MILIND CHAUDHARI, MUMBAI V. ASST CIT CIR 33(2), MUMBAI

ITA 1941/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5803 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: DR P DANIEL
• Keywords: Salary income; Principle of natural justice; Rule of consistency; Tax effect; Set aside
• Section: 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1941 /MUM/2017 ASSESSMENT Y EAR: 2012 - 13 MR. MILIND CHAUDHARY, B/502, NAGVEKAR APARTMENT, BEHIND SAIBABA HOSPITAL, AKULRI ROAD, KANDIVALI (E), MUMBAI 400101 PAN: AADPC1936C VS. THE ACIT, CIRCLE 33(2), B.K.C., MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. P. DANIEL ( AR ) REVENUE BY : SHRI CHAITANYA ANJARIA (DR ) DATE OF HEARING: 10/09 /201 8 DATE OF PRONOUNCEMENT: 07 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 02.02.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 4 5 (FOR SHORT TH E CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2012 - 13 , WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED BY AO U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE DERIVING INCOME FROM SALARY, BUSINESS AND PROFESSION AND OTHER SOURCES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 2,60,14,679/ - . IN RESPONSE TO THE NOTICES U/S 143 (2) AND 142 (1), THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND SUBMITTED THE DETAILS CALLED FOR. SINCE, THE ASSESSEE HAD CLAIMED RECEIPTS FROM AGRICULTURAL ACTIVITY TO THE TUNE OF RS. 28,13,187/ - , THE ASSESSEE WAS ASKED TO FURNISH T HE DETAILS OF SALES OF AGRICULTURAL PRODUCE, DETAILS OF EXPENDITURE, 2 ITA NO. 1941 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 ELECTRICITY BILLS, FERTILIZERS AND OTHER RELATED EXPENSES. THE ASSESSEE FILED THE DETAILS CALLED FOR. THE ASSESSEE ALSO FILED THE DETAILS OF SALE AMOUNTING TO RS. 32,98,350/ - AND AFTER EX CLUDING THE EXPENSES AMOUNTING TO RS. 4,75,000/ - DECLARED THE AGRICULTURAL INCOME AT RS. 28,13,187/ - . HOWEVER, THE AO REJECTING THE COMPUTATION OF THE ASSESSEE MADE ADDITION OF RS. 31,25,000/ - HOLDING THAT NO AGRICULTURE PRODUCE WAS SOLD TO ONE OF THE PAR TIES SHOWN IN ITS DETAIL . 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND ACCEPTED THE AGRICULTURAL INCOME OF THE ASSESSEE OF RS. 19,28,497/ - AND TREATED THE REMAINING A MOUNT OF RS. 13,69,852/ - AS INCOME FROM OTHER SOURCES BY TAKING AVERAGE AGRICULTURAL INCOME OF FOUR ASSESSMENT YEARS FROM 2003 - 04 TO 2006 - 07. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 . T HE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) BY RAISING THE FOLLOWING EFFECTIVE GROUNDS : - 1. THE LEARNED CIT (A) ERRED IN VIOLATING THE PRINCIPLES OF NATURAL JUSTICE IN PASSING THE ORDER. 2. THE LEARNED CIT (A) ERRED IN RESTRICTING THE AGRICULTURAL INCOME TO RS. 19,28,497/ - AND SUSTAINING AN ADDITION OF RS. 13,69,852/ - WITHOUT ANY VALID BASIS OR REASONS WHATSOEVER. 3. THE LEARNED CIT (A) ERRED IN INTRODUCING A METHOD OF COMPUTATION OF AGRICULTURAL INCOME WHICH IS HITHERTO UNKNOWN IN JUDICIAL PARLANCE. 4. THE LEARNED CIT (A) TOTALLY MISUNDERSTOOD THE FACTS OF THE CASE AS THE ASSESSEE DECLARED AN AGRICULTURAL INCOME OF RS. 28,13,187/ - WHEREAS THE SALE PROCEEDS OF AGRICULTURAL PRODUCE WAS RS. 31,25,000/ - AND THEREBY MISTAKE OF THE A.O. IS PERPETUATED. 5. BEFORE US, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) IS NOT BASED ON THE EVIDENCE ON RECORD AND IN ACCORDANCE WITH THE SETTLED PRINCIPLES OF LAW. THE ASSESSEE HAS BEEN DECLARING THE AGR ICULTURE INCOME SINCE THE A.Y. 2003 - 04 . F ROM THE A.Y. 2003 - 04 TO 2012 - 3 ITA NO. 1941 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 13, ASSESSMENT ORDERS WERE PASSED U/S 143 (3) EXCEPT IN THE A.Y.2010 - 11 WHICH WAS PASSED U/S 143 (1). DURING THE ASSESSMENT YEAR 2011 - 12, THE AO DISALLOWED THE AGRICULTURE INCOME OF RS. 24,99,098/ - DECLARED BY THE ASSESSEE AND TREATED THE SAME AS INCOME FROM OTHER SOURCES. IN THE FIRST APPEAL, THE ADDITION WAS DELETED BY THE LD. CIT (A) . T HE DEPARTMENT FILED APPEAL AGAINST THE SAID ORDER, HOWEVER, THE SAME WAS DISMISSED DUE TO LOW TAX EFFECT. FURTHER, THE AO RE - OPENED THE ASSESSMENT FOR THE A.Y. 2007 - 08 BUT THE ORDER PASSED U/S 147 R.W.S. 143 (3) WAS QUASHED BY THE TRIBUNAL. THE LD. COUNSEL FURTHER SUBMITTED THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD THE AGRICULTURE PRODUCE TO THREE PARTIES I.E. HFC (HIND FRUI T COMPANY) AMOUNTING TO RS. 91,663/ - , KOC KRISHANLAL CO. AMOUNTING TO RS. 81,686.76/ - AND JAB INTERNATIONAL PVT. LTD. AMOUNTING TO RS. 31,25,000/ - (TOTAL RS. 32,98,349.76/ - ) OUT OF THE SAID RECEIPT S THE ASSESSEE DECLARED INCOME FROM AGRICULTURE OF RS. 28,1 3,187/ - . HOWEVER, THE AO REJECTING THE CONTENTION OF THE ASSESSEE ADDED AN AMOUNT OF RS. 31,25,000/ - AS INCOME FROM OTHER SOURCES. IN THE FIRST APPEAL, THE LD. CIT (A) DETERMINED THE AGRICULTURE INCOME OF THE ASSESSEE AT RS. 19,28,479/, ON THE BASIS OF AVE RAGE INCOME OF FOUR ASSESSMENT YEARS FROM 2003 - 04 TO 2006 - 07 AND DIRECTED THE AO TO TREAT THE REMAINING AMOUNT OF RS. 13,69,852/ - I.E., DIFFERENCE BETWEEN THE GROSS AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AND THE INCOME DETERMINED ON THE BASIS OF AVERAGE INCOME OF PAST FOUR YEARS AS THE INCOME FROM OTHER SOURCES. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE LD, CIT(A) HAS PASSED THE IMPUGNED ORDER IGNORING THE PRINCIPLE OF CONSISTENCY, THE SAME IS BAD IN LAW. 6. ON THE OTHER HAND, THE LD. DEPARTMEN TAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM BY PRODUCING COGENT EVIDENCE, THE LD. CIT (A) HAS RIGHTLY DETERMINED THE INCOME FROM AGRICULTURE ACTIVITY ON THE BA SIS OF AVERAGE INCOME OF THE FOUR ASSESSMENT YEARS . HENCE, THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A). 4 ITA NO. 1941 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL PLACED BEFORE US INCLUDING THE CASES RELIED UPON BY THE ASSE SSEE. ADMITTEDLY, THE ASSESSEE HAS BEEN CONTINUOUSLY DECLARING AGRICULTURE INCOME FROM THE ASSESSMENT YEAR 2003 - 04 AND THE SAME HAVE BEEN ASSESSED U/S 143 (3) EXCEPT IN THE A.Y. 2010 - 11 WHICH WAS ASSESSED U/S 143 (1) OF THE ACT. WE FURTHER NOTICE THAT THE AO HAS REJECTED THE SALE SHOWN TO JAB INTERNATIONAL PVT. LTD. AND ACCEPTED THE SALE IN RESPECT OF TWO OTHER PARTIES. THE SALE SHOWN TO JAB INTERNATIONAL PVT. LTD. WAS REJECTED BY THE AO FOR THE REASON THAT AN INSPECTOR WAS DEPOSITED TO COLLECT THE REQUIRE D DETAILS AND AS PER THE REPORT SUBMITTED BY THE INSPECTOR, IT CAME TO THE NOTICED THAT THE PURCHASE CONTRACT SUBMITTED BY THE M/S JAB INTERNATIONAL AND THE PURCHASE CONTRACT SUBMITTED BY THE ASSESSEE ARE NOT SAME AND SOME DISCREPANCIES WAS THERE IN BOTH T HE DOCUMENTS ; THE ASSESSEE HAS SUBMITTED BILLS OF PETROL APART FROM BILLS OF DIESEL ; THE ELECTRICITY BILLS AND TELEPHONE BILLS SUBMITTED BY THE ASSESSEE ARE IN THE DIFFERENT NAMES ; THE ASSESSEE HAS SHOWN PRODUCE OF 25 TONE CHILLY UNDER CULTIVATED AREA OF 0 .95 HECTARE OF LAND , WHEREAS THE ENQUIRY REVEALED THAT CHILLY PRODUCTION PER HECTARE IN THAT AREA IS 2 TO 4 TONS . THE SEED PURCHASED AND THE CHILLY SOLD ARE OF DIFFERENT VARIET IES . WE FURTHER NOTICE THAT THE ASSESSEE WAS NOT CONFRONTED WITH THE ENQUIRY REP ORT RELIED ON BY THE AO. THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO REBUT THE EVIDENCE COLLECTED AGAINST HIM. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL THAT THE FINDINGS OF THE AO ARE BASED ON THE INFORMATION COLLECTED BY THE AO BEHIND TH E BACK OF THE ASSESSEE AND SINCE THE INFORMATION COLLECTED WAS USED AGAINST THE ASSESSEE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE , THE LD. CIT(A) OUGHT TO HAVE EITHER OBTAINED REMAND REPORT FROM AO OR SET ASIDE THE FINDINGS OF THE AO . 8. ON THE OTHER HAND, THE LD. CIT (A) HAS DETERMINED THE AGRICULTURAL INCOME OF THE ASSESSEE BY ADOPTING A METHOD , HOLDING THAT IT WOULD BE FAIR AND REASONABLE TO ACCEPT THE CLAIM OF AGRICULTURE INCOME OF THE ASSESSEE BASED ON THE AVERAGE INCOME FOR FOUR YEARS . ACCORDINGL Y, THE LD. CIT(A) ALLOWED THE 5 ITA NO. 1941 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 AVERAGE INCOME OUT OF THE GROSS TOTAL INCOME OF RS. 32,98,349/ - SHOWN BY THE ASSESSEE. IN OUR CONSIDERED VIEW, NEITHER THE AO HAS PASSED THE ASSESSMENT ORDER IN ACCORDANCE WITH THE PROVISIONS OF LAW NOR HAS THE LD. CIT (A) DET ERMINED THE AGRICULTURE INCOME OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE ON RECORD. WE FURTHER NOTICE THAT THE ASSESSEE HAS BEEN CONTINUOUSLY CLAIMING THE AGRICULTURE INCOME IN ITS RETURN OF INCOME SINCE THE ASSESSMENT YEAR 2003 - 04. I N THE A.Y. 2007 - 08, THE AGRICULTURE INCOME OF THE ASSESSEE WAS RS. 31,15,389/ - IN A.Y. 2008 - 09, THE AGRI CULTURE INCOME DECLARED BY THE ASSESSEE WAS 32,39,135/ - AND IN A.Y. 2009 - 10 THE AGRICULTURE INCOME DECLARED BY THE ASSESSEE WAS 31,64,667 AND IN THE A.Y. 2011 - 12 THE SAME WAS RS. 24,99,996/ - IN ALL THESE YEARS, THE ASSESSMENTS HAVE BEEN COMPLETED U/S 143 (3) OF THE ACT AND THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE DURING THE SAID ASSESSMENT YEARS. FURTHER, WE DO NOT FIND ANY COGENT AND CONVINCING REASON S EITHER IN THE ORDER OF AO OR IN THE ORDER OF THE LD. CIT (A) FOR TAKING A VIEW DIFFERENT FROM THE CONSISTENT VIEW TAKEN IN THE EARLIER YEARS. WE FURTHER NOTICE THAT THE AGRICULTURE INCOME DETERMIN E D BY THE LD. CIT (A) IS NOT BASED ON THE EVIDENCE ON RECORD. HENCE WE FIND MERIT IN THE ASSESSEES APPEAL. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND ALLOW THE APPEAL OF THE ASSESSEE AND FURTHER D IRECT TO AO DELETE THE ADDITION. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBE R, 2018. SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 07 / 1 2 / 201 8 ALINDRA, PS 6 ITA NO. 1941 / MUM/2017 ASSESSMENT YEAR: 2012 - 13 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI