HAVING REGARD TO THE AGRICULTURE INCOME SHOWN IN THE EARLIER YEARS, FORM 2C, YIELD STATISTICS OF POMEGRANAT E AVAILABLE FOR THE YEAR AND LOCAL ENQUIRIES. THE ESTIMATION OF AGRICULTU RAL PRODUCE DONE BY THE ASSESSING OFFICER AFTER MAKING LOCAL ENQUIRIES AND O N THE BASIS OF DATA PUBLISHED BY MAHATMA PHULE KRISHI VIDYAPEETH CANNOT B E SAID TO BE WITHOUT BASIS OR ARBITRARY. WHILE MAKING THE ESTIMATE, THE ASSESSING OFFICER HAS DULY CONSIDERED THE EXTENT OF THE LAND CU LTIVATED, THE MAXIMUM YIELD PER TREE, THE PRICE AT WHICH THE PRODUCE COUL D BE SOLD AT THE RELEVANT POINT OF TIME AND THE AGE OF THE TREES AND ALSO, THE DECLARATION OF AGRICULTURAL INCOME OF RS.7 LAKHS IN FORM 2C IN THE E ARLIER YEAR. AS COULD BE SEEN FROM THE PAPER BOOK FILED BY THE APPELLANT, DET AILED SHOW CAUSE NOTICES AND QUESTIONNAIRES WERE ISSUED BY THE ASSESSING OFF ICER AND IN COMPLIANCE TO THIS, ELABORATE REPLIES WERE FILED BY T HE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AND ADEQUATE OPPORTUNITY WAS GRAN TED TO THE APPELLANT TO MAKE HIS SUBMISSIONS ON VARIOUS ISSUES. THEREF ORE, THE CLAIM OF THE APPELLANT THAT THE PRINCIPLES OF NATURAL JUSTI CE AS WELL AS INHERENT RIGHTS OF THE APPELLANT AVAILABLE U/S.143(3) HAVE BEE N VIOLATED DOES NOT STAND TO REASON. IN THIS CONTEXT, REFERENCE CAN BE MAD E TO THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF GULAB CHA ND (252 ITR 719), WHEREIN IT IS HELD AS UNDER: KEEPING IN VIEW THE FACT THAT ACCOUNTS WERE NOT PROD UCED, THE VIEW TAKEN BY THE TRIBUNAL WAS NOT UNREASONABLE OR UNFAIR. IF THE A SSESSEE HAD PRODUCED ACCOUNTS AND SHOWN THE COST OF INPUTS AND THE AMOUNT OF OTHER EXPENSES AS ALSO THE TOTAL YIELD, IT MIGHT HAVE BEEN POSSIBLE TO F IND OUT THE EXACT INCOME. HOWEVER, SINCE IT WAS THE ASSESSEE'S OWN CASE THAT THE ACCO UNT WAS NOT PRODUCED AT THE RELEVANT TIME, THE VIEW TAKEN BY TH E TRIBUNAL COULD NOT BE SAID TO BE WRONG SO AS TO CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE APPEAL WAS TO BE DISMISSED. 20 5.2.3 AS REGARDS THE DECISIONS RELIED UPON BY THE APPEL LANT, IN THE CASE OF R.B. JESARAM FATTECHAND VS. CIT [75 ITR 33 (BOM)], THE HON 'BLE BOMBAY HIGH COURT HELD THAT THE BOOKS OF ACCOUNTS CANNOT BE REJEC TED MERELY BECAUSE THE ADDRESS OF THE PURCHASER IN THE CASH SALE MEMOS WAS NOT MA INTAINED AND NOT SUPPLIED ON DEMAND BY THE ASSESSING OFFICER. THE RELIANC E PLACED BY THE APPELLANT ON THIS DECISION IS MISPLACED. THAT WAS A CASE WHERE THE REGULAR BOOKS OF ACCOUNTS WERE MAINTAINED AND THE INCOME WAS O THERWISE TAXABLE AND IN THAT CONTEXT, THE HON'BLE COURT HELD THAT ME RELY BECAUSE THE NAME AND ADDRESS OF THE PARTIES TO WHOM CASH SALES WERE MADE IS NOT MENTIONED IN THE CASH BILLS, BOOKS OF ACCOUNTS CANNOT BE REJECTED. IN TH E PRESENT CASE, ADMITTEDLY, NO BOOKS OF ACCOUNTS ARE MAINTAINED FOR A GRICULTURAL INCOME AND EXPENDITURE AND THE ENTIRE INCOME FROM CASH SALES WAS CLAIMED AS EXEMPTED INCOME AND MOST OF THE CASH BILLS WERE RAISED IN ONLY O NE MONTH, I.E. IN JULY 2002. AS ALREADY MENTIONED EARLIER, THE OTHER IMPORT ANT DISTINGUISHING FEATURE IN THE PRESENT CASE IS THAT THERE WAS QUANTUM J UMP IN THE AGRICULTURAL INCOME AS COMPARED TO THE EARLIER YEARS AND FOR THIS REASON, IT IS ALL THE MORE NECESSARY FOR THE APPELLANT TO PROVE THE THAT THE CLAIM OF AGRICULTURAL INCOME IS GENUINE AND ALSO JUSTIFY SUCH STE EP RISE IN THE SAID INCOME. BUT, THE APPELLANT FAILED TO SUBSTANTIATE THE CLAIM OF CASH SALES WITH COGENT AND RELIABLE EVIDENCES. THEREFORE, IN MY HUMB LE OPINION, THE DECISION IN THE ABOVE CASE IS NOT APPLICABLE TO THE FACTS OF TH E PRESENT CASE. 5.2.3.1 IN THE CASE OF KAMAL KISHOR CHAND VS. ITO REPO RTED IN 103 TTJ 843, THE ASSESSEE HAD SHOWN REASONABLE AGRICULTURAL INCOME VIS -A-VIS THE AGRICULTURAL LAND HOLDINGS AND IN THAT CONTEXT, THE JODHPUR BENCH OBSERVED THAT MERELY BECAUSE THE ASSESSEE HAS SHOWN AGRICULTURAL IN COME FOR THE FIRST TIME, THE SAME CANNOT BE TREATED AS INCOME FROM UNDISC LOSED SOURCES. THIS CASE IS ALSO DISTINGUISHABLE ON FACTS. FIRSTLY, THERE WAS A N OBSERVATION IN THE SAID CASE THAT THE APPELLANT HAD SHOWN REASONABLE AGRIC ULTURAL INCOME FROM THE AGRICULTURAL LAND HOLDINGS. SECONDLY, THERE IS NO INDICATION IN THAT CASE THAT THE AGRICULTURAL PRODUCE WAS SOLD THROUGH SELF-MA DE CASH SALE BILLS WITHOUT CONTAINING NAME AND ADDRESS OF THE BUYERS. THI RDLY, THERE WAS ALSO AN OBSERVATION THAT THE ASSESSEE SUBMITTED COMPLETE DETAI LS OF ACTIVITIES CARRIED OUT BY HIM DURING THE YEAR. HAVING REGARD TO ALL THESE FACTORS, THE JODHPUR BENCH HELD THAT NO ADHOC ADDITION COULD BE MADE BY TREATING A PART OF THE AG RICULTURAL INCOME AS NON- AGRICULTURAL INCOME. IN THE CASE OF THE APPELLANT, B Y NO STRETCH OF IMAGINATION, IT CAN BE SAID THAT THE 300% INCREASE IN THE AGRICULT URAL INCOME DURING THE YEAR FROM THE SAME LAND HOLDING IS REASONABLE. THEREFO RE, THE SAID DECISION IS OF NO ASSISTANCE TO THE APPELLANT. 5.2.3.2 IN THE CASE OF ITO VS. RAJENDRA TIWARI REPORT ED IN 82 TTJ 347, THE NAGPUR BENCH HELD THAT THE ASSESSING OFFICER HAS NOT BRO UGHT OUT ANY EVIDENCE ON RECORD FOR DISBELIEVING 50% OF THE AGRIC ULTURAL INCOME RETURNED BY THE ASSESSEE AND THERE WAS NO EVIDENCE ON RECORD TO SH OW THAT 50% OF THE AGRICULTURAL INCOME IS IN FACT, UNDISCLOSED INCOME EAR NED BY THE ASSESSEE DURING THE TWO RELEVANT YEARS. IN THAT CASE, IT WAS H ELD THAT SINCE TRANSACTION WAS DONE THROUGH INTERMEDIARY, ASSESSEE, AS A SELLER, COUL D NOT BE HELD RESPONSIBLE FOR DEFECT IN RECEIPTS OBTAINED FROM PURCH ASER THROUGH INTERMEDIARY AS ASSESSEE DID NOT HAVE KNOWLEDGE ABOUT P URCHASER. IN THE PRESENT CASE, THE APPELLANT WAS EMPHATICALLY STATING AL L ALONG THAT 70% OF THE PRODUCE WAS SOLD AT THE FARM SITE WITHOUT ANY INTERMED IARIES AND IN SUCH A SITUATION, THE APPELLANT HIMSELF WAS RESPONSIBLE FOR ISSUI NG SUCH DEFECTIVE SALE BILLS WITHOUT THE NAME AND ADDRESS OF THE HAWKERS E TC. THEREFORE, THE SAME DECISION, INSTEAD OF HELPING THE CASE OF THE APPEL LANT, SUPPORTS THE FINDING OF THE ASSESSING OFFICER. 21 5.2.4 AT THIS JUNCTURE, IT MAY ALSO BE RELEVANT TO ME NTION THAT DURING THE YEAR, THE APPELLANT HAS MADE A GIFT OF RS.3 LAKHS TO HIS SPOUSE , PERFORMED HIS DAUGHTER'S MARRIAGE AND ALSO REPAID LOAN TO APPELLANT 'S HUF WHICH NECESSITATED ADDITIONAL FUNDS AND IT APPEARS THAT THE UNDISCLOSED INCOME OF THE APPELLANT WAS INTRODUCED BY WAY OF INFLATED AGRI CULTURAL INCOME TO MEET THE SAID OUTGOINGS. 5.2.5 FOR THE FOREGOING REASONS, I AM OF THE CONSIDERE D OPINION THAT THE ASSESSING OFFICER IS JUSTIFIED IN RESTRICTING THE NET AGRI CULTURAL INCOME TO RS.5,63,423/- (RS.11,73,973 - 6,10,550) AND TREATING A SUM OF RS.6,10,550/- AS NON-AGRICULTURAL INCOME. THE NET AGRICULTURAL INC OME ESTIMATED BY THE ASSESSING OFFICER IS ABOUT 20% MORE THAN THE NET AGRICU LTURAL INCOME SHOWN BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR WHICH , BY ANY STANDARDS, IS QUITE REASONABLE WHEN THERE IS NO INCREASE IN THE AR EA CULTIVATED AND NO NEW ORCHARDS WERE ACQUIRED BY THE ASSESSEE DURING THE YE AR. ACCORDINGLY, IT IS HELD THAT THE ADDITION OF RS.6,10,500/- MADE BY TH E AO BY TREATING THE AGRICULTURAL INCOME TO THAT EXTENT AS NON-AGRICULTUR AL INCOME IS JUSTIFIED AND DOES NOT CALL FOR ANY INTERFERENCE. GROUNDS OF APPEA L 1(C), 4 AND 5 FAIL. 14.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 15. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE IMPUGNED GROUNDS IS REGARDING TREATMENT OF RS.6,10,055/- AS NON-AGRICUL TURAL INCOME OUT OF RS.11,73,973/- CLAIMED AS AGAINST AGRICULTURAL INC OME BY THE ASSESSEE. WE FIND THE ASSESSEE DURING THE IMPUGNED YEAR HAS CLAI MED GROSS AGRICULTURAL INCOME OF RS.16,23,050/-. AFTER INCURRING EXPENSES TO THE TUNE OF RS.4,49,077/- HE DECLARED NET AGRICULTURAL INCOME O F RS.11,73,973/-. WE FIND THE ASSESSING OFFICER, KEEPING IN MIND THE NAT URE OF ACTIVITIES AND PAST AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AND AF TER CONDUCTING LOCAL ENQUIRIES, DETERMINED THE GROSS AGRICULTURAL INCOME AT RS.10,12,500/- AS AGAINST RS.16,23,050/- DECLARED BY THE ASSESSEE AND TREATED THE DIFFERENTIAL AMOUNT OF RS.6,10,550/- AS NON-AGRICULTURAL INCOME AND BROUGHT THE SAME 22 TO TAX AS INCOME FROM OTHER SOURCES WHICH WAS UPHEL D BY THE LD.CIT(A) IN HIS ELABORATE ORDER. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT IT HAS MAINTAINED PROPER BOOKS OF ACCOUNTS AN D THE AGRICULTURAL INCOME IS SUPPORTED BY PROPER CASH MEMOS EXCEPT IN FEW CAS ES. FURTHER, NO MISTAKE WAS FOUND BY THE ASSESSING OFFICER IN THE B OOKS OF ACCOUNTS, SALE BILLS, EXPENDITURE VOUCHERS ETC. IT IS ALSO THE SU BMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER HAS TAK EN THE YIELD OF POMEGRANATES ON THE BASIS OF NUMBER OF POMEGRANATES PER TREE WHEREAS THE ASSESSEE HAS CONSIDERED THE YIELD IN KG BASIS PER T REE. 15.1 WE FIND IN THE INSTANT CASE THERE IS A SUDDEN JUMP IN THE NET AGRICULTURAL INCOME OF THE ASSESSEE WHICH WAS RS.81 ,124/- DURING F.Y. 1998-99, RS.1,12,652 IN F.Y. 1999-2000, RS.1,87,804 DURING F.Y. 2000-01 AND RS.4,35,750/- DURING F.Y. 2001-02. WE FIND THE INCOME HAS SUDDENLY GONE UP TO RS.11,73,993/- DURING F.Y. 2002-03. EVE N THOUGH THE SUBMISSION OF THE ASSESSEE THAT DUE TO GOOD HARVEST AND INCREASE IN PRICE, THE AGRICULTURAL INCOME HAS GONE UP DURING THE YEAR , HOWEVER, WE FIND THE SAME TO BE ON THE HIGHER SIDE ESPECIALLY WHEN THE A REA OF AGRICULTURAL LAND IS SAME, I.E. 10.15 HECTARES AND THE NUMBER OF TREE S ALSO REMAINED THE SAME AT 2700. WE FIND THE YIELD IN THE PRECEDING YEAR W AS 44704 KGS WHEREAS THE SAME HAS GONE UP TO 80423 KGS DURING THE YEAR. THEREFORE, IT APPEARS TO BE SOMEWHAT UNREASONABLE. WE FURTHER FIND THAT OUT OF TOTAL GROSS RECEIPT OF RS.16,23,050/- , GROSS RECEIPTS TO THE T UNE OF RS.10,68,241/- WERE SUPPORTED BY ONLY SELF-MADE VOUCHERS WITHOUT CONTAI NING THE NAME AND ADDRESS OF THE BUYERS, A FACT BROUGHT ON RECORD BY THE CIT(A) AND NOT CONTROVERTED BY THE ASSESSEE. UNDER THESE CIRCUMST ANCES, THE PLEA OF THE ASSESSEE THAT THE GROSS RECEIPTS FROM AGRICULTURAL ACTIVITIES AT RS.16,23,050/- 23 DURING THE YEAR IS CORRECT CANNOT BE ACCEPTED AS TR UE. AT THE SAME TIME, WE FIND THE ASSESSING OFFICER, WHO CONDUCTED EXTENSIVE ENQUIRIES IN THE LOCAL MARKET AND OBTAINED A REPORT FROM THE AGRICULTURAL UNIVERSITY, MAHATMA PHULE KRUSHI VIDHYAPEETH REGARDING THE YIELDING CAP ACITY OF THE TREES, QUALITY OF FRUIT AND ITS MARKETABILITY ETC. NEVER C ONFRONTED THE SAME TO THE ASSESSEE. FURTHER, THE AO INSTEAD OF GOING FOR SAL E OF POMEGRANATES IN KGS PREFERRED TO ADOPT THE SAME AS 2.50 PER FRUIT. FUR THER, HE HAS ALSO NOT DISTURBED THE AGRICULTURAL EXPENSES INCURRED BY THE ASSESSEE. THE AO HAS PROCEEDED TO ESTIMATE THE YIELD OF POMEGRANATES UNI FORMALLY AT 150 POMEGRANATES PER TREE FOR 2700 TREES. THEREFORE, T HE DETERMINATION OF AGRICULTURAL INCOME BY THE AO IN OUR OPINION WAS AL SO ON ESTIMATE BASIS WHICH HAS BEEN UPHELD BY THE CIT(A). FROM THE VARI OUS DETAILS FURNISHED BY THE ASSESSEE, WE FIND IN THE SUBSEQUENT YEARS TH E NET AGRICULTURAL INCOME OF THE ASSESSEE WAS DECLARED AT RS.6,94,770/- FOR F .Y. 2003-04, RS.6,74,026 IN THE F.Y. 2004-05 AND RS.7,02,955/- IN THE F.Y. 2 005-06. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T A REASONABLE ESTIMATE SHOULD BE MADE AND NEITHER THE INCOME DECLARED BY T HE ASSESSEE NOR THE INCOME DETERMINED BY THE AO CAN BE ACCEPTED AS CORR ECT. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , THE NET AGRICULTURAL INCOME OF RS.7,68,171/- FOR THE IMPUGNED ASSESSMENT YEAR, IN OUR OPINION, WILL MEET THE ENDS OF JUSTICE WHICH IS DETERMINED O N THE BASIS OF THE AVERAGE NET AGRICULTURAL INCOME OF F.YRS. 2001-02, 2002-03 AND 2003-04 WHICH ARE AS UNDER : F.Y. AMOUNT 2001-02 4,35,750/- 2002-03 11,73,993/- 2003-04 6,94,770 23,04,513 / 3 = 7,68,171 24 15.2 THUS, THE GROSS AGRICULTURAL INCOME OF THE ASS ESSEE COMES TO RS.12,17,248, I.E. NET INCOME OF RS.7,68,171/- AND EXPENDITURE OF RS.4,49,077/-. THUS, THE NON-AGRICULTURAL INCOME O F THE ASSESSEE COMES TO RS.4,05,802/- (I.E.16,23,050 12,17,248) AS AGAINS T RS.6,10,550/- DETERMINED BY THE ASSESSING OFFICER AND UPHELD BY T HE CIT(A). THUS, THE ASSESSEE GETS A RELIEF OF RS.2,04,748/-. THE ASSES SING OFFICER SHALL VERIFY THE ABOVE CALCULATION. THE GROUND RAISED BY THE AS SESSEE IS ACCORDINGLY PARTLY-ALLOWED. 16. GROUND OF APPEAL NO. 5 RELATES TO DENIAL OF EXE MPTION OF RS.24,000/- U/S.10(17(III) OF THE I.T. ACT. 16.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSES SING OFFICER DID NOT GRANT EXEMPTION U/S. 10(17(III) AMOUNTING TO RS.24, 000/- OUT OF THE SALARY RECEIVED BY THE ASSESSEE AS MEMBER OF PARLIAMENT DU RING THE YEAR. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 16.2 WE FIND THE ASSESSEE IN ITS PAPER BOOK HAS FIL ED A COPY OF LETTER DATED 16-05-2006 WRITTEN BY THE ITO, INCOME TAX CELL (PHA ), NEW DELHI TO THE ASSESSEE AS PER REQUEST MADE BY THE ASSESSEE AND A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 14 TO 15. THE INCOME TAX OFFIC ER IN THE SAID LETTER HAS CLEARLY MENTIONED THAT EXEMPTION OF RS.2000/- PER M ONTH IS ALLOWABLE TO THE ASSESSEE AS PER PROVISIONS OF SECTION 10(17) OF THE I.T. ACT. IN VIEW OF THE LETTER ADDRESSED BY THE ITO, INCOME TAX CELL (P HA), NEW DELHI TO THE ASSESSEE WITH A COPY TO THE ASSESSING OFFICER OF TH E ASSESSEE WE HOLD THAT ASSESSEE IS ENTITLED TO EXEMPTION OF RS.2,000/- PER MONTH U/S.10(17)(III) OF THE I.T. ACT. ACCORDINGLY, GROUND OF APPEAL NO.5 I S ALLOWED. 25 17. GROUNDS OF APPEAL NOS. 6 AND 7 BY THE ASSESSEE READ AS UNDER : 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4,53,066/- MADE BY THE LD. A.O. ON THE GROUND OF ALLEGED UNEXPLAINED EXPENDITURE OF RS.4,53,066/- INCURRED BY THE APPELLANT FOR AIR TICKETS FOR TRAVEL ETC. [FO R WHICH THE APPELLANT RECEIVED REIMBURSEMENT AS M.P.]. THE SAID ADDITION BEI NG ARBITRARY, PERVERSE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DE LETED. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, IT MAY PLEASE BE HELD THAT DURING THE RELEVANT YEAR THE APPELLANT DI D BORROW AN AMOUNT OF RS.3,70,000/- FROM HIS SON MR. SHRIPAD SHIVAJIRAO KAMB LE FOR INCURRING AIR TRAVEL AND OTHER EXPENSES AND THE NECESSARY CONSEQUENTIA L RELIEFS IN THE MATTER MAY PLEASE BE GRANTED TO THE APPELLANT. 17.1 AFTER HEARING BOTH THE SIDES WE FIND THE ASSES SING OFFICER DISALLOWED AN AMOUNT OF RS.4,53,066/- BEING REIMBURSEMENT OF T RAVELLING EXPENSES ON THE GROUND THAT THE ASSESSEE HAS INCURRED THE EXPEN DITURE WHICH WAS SUBSEQUENTLY REIMBURSED BY THE GOVERNMENT AND THE A SSESSEE HAD NO VALID SOURCE TO EXPLAIN SUCH SOURCE. WHILE DOING SO, HE REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE THAT THE EXPENSES WERE INCURR ED OUT OF FUNDS OF HIS SON. WE FIND THE LD.CIT(A) ALSO REJECTED THE EXPLA NATION OF THE ASSESSEE THAT THE CAPITAL OF HIS SON SHOWS A CREDIT OF RS.6, 50,930/- BY WAY OF AGRICULTURAL INCOME AND DEBIT OF RS.3,70,000/- BY W AY OF WITHDRAWALS AND THE AMOUNT WITHDRAWN OF RS.3,70,000/- WAS UTILISED FOR THE PURPOSE OF TRAVELLING EXPENSES. SINCE THE AMOUNT OF RS.3,70,0 00/- WAS NOT REFLECTED IN THE CAPITAL ACCOUNT OR BALANCE SHEET OF THE ASSESSE E THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2000-01 AND VARIOUS OT HER DECISIONS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. WE FIND TH E ABOVE ISSUE IS IDENTICAL TO GROUND OF APPEAL NO. 2 IN ITA NO.1496/ PN/2011. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEEN ALLOWED. FOLLOWING THE SAME RATIO, WE HOLD THAT TH E ASSESSEE SHOULD BE GIVEN RELIEF OF RS.3,70,000/- OUT OF EXPENDITURE OF RS.4,53,066/- BEING THE AMOUNT AVAILABLE TO THE SON OF THE ASSESSEE WHICH W AS SHOWN AS WITHDRAWAL 26 FROM HIS CAPITAL ACCOUNT AND UTILISED BY THE ASSESS EE FOR HIS AIR TICKETS ETC. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY PA RTLY ALLOWED. 18. GROUND OF APPEAL NO.8 BEING GENERAL IN NATURE I S DISMISSED. 19. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18-02-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE, DATED : 18 TH FEBRUARY 2014 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-III, PUNE 4. THE CIT-III, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE