Kishor Kashinath Patel, Nandurbar V. Deputy Commissioner of Income-tax,

ITA 216/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9455 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Principle of natural justice; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 216 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 SHRI KISHOR KASHINATH PATEL, 131/132, GANDHI NAGAR, SHAHADA, NANDURBAR 425409 . / APPELLANT PAN: AAMPP8727H VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), DH ULE . / RESPONDENT / APPELLANT BY : S HRI SUNIL GANOO / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 0 3 .0 4 . 2017 / DATE OF PRONOUNCEMENT: 17 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I, NASHIK , DATED 08 . 12 .201 5 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS FILED CONCISE GROUNDS OF APPEAL , WHICH READ AS UNDER : - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T.[A] HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.11,94,556.00 MADE BY THE LEARNED AS SESSING OFFICER ON THE GROUND OF ALLEGED UNDISCLOSED INCOME BY DISALLOWING THE PART OF THE AGRICULTURE RECEIPTS. THE AFORESAID ADDITION BEING DEVOID OF MERITS, PATENTLY ILLEGAL, ITA NO. 216 /P U N/20 1 6 KISHOR K PATEL 2 BAD IN LAW, BASELESS, ARBITRARY, AND PERVERSE AND SOLELY MADE ON PRESUMPTIONS AND SURMISES AND BEING MADE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE THE SAME MAY PLEASE BE DELETED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C. I. T.[A] HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER OF RS.50, 000.00 OUT OF LABOUR EXPENSES. THE AFORESAID DISALLOWANCE BEING DEVOID OF MERITS, PATENTLY ILLEGAL, BASELESS, ARBITRARY, PERVERSE AND BASED ON PRESUMPTIONS AND SURMISES THE SAME MAY PLEASE BE DELETED. 3. THE FI R ST ISSUE RAISED BY WAY OF GROUND OF APPEAL NO.1 IS AGAINST THE ADDITION OF RS.11,94,556/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL AND WAS ENGAGED IN CIVIL CONSTRUCTION WORK. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS.21,63,240/ - AND AGRICULTURAL INCOME OF RS.27,33,747/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN GROSS RECEIPTS FROM AGRICULTURAL ACTIVITY AT RS.34,48,370/ - AND NET INCOME FROM AGRICU LTURAL ACTIVITY AT RS. 27,33,747/ - . ON ANALYZING THE GROSS RECEIPTS AND EXPENDITURE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN THE EXPENDITURE @ 20.72% OF THE GROSS RECEIPTS, WHICH APPEARED TO BE ON LOWER SIDE. THE ASSESSEE IN THE EARLIER YEARS HAD DECLARED LESSER AGRICULTURAL INCOME. WHERE THE ASSESSEE HAD NOT PURCHASED ANY OTHER AGRICULTURAL LAND OR ENHANCED THE FACILITIES, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE AGRICULTURAL INCOME SHOULD BE ACCEPTE D AS SUCH AND ADDED RS.3,71,409/ - TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER PLACED RELIANCE ON THE REPORT RECEIVED FROM AGRICULTURE OFFICER, NANDURBAR IN RESPECT OF YIELD PER HECTARE , COPY OF WHICH WAS ALSO GIVEN TO THE ASSESSEE. HOWEVER, REJE CTING THE SALE BILLS AND STATEMENT OF AGRICULTURAL INCOME PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD ENHANCED ITS ITA NO. 216 /P U N/20 1 6 KISHOR K PATEL 3 AGRICULTURAL INCOME. CONSEQUENTLY, SUM OF RS.11,94,556/ - WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. 5. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 6. THE ASSESSEE IS AGGRIEVED BY THE PROCEEDINGS BEFORE THE ASSESSING OFFICER, WHEREIN IN THE SHOW CAUSE NOTICE, THE ASSESSING OFFICER HAD PROPOSED ADDITION OF RS.3,71,409/ - . HOWEVER, AFTER RECEIVING TH E REPORT FROM THE AGRICULTURE OFFICER, WHO S TATED THAT TALUKA - WISE DETAILS WERE NOT AVAILABLE BUT GAVE CERTAIN DETAILS AND THE ASSESSING OFFICER WITHOUT ANY SHOW CAUSE OR ALLOWING ANY CROSS - EXAMINATION, HAD ENHANCED THE DISALLOWANCE TO RS.11,94,556/ - . THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN NOT ALLOWING THE CRO S S - EXAMINATION. IT IS ALSO PLEADED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE REASON FOR INCREASE IN AGRICULTURAL INCOME WAS BECAUSE OF INCREASE IN YI ELD OF COTTON, SOYABEAN AND CHANA DAL. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT APPEAL FOR ADJUDICATION IS AGAINST THE ORDER OF ASSESSING OFFICER IN FIRST SHOW CAUSING THE ASSESSEE TO ADDITION OF RS.3,71,409/ - AND THEREAFTER, CONFIRMING THE ADDITION OF RS.11,94,556/ - ON THE BASIS OF REPORT OF AGRICULTURE OFFICER, WITHOUT ALLOWING CROSS - EXAM INATION TO THE ASSESSEE. THE CASE OF THE ASSESSEE BEFORE US IS THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE PERUSAL OF ASSESSMENT ORDER REFLECTS THE PROCEEDINGS ITA NO. 216 /P U N/20 1 6 KISHOR K PATEL 4 BEFORE THE ASSESSING OFFICER, WHEREIN SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE TO CLARIFY THE AGRICULTURAL INCOME. THE SAID LETTER DATED 03.02.2014 IS REPRODUCED AT PAGES 3 AND 4 OF THE ASSESSMENT ORDER AND ON THE BASIS OF EVIDENCES AND MATERIAL PRODUCED AND THE INFORMATION RECEIVED FROM THE AGRICULTURE OFFICER, NANDURBAR, THE ASSESSEE WAS CONFRONTED WITH THE INTENTION OF ASSESSING OFFICER TO ADOPT THE AVERAGE SALE VALUE AT A FIGURE OTHER THAN THE YIELD SHOWN BY THE ASSESSEE AND PROPOSED ADDITION OF RS.3,71,409/ - . THE ASSESSEE IN RESPONSE ASKED FOR THE COPY OF REPORT RECEIVED FROM THE AGRICULTURE OFFICER, NANDURBAR , WHICH WAS GIVEN TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE EXPLAINED THE BASIS OF QUALITY OF FERTILE AGRICULTURAL LAND AND THE CULTIVATION OF THE SAID LAND BY THE ASSESSEE. THE ASSESSING OFFICER AFTER CONSIDERING THE ARGUM ENTS OF ASSESSEE, ENHANCED THE YIELD OF CROP PER HECTARE BY 50% MORE THAN THE REPORT OF AGRICULTURE OFFICER, NANDURBAR AND MADE ADDITION OF RS.11,94,556/ - . THE ASSESSEE CLAIMS THAT WHERE THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE DURING THE YEAR WAS DE PENDENT ON THE YIELD OF CROPS GROWN BY THE ASSESSEE, WHICH WAS HIGHER IN THE YEAR UNDER CONSIDERATION, THE SAME WAS NOT ACCEPTED AND ON THE OTHER HAND, RELIANCE WAS PLACED ON THE REPORT OF AGRICULTURE OFFICER, WHO IN THE REPORT CLEARLY SAYS THAT TALUKA - WIS E DETAILS WERE NOT AVAILABLE IN RESPECT OF AGRICULTURE YIELD. THE ASSESSEE IS FURTHER AGGRIEVED BY THE RELIANCE ON SUCH A REPORT, WHEREIN THE ASSESSEE HAD NOT BEEN ALLOWED CROSS - EXAMINATION OF THE SAID AGRICULTURE OFFICER. WE FIND MERIT IN THE PLEA OF TH E ASSESSEE IN THIS REGARD THAT THE ASSESSEE HAD MADE A REQUEST TO CALL FOR THE SAID WITNESS I.E. DISTRICT AGRICULTURE OFFICER, NANDURBAR FOR CROSS - EXAMINATION. SINCE ON THE BASIS OF SAID REPORT, THE ASSESSING OFFICER HAD DRAWN ADVERSE INFERENCE AND INTEND ED TO MAKE ADDITION VIDE FIRST LETTER DATED 18.02.2014 AND THEREAFTER, ANOTHER LETTER DATED 21.02.2014 WAS WRITTEN. THE COPY OF LETTER DATED 21.02.2014 IS PLACED AT PAGE ITA NO. 216 /P U N/20 1 6 KISHOR K PATEL 5 123 OF THE PAPER BOOK, WHICH TALKS OF EARLIER LETTER. THE ASSESSING OFFICER HAS FAIL ED TO PROVIDE CROSS - EXAMINATION OF HIS WITNESS, REPORT OF WHICH PERSON WAS BEING USED AGAINST THE ASSESSEE AND HENCE, THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. SINCE NO OPPORTUNITY TO CROSS - EXAMINE THE WITNESS HAS BEEN PROVIDED TO THE ASSESSEE, THERE IS NO MERIT IN MAKING AN ADDITION IN THE HANDS OF ASSESSEE ON THE BASIS OF REPORT OF SUCH A WITNESS. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE TRIBUNAL IN JAYDEEP M. KHER VS. DCIT IN ITA NO.973/PN/2013, RELATING TO ASSESSMENT YEAR 2003 - 04, OR DER DATED 28.12.2016 . FURTHER, THE ASSESSING OFFICER IN THE FIRST SHOW CAUSE NOTICE HAD PROPOSED ADDITION OF RS.3,71,409/ - BUT IN THE FINAL ASSESSMENT ORDER HAD MADE ADDITION OF RS.11,94,556/ - , WHICH CANNOT BE UPHELD. ACCORDINGLY, THE ASSESSING OFFICER I S DIRECTED TO DELETE THE ADDITION OF RS.11,94,556/ - . THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 9. THE ISSUE IN GROUND OF APPEAL NO.2 RAISED IS AGAINST THE DISALLOWANCE OF RS.50,000/ - ON ACCOUNT OF LABOUR CHARGES. THE ASSESSEE WA S ENGAGED IN CONTRACT WORK AND HAD CLAIMED LABOUR CHARGES AT RS.1.13 CRORES. THE ASSESSING OFFICER NOTED THAT THE SAID EXPENDITURE WAS INCURRED IN CASH AND SOME OF THE EXPENSES WERE NOT SUPPORTED BY CORROBORATIVE EVIDENCES AND IN VIEW THEREOF, RS.1 LAKH W AS DISALLOWED OUT OF LABOUR CHARGES. 10. THE CIT(A) UPHELD THE DISALLOWANCE AT RS.50,000/ - SINCE THE PAYMENT OF LABOUR CHARGES WAS MADE IN CASH THROUGH SELF MADE VOUCHERS, FOR WHICH NO CORROBORATIVE EVIDENCE WAS AVAILABLE. 11. IN THE ENTIRETY OF THE AB OVE SAID FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE AND UPHOLDING THE ITA NO. 216 /P U N/20 1 6 KISHOR K PATEL 6 ORDER OF CIT(A), WE DISMISS THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, P ARTLY ALLOWED. 1 2 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF MAY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 17 TH MAY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I, NASHIK ; 4. / THE PR. CIT - I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE