Shri Rameshbhai F. Patel,HUF, Dist.Baroda V. The Income tax Officer,Ward-2(2), Baroda

ITA 1742/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1722 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 16-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: M J SHAH
• Keywords: Unexplained cash credit; Unexplained expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.1739/AHD/2008 [ASSTT. YEAR : 2004-2005] PRAFULBHAI C. PATEL, HUF C/O. P.C. PATEL & CO. N.H.NO.8, DASHRATH DIST: BARODA. VS. ITO, WARD-2(2) BARODA. ITA NO.1742/AHD/2008 [ASSTT. YEAR : 2004-2005] RAMESHBHAI F. PATEL, HUF C/O. P.C. PATEL & CO. N.H.NO.8, DASHRATH DIST: BARODA. VS. ITO, WARD-2(2) BARODA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH REVENUE BY : SHRI R.K. DHANESTA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THESE ARE TWO APPEALS BY TWO ASSESSEES AGAINST THE ORDER OF THE COMMISSIO NER OF INCOME TAX(APPEALS)-II, BARODA DATED 04.03.2008 ARISING OU T OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF TH E INCOME TAX ACT, 1961. SINCE THE ASSESSEES ARE INTER-RELATED AND IS SUES RAISED IN BOTH THE APPEALS ARE IDENTICAL, FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF BOTH THE APPEALS BY THIS COMMON ORDER. 2. FIRST WE SHALL TAKE UP ITA NO.1739/AHD/2008 IN T HE CASE OF PRAFULBHAI C. PATEL, HUF. IN THIS APPEAL BY THE AS SESSEE FOLLOWING GROUNDS ARE RAISED: ITA NO.1739 & 1742/AHD/2008 -2- 1. THE LD.CIT(A) HAS WRONGLY REJECTED CULTIVATION AND PRODUCTION ON DANE LAND OF OTHER PERSONS BY APPELLA NT. 2. THELD.CIT(A) HAS WRONGLY ESTIMATE THE PRODUCTION OF TOBACCO AT THE RATE OF 45 MAUNDS PER ACRE. 3. THE LD.CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS.61,900/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT ALL THE ABOVE GROUNDS ARE RELATED TO T HE AGRICULTURAL INCOME OF RS.7,75,143/-. THE AO PARTLY ACCEPTED THE AGRIC ULTURAL INCOME AND ADDED THE SUM OF RS.6,08,660/- AS EXCESS AGRICULTUR AL INCOME DISCLOSED BY THE ASSESSEE. HE ALSO DISALLOWED THE EXPENDITUR E OF RS.61,900/- OUT OF AGRICULTURAL EXPENDITURE ON THE GROUND THAT SUCH EX PENDITURE WAS NOT INCURRED FOR THE PURPOSE OF AGRICULTURAL ACTIVITIES . THE GROUND NO.1 AND 2 OF THE ASSESSEES ARE AGAINST THE ABOVE ADDITIONS. HE STATED THAT THE ASSESSEE IS A WHOLE TIME AGRICULTURALIST AND MAIN S OURCE OF THE INCOME OF THE ASSESSEE IS AGRICULTURAL INCOME ONLY; THAT THE IDENTICAL CASE IS CONSIDERED BY THE ITAT IN THE CASE OF NILESH RAMANB HAI PATEL (HUF) WHEREIN THE ASSESSEE HAS DISCLOSED THE AGRICULTURAL INCOME OF RS.4,47,771/- AND THE AO HAD ACCEPTED THE AGRICULTU RAL INCOME ONLY TO THE EXTENT OF RS.2,44,626/-. THE ITAT DIRECTED THE AO TO ACCEPT THE AGRICULTURAL INCOME AT RS.5 LAKHS. HE HAS STATED T HAT THE FACTS IN THE CASE OF THE ASSESSEE AND THE NILESH RAMANBHAI PATEL (HUF ) ARE IDENTICAL. IN BOTH THE CASES, THE ASSESSEE CULTIVATED TOBACCO ON ITS OWN LAND AS WELL AS ON THE LAND OF HUF AND ALSO ON THE LAND TAKEN ON LE ASE. THE AO ALLOWED AGRICULTURAL INCOME ON ESTIMATED BASIS. HE ALSO ST ATED THAT IN OTHER YEARS, THE REVENUE HAS ACCEPTED THE AGRICULTURAL INCOME DI SCLOSED BY THE ASSESSEE. HE THEREFORE STATED THAT EITHER AGRICULT URAL INCOME AS DISCLOSED ITA NO.1739 & 1742/AHD/2008 -3- BY THE ASSESSEE SHOULD BE ACCEPTED OR A REASONABLE ESTIMATE THEREOF SHOULD BE MADE. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. HE HAS STATED THAT THE FACTS OF THE ASSESSEES CASE ARE DIFFERENT THAN THE FACTS BEFORE THE ITAT IN THE CAS E OF NILESH RAMANBHAI PATEL (HUF) BECAUSE IN THAT CASE THE ITAT HAS RECOR DED THE FINDING THAT THE ASSESSEE HAS PRODUCED THE EVIDENCE OF LAND TAKE N ON LEASE. IN THE CASE OF THE PRESENT ASSESSEE, THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE IN RESPECT OF TAKING THE LAND ON LEASE. HE THEREFO RE SUBMITTED THAT THE CONSIDERING THE FACTS AND CIRCUMSTANCES THE ESTIMAT E OF AGRICULTURAL INCOME BY THE AO IS QUITE FAIR AND REASONABLE, THE SAME SHOULD BE SUSTAINED. 5. IN REJOINDER, IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE ASSESSEE HAD DULY PRODUCED THE CONFIRMATION WITH RE GARD TO THE LAND TAKEN ON LEASE. HE ALSO STATED THAT SIMILAR CONFIRMATION WERE PRODUCED IN THE CASE OF NILESH RAMANBHAI PATEL (HUF), THEREFORE, TH E FACTS IN THE CASE OF THE ASSESSEE ARE ALMOST IDENTICAL TO THE FACTS IN T HE CASE OF NILESH RAMANBHAI PATEL (HUF). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. WE FIND THAT THE IDENTICAL ISSUE IS CON SIDERED BY THE ITAT IN THE CASE OF NILESH RAMANBHAI PATEL (HUF) WHEREIN TH E ITAT HELD AS UNDER: 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITT ED BY THE LEARNED COUNSEL THAT THE ASSESSEE IS MAINLY AN AGRICULTURIS T AND CULTIVATES TOBACCO ON HIS OWN LAND (LAND OWNED BY HIM INDIVIDU ALLY AS WELL AS THE LAND OWNED BY HIM JOINTLY) AS WELL AS ON THE LA ND TAKEN ON LEASE. THAT THE GROSS AGRICULTURAL RECEIPTS ON THE SALE OF TOBACCO AND OTHER ITA NO.1739 & 1742/AHD/2008 -4- CASH CROPS WERE RS.9,49,771/- AND THE EXPENDITURE I NCURRED ON SUCH AGRICULTURAL OPERATION WAS RS.2,02,000/-. THUS, NE T AGRICULTURAL INCOME OF RS.7,47,771/- WAS DISCLOSED BY THE ASSESS EE. THAT THE ASSESSING OFFICER ESTIMATED THE YIELD OF THE TOBACC O AT 1800 KGS. PER HECTOR IN RESPECT OF THE LAND OWNED BY THE ASSESSEE . HOWEVER, IN RESPECT OF THE JOINT LAND AS WELL AS THE LEASE-HOLD LAND NO CROP WAS ACCEPTED. HE HAS STATED THAT AS PER THE PUBLICATIO N OF THE AGRICULTURAL DEPARTMENT, THE YIELD OF TOBACCO PER H ECTARE VARIES DEPENDS ON VARIETIES OF TOBACCO. HE POINTED OUT TH AT IN RESPECT OF BIDI TOBACCO IT RANGES FROM RS.2,255/- PER KG TO RS .2600/- PER KG PER HECTOR, WHILE IN RESPECT OF OTHER TOBACCO IT GOES A S HIGH AS RS.3500/- PER KG PER HECTOR. HE ALSO STATED THAT THE ASSESSI NG OFFICER HAS GIVEN NO ADEQUATE REASON FOR NOT ACCEPTING THE AGRI CULTURE PRODUCE FROM THE LAND JOINTLY OWNED BY THE ASSESSEE AS WELL AS THE LAND TAKEN ON LEASE. THE ASSESSEE HAS GIVEN NECESSARY EVIDENC E IN RESPECT OF THE LAND TAKEN ON LEASE. HE THEREFORE SUBMITTED TH AT THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER MAY BE DELET ED. HE ALTERNATIVELY STATED THAT EVEN OTHERWISE, THE ESTIM ATE MADE BY THE ASSESSING OFFICER IS VERY LOW AND EVEN IF THE AGRIC ULTURAL INCOME WAS TO BE ESTIMATED, IT SHOULD HAVE BEEN A REASONABLE E STIMATE. THE ASSESSING OFFICER ACCEPTED THE AGRICULTURAL INCOME AT RS.2,44,626/- ONLY AS AGAINST THE AGRICULTURAL INCOME OF RS.7,47, 771/- DISCLOSED BY THE ASSESSEE. HE THEREFORE REQUESTED THAT A REASON ABLE ESTIMATE MAY BE MADE BY THE ITAT. 4. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND HE HAS STATED THAT THE AS SESSING OFFICER HAS FAIRLY WORKED OUT THE AGRICULTURE INCOME OF THE ASSESSEE AT RS.2,44,626/-. THE SAME SHOULD BE ACCEPTED AND THE ASSESSEES APPEAL MAY BE DISMISSED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIALS PLACED BEFORE US. SINCE THE ASSESSEE HAS NOT MAINTAINED THE COMPLETE DETAILS IN RESPECT OF AGRIC ULTURE ACTIVITIES, THE PRODUCE SOLD AND THE EXPENDITURE INCURRED, THER EFORE, THE ENTIRE CLAIM OF THE AGRICULTURAL INCOME OF THE ASSESSEE CA NNOT BE ACCEPTED. HOWEVER, AT THE SAME TIME, ESTIMATE OF THE AGRICULT URAL INCOME BY THE ASSESSING OFFICER IS ALSO VERY LOW. IN OUR OPI NION, IT WOULD MEET ENDS OF THE JUSTICE, IF THE AGRICULTURAL INCOME OF THE ASSESSEE IS ACCEPTED AT RS.5,00,000/- AS AGAINST THE INCOME OF RS.7,47,771/- DISCLOSED BY THE ASSESSEE. WE ORDER ACCORDINGLY. T HUS, THE ADDITION IS SUSTAINED AT RS.2,47,771/-. SINCE THE FACTS OF THE ASSESSEE ARE IDENTICAL TO TH E ABOVE CASE, WE DIRECT THE AO TO ACCEPT THE AGRICULTURAL INCOME AT RS.5,00 ,000/- . ACCORDINGLY, ITA NO.1739 & 1742/AHD/2008 -5- THE ADDITION IS SUSTAINED AT RS.2,75,143/- AS AGAIN ST RS.3,98,620/- SUSTAINED BY THE CIT(A). SINCE WHILE DETERMINING T HE NET AGRICULTURAL INCOME, THE AGRICULTURAL EXPENDITURE IS ALREADY TAK EN INTO ACCOUNT, NO SEPARATE ADDITION BY WAY OF DISALLOWANCE OUT OF AGR ICULTURAL INCOME SHALL BE MADE. ACCORDINGLY, THE ADDITION OF RS.61,900/- OUT OF AGRICULTRUAL EXPENDITURE MADE BY THE AO IS ALSO DELETED. ITA NO.1742/AHD/2008 (RAMESHBHAI F. PATEL, HUF) 7. IN THIS APPEAL, THE FOLLOWING GROUNDS ARE RAISED . 1. THE LD.CIT(A) HAS WRONGLY REJECTED CULTIVATION AND PRODUCTION ON DANE LAND OF OTHER PERSONS BY APPELLA NT. 2. THELD.CIT(A) HAS WRONGLY ESTIMATE THE PRODUCTION OF TOBACCO AT THE RATE OF 45 MAUNDS PER ACRE. 3. THE LD.CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS.60,000/- ON ACCOUNT OF CREDIT ENTRY IN BANK ACCO UNT. 8. GROUND NO.1 AND 2 OF THE ASSESSEES APPEAL ARE I DENTICAL TO THE GROUND NO.1 AND 2 IN THE CASE OF PRAFUL C. PATEL, H UF. THE FACTS IN BOTH THE CASES ARE SIMILAR EXCEPT VARIATION IN THE FIGUR E. IN THE CASE OF THE ASSESSEE, AGRICULTURAL INCOME WAS SHOWN AT RS.18,77 ,938/-. THE AO PARTLY ACCEPTED THE AGRICULTURAL INCOME AND MADE TH E ADDITION FOR RS.16,02,921/-. THE CIT(A) REDUCED THE ADDITION T O RS.13,27,993/-. CONSIDERING THE FACTS AND ARGUMENTS OF BOTH THE SID ES, IN OUR OPINION, IT WOULD MEET ENDS OF THE JUSTICE, IF THE AGRICULTURAL INCOME IN THE CASE OF THE ASSESSEE IS ACCEPTED AT RS.10 LAKHS. ACCORDING LY, DISALLOWANCE IS SUSTAINED AT RS.8,77,938/- AS AGAINST RS.13,27,993/ - SUSTAINED BY THE CIT(A). ITA NO.1739 & 1742/AHD/2008 -6- 9. THE NEXT GROUND OF APPEAL IS AGAINST THE UNEXPLA INED CREDIT OF RS.60,000/- IN THE ASSESSEES BANK ACCOUNT. IN THI S REGARD, THE AO HAS RECORDED THE FOLLOWING FINDINGS: 10. THERE IS A CREDIT ENTRY IN THE BANK ACCOUNT OF THE ASSESSEE OF RS.60,000/- ON 11.08.2003. THE ASSESSEE HAS REQUIR ED TO EXPLAIN THE SOURCE OF THE CREDIT. THE ASSESSEE HAS STATED THAT THIS IS OUT OF SALE OF ITS ALL HOUSE BUT FAILED TO FURNISH ANY DOC UMENTARY EVIDENCE IN THIS REGARDS. MOREOVER, IF THIS WAS SALE PROCEE DS OF ANY HOUSE THE ASSESSEE SHOULD HAVE SHOWN IT AS CAPITAL GAIN I N THE RETURN OF INCOME. IN THE ABSENCE OF EXPLANATION BY ASSESSEE THE SAME IS TREATED AS UNEXPLAINED CREDIT IN TO THE BANK ACCOUN T OF THE ASSESSEE AND HENCE AN ADDITION OF RS.60,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ARE INITIATED ON THIS ISSUE. 10. AT THE TIME OF HEARING BEFORE US, THE LEARNED C OUNSEL DID NOT CONTROVERT THE ABOVE FINDINGS RECORDED BY THE AO. NO EVIDENCE IS PRODUCED BEFORE US WITH REGARD TO THE SALE OF ANY H OUSE BY THE ASSESSEE. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER S OF THE AUTHORITIES BELOW ON THIS POINT, THE SAME IS SUSTAINED AND THE GROUND NO.3 OF THE ASSESSEES APPEAL IS REJECTED. 11. IN RESULT, THE ASSESSEES APPEALS ARE PARTLY AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON 18 TH MARCH, 2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 18-03-2011 ITA NO.1739 & 1742/AHD/2008 -7- C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD