Hardev Singh, Mohali V. ITO, W-6(4), Mohali

ITA 1610/CHANDI/2019

AI Insights

The case revolves around the reassessment of income under section 147 of the Income Tax Act, 1961, concerning the assessee, Shri Hardev Singh, who was accused of underreporting his income for the assessment year 2010-11. The Income Tax Officer (ITO) initiated reassessment proceedings, leading to the addition of Rs. 13,90,000 to the assessee's income, which he claimed was from agricultural activities and the sale of poplar trees. The CIT(A) partially relieved the assessee by reducing the addition to Rs. 9,00,000. The Tribunal, however, found that the assessee had provided adequate evidence to substantiate his claims, leading to the allowance of his appeal and the deletion of the remaining addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133745 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 08-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 25-12-2019
• Other Referred Cases: Shri Mahavir Singh Vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147; 148

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ , च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC CHANDIGARH BEFORE: SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ ITA No. 1610/CHD/2019 Assessment Year : 2010-11 Shri Hardev Singh, S/o Shri Dil Singh, Village Padiala, PO Sahauran, Tehsil-Kharar, Distt.Mohali. बनाम VS The ITO, Ward 6(4), Mohali. 瀡थायी लेखा सं./PAN /TAN No: AFDPS0451F अपीलाथ牸/Appellant 灹瀄यथ牸/Respondent िनधा榁琇रती क琉 ओर से/Assessee by : Shri Nalin Nohria, CA and Shri B.K.Nohria, CA राज瀡व क琉 ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR तारीख/Date of Hearing : 09.01.2023 उदघोषणा क琉 तारीख/Date of Pronouncement : 18.01.2023 आदेश आदेशआदेश आदेश/ORDER This appeal has been filed by the assessee against the order of ld. CIT(A)-2, Chandigarh dated 30.08.2019 wherein the assessee has taken the following revised grounds of appeal: “Ground No. 1 That on the facts and in the circumstances of the case the Learned CIT (A)-2 Chandigarh has wrongly upheld the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961. Ground No. 2 That on the facts and in the circumstances of the case the Learned CIT (A)-2 Chandigarh has erred in law and facts in upholding the contention of the learned A O in adding Rs.9,00,000/- inspite of complete documents alongwith reasons submitted. Ground No. 3 That on the facts and in the circumstances of the case the Learned CIT (A)-2 Chandigarh has erred in law and facts in upholding the contention of the learned A O has not reduced the agricultural income as disclosed in the return of income ITA 1610 /CHD/2019 A.Y. 2010-11 Page 2 of 9 filed pursuant to notice u/s 148 and accepted by the learned A O in the assessment order of Rs.5,56,000/-.” 2. Briefly the facts of the case are that the case of the assessee was reopened u/s 147 by issuing notice u/s 148 dated 24.03.2017 for escapement of income amounting to Rs.13,90,000/-. In response, the assessee filed his return of income declaring total income of Rs.1,77,790/-and agriculture income of Rs.5,56,000/-. During the course of assessment proceedings, the assessee was issued a Show Cause Notice and required to explain the source of cash deposits of Rs.13,90,000/- in his bank account maintained with HDFC Bank, Kurali. In response, the assessee submitted that the deposits were made out of the sale proceeds of wheat, bajra and popular trees. The assessee was further required to furnish documentary evidence regarding the sale of wheat, bajra and popular trees as well as total land holding which the assessee failed to furnish and in view of the same, the source of cash deposit was held by AO as unexplained and same was treated as income of the assessee from undisclosed sources and addition of Rs.13,90,000/- was made in the hands of the assessee. 3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has allowed part relief to the assessee to the extent of Rs.4.90 lacs and the remaining additions have been sustained and the relevant findings of the ld. CIT(A) are ITA 1610 /CHD/2019 A.Y. 2010-11 Page 3 of 9 contained at para 17 of the impugned order which reads as under: “17. Coming to the main Ground of Appeal No.l against the addition of Rs. 13.90 Lakhs the following facts are relevant:- i. The contents of J form annexed by the assessee connote payments received amounting to Rs. 2.10 Lakhs (wheat) on 06.04.2009, Rs.88,200/- (Bajra) on 20.08.2009 and Rs.2,00,850/- (Rice) on 01.09.2009. ii. Additionally there is a joint confirmation from Sh. Harchand Khan s/o. Sh. Nasib Khan & Gurinder Singh s/o. Sh. Naib Singh regarding purchase of poplar trees from Sh. Hardev Singh s/o. Sh. Gurdial Singh on several dates (14 times during the year), evidencing small payments each time, totaling to Rs.9 lakhs. Evidence has also been filed regarding ownership of land that have been sold subsequently by the assessee. Evidence in the form of Jamabandi and Girdwari have been filed (English translation have also been provided). The said evidences however do not certify cultivation poplar trees. The assessee has cited the ITAT, Chandigarh bench's order dated 01.08.2019 in ITA No. 281/Chd/2019 where the bench has recorded that if poplar trees are grown on the periphery of the fields, then the same fact is not mentioned in the Girdwari. The said ratio does not help the assessee's case since no evidence of poplar being planted on the periphery has been provided. In fact the assessee vide letter dated 29.08.2019 has claimed cultivation of poplar in an area of 6.3 acres. In that light Girdwari must depict such details. Also, it is commonly known that the poplar trees mature over a period of 6 to 7 years and the same if matured together are sold in one go rather than in a piecemeal manner as is the case with the claims made by the assessee. In light of the above, the confirmation provided by two unrelated persons as buyers of the poplar trees in the absence of any other details containing their PAN, Assessment details (it must be remembered that the wood of the poplar tree are invariably put to commercial use) do not assist the case of the assessee. It is also relevant to quote, from the assessment order, the explanation given for the cash deposit:- "During the course of assessment proceedings, the assessee was required to explain the sources of cash deposits of Rs. 13,90,000/-. It was stated the deposits were made out of the sale proceeds of wheat, bajra and poplar trees as per details given below:- 10.04.2009 Wheal and poplar 3,00,000/- 28.08.2009 Bajra and poplar 2,00,000/- 01.09.2009 Wheat and poplar 6,50,000/- 28.11.2009 Wheat and poplar 2,40,000/- 13,90,000/- The details are not in congruity with the seasonal sales pattern at the end of the harvest seasons. From the details it is seen that wheat is seen to have been sold beyond normal harvest times. Also there is mention of sale of rice in the J form a product that was not taken as a source before the assessing officer. (iii) In light of the above the explanation given on account of sale of poplar trees needs to be negated. The J form in respect of sale of cereals, even though at variance ITA 1610 /CHD/2019 A.Y. 2010-11 Page 4 of 9 with the details given before the AO, is accepted given the fact that the assessee is in possession of agricultural land and undertakes cultivation. The amounts contained therein go on to explain Rs.4.90 lakhs of cash deposits in the present case. 17.1 In light of the above, the issue raised in Grounds of Appeal No.l is partly allowed. 4. Against the said findings and the order of the ld. CIT(A), the assessee is in appeal before us. During the course of hearing, ld. AR reiterated the submissions made before the lower authorities. It was submitted that the fact that the poplar trees were grown on the specified land holding owned by the assessee is not in dispute. However, ld. CIT(A) has failed to appreciate that the popular trees were only planted on the periphery of its agriculture land and not on the whole of the agriculture land measuring 6.3 acres and therefore, the findings of the ld. CIT(A) are not borne out from the facts on record. It was further submitted that the necessary confirmations of the persons who have purchased the popular trees from the assessee have been submitted during the course of assessment proceedings and which have not been disputed by the Revenue. In this regard, our attention was drawn to the copy of the affidavit which is placed at page 17 of the assessee's Paper Book. Reliance was also placed on the Co-ordinate Chandigarh Benches decision in the case of Shri Mahavir Singh Vs ITO (in IT A No . 281/CHD/2019 date d 01.08.2019) wherein relevant findings are contained in para 8 of the said order, which reads as under : ITA 1610 /CHD/2019 A.Y. 2010-11 Page 5 of 9 “8. I have considered the submissions of both the parties and perused the material available on the record. In the present case it appears that the A.O. made the addition and rejected the explanation of the assessee that the Popular trees were also planted on the periphery of the field having the crops of wheat and paddy. The A.O. did not doubt the crops sown by the assessee but had not accepted this contention that the Popular trees planted on the land and on the periphery of the field were sold for Rs. 20.65 lakhs. Ld. CIT(A) estimated the agriculture income at Rs. 11,00,000"/- from 27.5 Acres of land @ Rs. 40,000/- per acre and also accepted the income from sale of Popular trees at Rs. 2,00,000/- on estimate basis. However while accepting the income at Rs. 2,00,000/- no cogent reason has been given, on the contrary the assessee furnished the affidavit of Shri Ziledar Ali and Shri Mohan Walia copies of which are placed at page 6 to 8 of the assessee's compilation. In the said affidavits both the persons accepted that they purchased Popular trees from the assessee. Shri Ziledar Ali stated in his affidavit that he purchased the Popular trees for Rs. 10.40 lakhs, similarly Shri Mohan Walia in his affidavit stated that he purchased the Popular trees for a sum of Rs. 10.25 Lakhs. Shri Mohan Walia also accepted in his statement before the A.O. that he purchased Popular trees from the assessee for approximately Rs. 10,00,000/-. The assessee also furnished the copy of Girdawari before the A.O. and mentioned the Khasra number, on which the Popular trees were planted. In the present case, the A.O. while observing that trees were already cut in the earlier years had not brought any evidence on record to rebut this contention of the assessee that the Popular trees were already planted on the periphery of the field. Therefore, by considering the totality of the facts, particularly the acceptance given by the purchasers of the Popular trees in their respective affidavits, I am of the view that the sale proceeds amounting to Rs. 20.65 Lakhs from Shri Ziledar Ali and Shri Mohan Walia apart from the agriculture income estimated by the Ld. CIT(A) at Rs. 11,00,000/- was sufficient to make the deposit of Rs. 26,68,850/- in the bank account of the assessee. In that view of the matter the addition sustained by the Ld. CIT(A) is deleted.” 5. It was accordingly, submitted that the additions made and confirmed by the ld. CIT(A) be directed to be deleted. 6. Per contra, the ld. DR relied on the finding of the ld. CIT(A). It was submitted that part relief of Rs.4.90 lacs has already been provided to the assessee and the balance amount of Rs.9 lacs was disallowed since the assessee failed to substantiate the source of cash deposit with any documentary evidence. ITA 1610 /CHD/2019 A.Y. 2010-11 Page 6 of 9 Regarding decision of the Co-ordinate Chandigarh Benches in the case of Shri Mahavir Singh relied upon by the ld. AR, it was submitted that the facts of the said case are distinguishable from the present case. It was submitted that in the said case, the affidavits of the purchasers were produced and purchasers were also physically produced before the AO who recorded their statements. However, in the present case, only confirmation from purchaser is filed without providing any details regarding their PAN and Income Tax Return. It was further submitted that in the said case, the poplar trees were grown on the periphery while in the present case, the assessee has himself admitted to have cultivated the poplar trees in an area measuring 6.3 acres which should have appeared in the Girdwari Report. It was, accordingly, submitted that there is no infirmity in the findings of the ld. CIT(A) and the same should be confirmed. 7. Heard the rival contentions and purused the material available on record. The factum of assessee being an agriculturist owing 6.3 acres of land on which he has carried out agricultural activities during the year under consideration is not in dispute. The factum of disclosure of agriculture income in the return of income has also not been disputed by the AO. The ld CIT(A) considering the aforesaid and other documentation submitted gathered by the assessee in form of J Forms has accepted the nature and source of deposit of cash totaling to Rs 4.90 lacs in ITA 1610 /CHD/2019 A.Y. 2010-11 Page 7 of 9 the assessee’s bank account on account of agriculture produce. However, contention of the assessee that he has also sold popular trees which were grown on the periphery of his land, and has earned an amount of Rs 9 lacs which has also been deposited in his bank account has not been accepted. In support of his contention, the assessee has submitted joint affidavit/confirmation from Shri Harchand Khan and Gurinder Singh which has also not been accepted. We have gone through the submissions filed by the assessee before the ld CIT(A) wherein the assessee has submitted the joint affidavit/confirmation from Shri Harchand Khan and Gurinder wherein they have categorically stated that they have purchased popular trees from the assessee for further sale and have made payment in cash totaling to Rs 9,00,000/- besides photocopies of popular trees grown and sold by the assessee, cash flow statement of his agricultural activities have also been submitted. Nothing has been stated as to what further explanation or documentation is required from the assessee especially given the fact that he is not mandated under law to maintain any regular books of accounts. In my view, the assessee has discharged the initial onus cast on him explaining the nature and source of cash deposit being proceeds of sale of popular trees. Where the Revenue authorities disbelief the contents of the affidavit/confirmation, merely stating so and expressing such ITA 1610 /CHD/2019 A.Y. 2010-11 Page 8 of 9 disbelief is not sufficient. The PAN number cannot be held to be proof of identity of the buyer. What was stopping the Revenue authorities in calling these persons whose name, address and Aadhar number are on record and recording their statement. There is nothing on record in respect of any steps taken in this regard including any direction to the assessee to produce these persons. There is nothing on record that the assessee was involved in any other activities other than agriculture activities. The Revenue has to bring some positive evidence rebutting the explanation so furnished and the contents of the affidavit from the buyers so placed on record. In absence thereof, the explanation of the assessee which is duly corroborated cannot be negated and the onus cannot be shifted back on the assessee. Similar findings have been recorded by the Co-ordinate Chandigarh Benches in the case of Shri Mahavir Singh Vs ITO (supra) which supports the case of the assessee. 8. In light of aforesaid discussion and in the peculiar facts and circumstances of the present case, the addition so confirmed by the ld CIT(A) amounting to Rs 9 lacs is hereby directed to be deleted. In the result, ground no. 2 of assessee’s appeal is allowed in favour of the assessee. ITA 1610 /CHD/2019 A.Y. 2010-11 Page 9 of 9 9. In view of our aforesaid findings on merits of the case where we have directed to delete the addition, Ground no. 1 challenging the legality of the reassessment proceedings has become academic in nature and hence, the same is dismissed as infructuous. 10. Ground no. 3 was not pressed by the ld AR during the course of hearing, hence, the same is dismissed as not pressed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 18 th January, 2023. Sd/- (VIKRAM SINGH YADAV) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. आयकर आयु猴 (अपील)/ The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar