Shri Minesh C. Patel, Surat V. The Dy.CIT.,Circle-3, Surat

ITA 206/AHD/2009

• Counselvise Citation: 20620514 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Income from undisclosed sources
• Section: 142(1)

Judgement Text

ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH,A HMEDABAD. (BEFORE SHRI D. K. TYAGI AND SHRI A.K. GARODIA) I.T.A. NO. 206/AHD/2009 (ASSESSMENT YEAR 2004-05) SHRI MINESH C. PATEL, 35-36, ANURAG SOCIETY, BEHIND NAVYUG COLLEGE, SURAT. (APPELLANT) VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, AAYAKAR BHAVAN, MAJURA GATE, SURAT (RESPONDENT) PAN: ABNPP 1233 C APPELLANT BY : SHRI HARDIK VORA RESPONDENT BY : SHRI MAHESH KUMAR, SR.D.R. DATE OF HEARING : 18-8-2011 DATE OF PRONOUNCEMENT : 26-8-2011 ( (( ( )/ )/)/ )/ ORDER PER: SHRI D. K. TYAGI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT (A)-II, SURAT DATED 30-10-2008 FOR ASSESSMENT YEAR 2004-05.. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL :- ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.2,00,000 /- BY ENHANCING THE NET PROFESSIONAL INCOME FURTHER AT RS.2,00,000/ -. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LD. CIT (A) HAS ERRED IN CONFIRMING TH E ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.7,00,000 /- BY TREATING 50% OF AGRICULTURAL INCOME AS BUSINESS INCOME/OTHER SOURCES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED RETURN OF INCOME ON 30-3-2005 DECLARING TOTAL INCOME OF RS.17,82,1`84/- AND AGRICULTURAL INCOME OF RS.13,96,710/-. THE ASSESSEE IS THE PARTNER OF A PARTNERSHIP FIRM, IN THE NAME AND STYLE OF M/S. KRISHNA PRINTERS & PUBLISHER S. THE ASSESSEE HAD ALSO SHOWN AGRICULTURAL INCOME OF RS.13,96,710 /-. THE A SSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT. HE HAD SHOWN THE RECEIPT OF A DVOCATE FEES OF RS.6,44,340, WHICH IN ABSENCE OF THE BOOKS OF ACCOU NT OR ANY DETAIL, WAS NOT VERIFIABLE. THE A.O. THEREFORE, ESTIMATED HIS PROFE SSIONAL INCOME AT RS.2 LACS NET OF DEPRECIATION AND ALL EXPENSES, SINCE THE EXP ENSES HAD BEEN CLAIMED IN THE PROFIT AND LOSS ACCOUNT AND HAD BEEN ALLOWED, I N-SPITE OF THE FACT THAT THERE WAS NEITHER ANY DETAIL NOR ANY BOOKS OF ACCOU NT. THE A.O. ADDED THE SUM OF RS.2 LACS TO THE ASSESSEES TOTAL INCOME. 4. BEING AGGRIEVED WITH THE ABOVE ORDER, THE ASSESS EE HAS PREFERRED APPEAL BEFORE THE LD. CIT (A). BEFORE THE LD. CIT (A), THE A.R. OF THE ASSESSEE EXPLAINED THAT THE BOOKS OF ACCOUNT AND OT HER RECORDS HAD BEEN DESTROYED IN THE FLOOD FOR WHICH NECESSARY EVIDENCE S HAD BEEN FURNISHED. THE A.O. HAD NOT DOUBTED THIS CLAIM BUT HAD NOT GIV EN ANY REASON TO SUPPORT HIS ALLEGATION THAT THE ASSESSEES CONTENTION WAS N OT CORRECT. THE A.O. ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 3 SHOULD NOT HAVE MADE ANY ESTIMATION UNLESS THERE WE RE MATERIALS TO INDICATE THAT THE ASSESSEE HAD SUPPRESSED HIS INCOME. THE IN COME SHOWN DURING THE YEAR UNDER CONSIDERATION WAS SUBSTANTIALLY HIGHER A S IN THE IMMEDIATELY PRECEDING YEAR. THE A.R. THEREFORE, PRAYED THAT THE ADDITION OF RS.2 LACS BE DELETED. 5. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSION S OF THE A.R. OF THE ASSESSEE OBSERVED AS UNDER :- I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS,. WHAT THE AR HAS NOT STATED IS THAT THE SUBSTANTIALLY HIGHER INC OME SHOWN DURING THE YEAR WAS A CLEAR ATTEMPT TO BUILD-UP HIS CAPITAL WI THOUT BEING SUBJECTED TO ANY SCRUTINY. IT WAS NOT EXPLAINED AS TO HOW THE DECLARED INCOME DURING THE YEAR HAD JUMPED TO RS.17,82,184 A S AGAINST RS.2,10,674 IN THE IMMEDIATELY PRECEDING YEAR. IN T HE ABSENCE OF THE BOOKS OF ACCOUNT AND OTHER RECORDS, NOTHING COULD B E VERIFIED, LEAST OF ALL THE EXPENSES CLAIMED. IT HAS NOT BEEN EXPLAINED AS TO WHERE THE BOOKS WERE KEPT AND IN WHICH FLOOD THEY WERE DESTRO YED AND WHAT WERE THE EVIDENCES THAT WERE ALLEGEDLY FILED BEFORE THE A.O. IF INDEED SOME EVIDENCE HAD BEEN FILED, THEY SHOULD HAVE ALSO BEEN FILED IN APPELLATE PROCEEDINGS TO SUBSTANTIATE SUCH A CLAIM. SUCH EVIDENCES WOULD HAVE ALSO FOUND MENTION IN THE ASSESSMENT ORD ER. SUCH A CLAIM THEREFORE, APPEARS TO BE CLEARLY BOGUS, AS HAS BEEN FOUND IN MANY CASES WHERE BLATANT ATTEMPTS HAVE BEEN MADE TO TAKE ADVANTAGE OF THE DESTRUCTION AND HUMAN MISERY CAUSED BY THE FLOOD. B USINESS PERSONS LIKE THE ASSESSEE HAVE ATTEMPTED TO ENHANCE SUCH HU MAN MISERY TO TAKE ADVANTAGE. IN ANY CASE, IN THE ABSENCE OF ANY EVIDENCE WHATSOEVER, THE ASSESSEES CLAIM REGARDING THE DEST RUCTION OF THE BOOKS CANNOT BE ACCEPTED. THE A.O. COULD HAVE EITHE R DISALLOWED THE EXPENSES CLAIMED IN THE ABSENCE OF ANY EVIDENCE, OR COULD HAVE ESTIMATED THE INCOME. THE AO CHOSE TO TAKE THE SECO ND OPTION. THE ESTIMATION OF PROFESSIONAL INCOME AT A FURTHER SUM OF RS.2 LACS IS THEREFORE SUSTAINED AND THE ADDITION OF THE SAID SU M IS CONFIRMED. ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 4 6. AT THE TIME OF HEARING THE LD. COUNSEL OF THE AS SESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE LD. CIT (A). 7. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THIS ADDITION HAS BEEN MADE BY THE A.O. BY ESTIMATI NG THE PROFESSIONAL INCOME AT RS.2 LACS NET OF DEPRECIATION AND OF EXPE NSES AS ASSESSEE FAILED TO PRODUCE HIS BOOKS OF ACCOUNTS. THE LD. CIT (A) HAS UPHELD THIS ADDITION AS THE ASSESSEE FAILED BEFORE HIM TO EXPLAIN UNDER WHA T CIRCUMSTANCES THE BOOKS WERE LOST IN THE FLOOD. BEFORE US ALSO, NO EX PLANATION IN THIS REGARD WAS OFFERED ON BEHALF OF THE ASSESSEE. THEREFORE, W E FEEL NO NEED TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT (A) AND THE SAME IS HEREBY UPHELD. 8. AS REGARDS THE SECOND GROUND OF APPEAL, THE ASSE SSEE HAS CONTESTED THE TREATMENT OF A SUM OF RS.7 LACS AS INCOME FROM UNDI SCLOSED SOURCES FROM OUT OF THE AGRICULTURAL INCOME OF RS. 13,96,710 SHOWN B Y THE ASSESSEE. THE AO ASKED THE ASSESSEE TO FURNISH THE RELEVANT DETAILS PERTAINING TO THE AGRICULTURAL ACTIVITY AND THE AGRICULTURAL INCOME E ARNED. THE ASSESSEE FURNISHED A COPY OF 7/12 UTARA AND PHOTOCOPIES OF BILLS OF PURCHASE OF FERTILIZERS, INSECTICIDES AND OF OTHER EXPENSES. T HERE WAS HOWEVER NO BOOKS OF ACCOUNT PERTAINING TO THE AGRICULTURAL ACTIVITY. IT WAS CLAIMED THAT SUCH PHOTOCOPIES HAD BEEN OBTAINED FROM THE SELLERS OF T HE INSECTICIDES AND FERTILIZERS. NONE OF THE DETAILS HOWEVER WERE FURNI SHED THAT WERE REQUESTED FOR; VIDE NOTICE ISSUED U/S. 142(1) OF THE I. T. AC T. THE AO THEREFORE, TREATED A SUM OF RS.7 LACS OUT OF THE TOTAL AGRICULTURAL IN COME OF RS. 13,96,710 AS ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 5 INCOME FROM UNDISCLOSED SOURCES, AND ADDED THE SAME TO THE ASSESSEES TOTAL INCOME. 9. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT (A) AGAINST THE ABOVE ADDITION OF RS. 7 LACS. ON APPEAL, BEFORE THE LD. CIT (A), THE A.R. OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE OWNED MORE THA N 80 BIGHAS OF AGRICULTURAL LAND WHICH WAS EVIDENCED BY THE COPIES OF THE LAND RECORDS FURNISHED BEFORE THE A.O. THE ASSESSEE HAD ALSO TAK EN LAND ON LEASE FROM OTHER OWNERS. THERE WAS NO JUSTIFICATION IN DISALLO WING 50% OF THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. THE A.R . FURTHER ARGUED THAT SINCE THE A.O. HAD ALREADY MADE AN ESTIMATION OF PR OFESSIONAL INCOME OF RS. 2 LACS, THE TREATMENT OF 50% OF THE AGRICULTURA L INCOME AS INCOME FROM UNDISCLOSED SOURCES HAD RESULTED IN DOUBLE TAXATION . 10. AFTER CONSIDERING THE SUBMISSIONS OF THE A.R. O F THE ASSESSEE, THE LD. CIT (A) HAS OBSERVED AS UNDER:- I AM OF THE VIEW THAT EVEN THOUGH THE ASSESSEE MA Y HAVE OWNED MORE THAN 80 BIGHAS OF LAND YET, IT WAS NECESSARY F OR THE ASSESSEE TO PRODUCE EVIDENCE TO SHOW THAT HE HAD INDEED EARNED AGRICULTURAL INCOME TO THE EXTENT OF RS.13,96,710,ITY WAS NECESS ARY FOR HIM TO FURNISH EVIDENCE OF THE LAND USE. HE MAY HAVE PRODU CED COPIES OF THE BILLS WHICH WERE CLAIMED TO HAVE BEEN PURCHASE BILL S OF INSECTICIDES AND FERTILIZERS, YET, THE ASSESSEE OUGHT TO HAVE RE CORDS OR BOOKS OF ACCOUNT ETC., TO SHOW THE UTILIZATION OF SUCH INSEC TICIDES AND FERTILIZERS ALONG WITH OTHER EXPENSES SUCH AS ON LABOUTR, ON E LECTRICITY (IRRIGATION), STORAGE, TRANSPORT ETC. ETC. EVIDENCE OF SALE SHOULD HAVE BEEN FILED. AFTER ALL, THE AGRICULTURAL INCOME OF R S.13,96,710 IS NOT A SMALL AMOUNT WHICH IS ROUTINELY SHOWN BY OTHER PEOP LE AS WELL. IF SUCH INCOME WAS ACTUALLY EARNED BY THE ASSESSEE IT WOULD MEAN THAT AGRICULTURAL ACTIVITY WAS THE MAIN ACTIVITY OF THE ASSESSEE. EVIDENTLY, ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 6 THIS WAS NOT SO, BECAUSE HE EARNED SUBSTANTIAL SUMS AS ADVOCATE FEES, ALONG WITH SHARE OF PROFIT FROM THE FIRM, SALARY, R EMUNERATION AND INCOME FROM OTHER SOURCES. HE ALSO DEALT IN SHARES AND SECURITIES. IF HE WAS INVOKED IN SO MANY ACTIVITIES, IT IS QUITE OBVI OUS THAT HE WOULD NOT HAVE BEEN ABLE TO DEVOTE SUFFICIENT TIME TO THE AGRICULTURAL ACTIVITY SO AS TO EARN SUCH SUBSTANTIAL INCOME. THIS DOUBT I S FURTHER STRENGTHENED BY THE FACT THAT THE ASSESSEE DID NOT MAINTAIN ANY RECORD OF SUCH ACTIVITY. THIS IN TURN WOULD MEAN THAT THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE WAS CLEARLY TO BUILD UP BOGUS CAPITAL IN THE HANDS OF THE ASSESSEE. THIS OBSERVATION TIES UP WI TH THE INITIAL OBSERVATION MADE AT THE BEGINNING OF THIS ORDER REG ARDING THE ASSESSEES ATTEMPT TO BUILD UP BOGUS CAPITAL. THE A CTION OF THE A.O. IS THEREFORE, SUSTAINED, AND THE ADDITION OF THE SUM O F RS.7 LACS AS INCOME FROM UNDISCLOSED SOURCES IS CONFIRMED. 11. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE US. AT THE TIME OF HEARING THE LD. COUNSEL OF THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES AND THE LD. D.R. RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 12. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E MATERIAL ON RECORD WE FIND THAT A.O. TREATED THE SUM OF RS.7 LACS OUT OF TOTAL AGRICULTURAL INCOME OF RS.13,96,710/- AS INCOME FROM UNDISCLOSED SOURCES A S ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS IN RESPECT OF HIS AG RICULTURAL ACTIVITY. BEFORE HIM THE ASSESSEE DID NOT FILE ANY DETAILS PERTAININ G TO AGRICULTURAL ACTIVITY AND THE AGRICULTURAL INCOME EARNED BY HIM. BEFORE T HE LD. CIT (A) ALSO NO COGENT EVIDENCE WAS FILED BY THE ASSESSEE IN SUPPOR T OF HIS AGRICULTURAL ACTIVITY. BEFORE US ALSO NO SUCH EVIDENCE WAS FILED BEFORE US EXCEPT REPEATING THE SUBMISSIONS MADE BEFORE THE LOWER AUT HORITIES. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES OF THIS CASE, WE FEEL THAT NO INTERFERENCE IS REQUIRED AT OUR END WITH THE ORDER PASSED BY THE LD . CIT (A). ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 7 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 8 - 2011. SD/- SD/- (A. K. GARODIA) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD. DATED: 26 -08 - 2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-II,SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA. NO .206/AHD/2009 ASSESSMENT YEAR 2004-05 8 1.DATE OF DICTATION 24 - 8 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 25 / 8 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 25 - 8 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 26 - 08 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 26 - 8 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 6 - 8 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..