Kalyanrao Vasantrao Kale HUF, Phandharpur V. Principal Commissioner of Income-Tax -4, Pune

ITA 184/PUN/2021

AI Insights

The case involves Kalyanrao Vasantrao Kale (HUF), who appealed against the order of the Pr. Commissioner of Income Tax-4, Pune, which revised the assessment of the assessee for the assessment year 2016-17. The primary issue was the incorrect apportionment of income between agricultural and business income. The Pr. CIT found that the Income Tax Officer (ITO) had not adequately verified the nature of the income from the sale of raisins, which should have been partly classified as business income. The tribunal supported the Pr. CIT's decision, emphasizing the need for a detailed inquiry and a speaking order from the ITO.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 124335 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-11-2022
• Assessment Year: misc
• Appeal Filed On: 19-02-2022
• Other Referred Cases: Gee Vee Enterprises Vs. Addl. CIT, CIT Vs. South India shipping Corpn. Ltd., CIT Vs. M.M. Khambhatwala, CIT Vs. Bhagwan Das
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Revision of order
• Section: 263; 143(3); 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA No. 184/PUN/2021 : A.Y. 2016-17 Kalyanrao Vasantrao Kale (HUF) Vasant Vihar, Plot No. 84, Vasant Nagar, Yashwant Housing Society Pandharpur Solapur PAN: AAJHK 6482 M Appellant Vs. The Pr. C.I.T.- 4, Pune. Respondent Appellant by : None Respondent by : Shri Ganesh Bare Date of Hearing : 24-11-2022 Date of Pronouncement : 29-11-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER This appeal preferred by the assessee emanates from order of the ld. Pr. Commissioner of Income Tax-4, Pune dated 31-03-2021 for A.Y. 2016-17 as per the grounds of appeal on record. 2. The solitary grievance of the assessee is the assumption of revisionary jurisdiction by the ld. Pr. CIT and passing an order u/s 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 3. At the time of hearing, none appeared for the assessee. The submissions of the ld. D.R as well as materials/documents on record have been considered and the case is adjudicated on merits. 4. The brief facts in this case are that the return of income was e-filed by the assessee on 28-03-2017 declaring total income at Rs. 1,13,930/- and agriculture income at Rs. 29,64,523/-. The case was selected for scrutiny under CASS to examine large agricultural income in comparison of the total income. The assessment order u/s 143(3) of the Act was passed on 20-12- 2 ITA No. 184/PUN/2021 Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 2018 accepting the total income at Rs. 1,13,930/- and agricultural income at Rs. 29,64,523/-. It was observed by the ld. Pr. CIT in his order that for the relevant assessment year 2016-17, the assessee had shown agricultural income at Rs. 48,46,836/- claimed to have been received from sale of raisins, horticulture receipts and sugar-cane receipts. From the said gross agricultural income, the assessee had claimed agricultural expenses of Rs. 18,82,313/- which is @ 38.83% of the gross agricultural income and net agricultural income shown in the computation of income was at Rs. 29,64,523/-. Further, it was observed that the income from sale of raisins of Rs. 24,12,312/- from sale of 12527 kg of raisins was shown as agricultural income but the same was required to be apportioned as agricultural income and business income as per section 2(1A) of the Act and Rule 7 of the Income-tax Rules, 1962. Thereafter, the ld. Pr. CIT has made an apportionment of income between the agricultural income and business income and arrived at net agricultural income assessable at Rs. 20,36,913/- as evident in his order. Considering the above facts, there was an underassessment of Rs. 9,27,610/- which was required to be taxed in the hands of the assessee under the head “income from business”. In view of the aforesaid, the ld. Pr. CIT observed that assessment completed u/s 143(3) of the Act on 20-12-2018 by the A.O was erroneous in so far as it was prejudicial to the interest of the Revenue to the above extent. Hence, the ld. Pr. CIT proposed to revise the order passed u/s 143(3) of the Act. Therefore, a DIN show cause notice was issued to the assessee vide No. ITBA/REV/REVI1/2020-21/1030974522(1) dt. 25-02-2021 giving an opportunity to explain as to why the order passed by the A.O. should not be revised by invoking provisions of sec. 263 of the Act. 3 ITA No. 184/PUN/2021 Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 5. Accordingly, notice was issued to the assessee and an opportunity to submit written submissions in the case on or before 05-03-2021 was given to the assessee. In response to the said notice, the assessee filed written submissions dated 23-03-2021 through ITBA Revision portal on 24-03-2021. 6. The ld. Pr. CIT placed reliance on following decisions and supported his findings that the A.O failed to make proper enquiries and verification with regards to the facts of the case making the assessment order erroneous and so as to be prejudicial to the interest of revenue. Gee Vee Enterprises Vs. Addl. CIT 1975 CTR (Del) 61 : (1975) 99 ITR 375 (Del), CIT Vs. South India shipping Corpn. Ltd. 1998) 147 CTR (Mad) 433 : (1998) 233 ITR 546 (Mad) CIT Vs. M.M. Khambhatwala (1992) 198 ITR 144 (Guj) and CIT Vs. Bhagwan Das (2004) 191 CTR 531 : (2005) 272 ITR 367 (All). 7. We have perused the assessment order as well as the order of the ld. Pr. CIT. We find that in the assessment order, the ld. A.O has not brought out specific facts after due verification regarding the extent of agricultural income and the agricultural expenses incurred by the assessee. The ld. A.O has simply accepted all the submissions and the documents submitted by the assessee and has not given any categorical findings of facts. It is absolutely evident that there has been no proper enquiry for ascertaining the extent of agricultural income. Even the Inspector‟s report which is stated in the assessment order does not bring out the details as to what exactly was the enquiry conducted. On the other hand, the ld. Pr. CIT has analyzed the facts and circumstances and has worked out the agricultural income assessable considering the facts of the case. In such scenario, it is the duty of the ld. A.O to bring out the correct facts after necessary verification and he should come out with a speaking order. The ld. Pr. CIT has therefore, directed the ld. A.O to re-visit the assessment while conducting the detailed enquiry and then pass an order as per law complying with principles of natural justice. We therefore, do 4 ITA No. 184/PUN/2021 Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 not find any infirmity with the findings of the ld. Pr. CIT and uphold his order passed u/s 263 of the Act. 8. In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on this 29 th day of November, 2022 Sd/- sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, the 29 th November 2022 Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT 4 Pune 4. D.R. ITAT „A‟ Bench 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. /// TRUE COPY /// 5 ITA No. 184/PUN/2021 Kalyanao V. Kale HUF A.Y. 2016-17 Anil B. Patil A.Y. 2012-13 1 Draft dictated on 24-11-2022 Sr.PS/PS 2 Draft placed before author 25-11-2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 29-11-2022 Sr.PS/PS 7 Date of uploading of order 29-11-2022 Sr.PS/PS 8 File sent to Bench Clerk 29-11-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order