Mrs. Jessy Kunjachan, Cochin V. The DCIT, Ernakulam

ITA 226/COCH/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4032 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: K P PAULSON
• Keywords: Unexplained cash credit; Additional evidence; Valuation report
• Section: 43B; 143(3); 153A; 68

Judgement Text

ITA NO . 226/C/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO 226/COCH/2016 (A SST YEAR 2011 - 12 ) MRS JESSY KUNJACHAN J K TRADERS JEWS STREET KOCHI 682 035 VS THE DY COMMR OF INCOME TAX CENTRAL CIRCLE 1 ERNAKULAM ( APPELLANT) (RESPONDENT) PAN NO. AKRPK8732C ASSESSEE BY SH K P PAULSON REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 7 TH SEPT 2016 DATE OF PRONOUNCEMENT 9 TH SEPT 2016 ORDER PER GEORGE GEORGE K,JM: THIS APPEAL, AT THE INSTA NCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 3.2.2016. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. 2 BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE, AN INDIVIDUAL, IS THE PROPRIETRESS OF M/S J K TRADERS, WHICH IS ENGAGED IN THE BUS INESS OF DISTRIBUTION OF BAKERY PRODUCTS. FOR THE ASSESSMENT YEAR 2011 - 12, THE RETURN OF INCOME WAS FILED ON 25.2.2012 DECLARING A TOTAL INCOME OF RS. 4,76,170/ - AND THE NET AGRICULTURAL INCOME OF RS. 48,95,000/. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE I T ITA NO . 226/C/2016 2 ACT 1961 AND THE SCRUTINY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 28.3.2014 U/S 143(3) OF THE ACT. THE AO DISALLOWED THE CLAIM OF AGRICULTURAL INCOME . A CCORDINGLY A SUM OF RS. 48,95,000/ - WAS TREATED AS UNEXPLA INED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE REASONING OF THE AO TO MAKE THE ADDITION U/S 68 OF THE ACT WAS THAT THE CLAIM OF AGRICULTURAL INCOME MADE BY THE ASSESSEE IS BASED ONLY ON A REPORT OF A VALUER AND THE BOOKS OF ACCOUNT, IN RESPECT OF THE AGRICULTURAL OPERATIONS CARRIED ON BY THE ASSESSEE , WERE NOT PRODUCED BEFORE THE AO. THE RELEVANT FINDING OF THE AO, READ AS FOLLOWS: 5.1 THE REPORT OF ESTATE AND AGRICULTURE INCOME FROM WT APPROVED VALUER DAT ED 16.11.2012 IS ALREADY SUBMITTED ALONG WITH THE REPLY DATED 31.12.2012. THE PLANTATION IS CONSISTING OF THREE BLOCKS. ONE BLOCK MEASURING 76 ACRES AT KOTTEMPADAM AND TWO BLOCKS MEASURING 4 ACRES 80 CENTS AND 4 ACRES ARE LOCATED IN KIZHAKKANCHERY VILLAG E. THE DISTANCE BETWEEN LATER TWO BLOCKS IS ABOUT FIVE KILOMETERS. EACH BLOCK IS LOCATED ABOUT 50 KILOMETERS AWAY FROM S Y .N O. 2 35 A/ 1 ,2 MEASURING 76 A CRES , WH I CH HAS AR O U N D 110 0 0 RUBBER T REE S , COCONUT TREES AND ARE C A NUT PLANT S . OUT OF 11000 TREES 6 0 00 T R EE S OF 8 YE A R S OLD A N D R EMA I N I NG 5000 T RE E S AR E OF 25 Y E ARS OLD. 6000 TREE S ARE IN THE IN I TIAL S T AGE OF YI E LDING AND 5000 TR E ES A RE I N P E AK LE VE L OF YIEL DI N G . BES IDE S , COCONU T TREE S A N D AREA PLAN T S ARE IN Y I ELDING S T AG E. SY .N O. 351 / P MEASUR IN G 4 ACR E 80 C E N TS H A S 1050 RUBBE R TREE S OF 18 YEARS A GES A N D AR E Y I E L DING. SY N O . 44 8 / P M E A S URING 4 .00 AREAS HA S 7 0 0 RUBB ER TRE ES A ND IS YIELDING . MAINTENANCE OF THE R U BB E R PLA NT A TI ON AR E A I S S AT I SFA CT O RY . MY AGRICUL T URE INCOME IS VALUED AT RS.56.35 LAKHS FOR THE ASSE SSME N T YEAR 20 11 - 12 , BY THE APPROVED VALUER AS PE R REPORT REFERRED ABOVE. I HAVE CREDITED RS.33 , 94,391 / - AS NET AGRICULTURE INCOME IN CAPITAL ACCOUNT OF MY BUSINESS DURING THE YEA R . ITA NO . 226/C/2016 3 5 . 2 THIS OFFICE HAS CARE F ULL Y C ONSIDERED THE SUBMISSION OF THE ASS E S S E E ' S AUTHORIZED REPRESEN T ATI V ES. IT I S CLE A R THA T THE ASS E SSEE HAS N O T KEP T A N Y BOOKS OF ACCOUNTS FOR HER A G R ICULTU R A L O PE RA T IONS . TH E RE F ORE THE ASSESSEE HAS SUBMITTED A REPORT F ROM T H E RE G ISTERED VA LUER EST I M A TING THE AGRICUL T URAL INCOME. THE REPORT O F T HE APP R O V ED VAL UER I N RESPE C T OF AGRICU LT URAL L AN D AN D ANNUAL Y I E LD H A S A LSO B E EN CAR EF ULL Y CONSIDERED . IN TH E LE T TER DATED 26.12.2013 IT HAS BEEN STATED THA T THE ASSESSEE ' S AGRICULTURE INCOME IS VALUED AT RS.56.35 LAKHS FOR THE AY 2011 - ' 12 BY THE APPROVE D VALUER WHEREAS THE REPORT SHOWS THE FIGURE AS RS.57 . 44 LAKHS. 5.3 HOWEVER, IT IS TO BE NOTED THAT PART - IV OF THE FINANCE ACT, ELABORATES T HE RULES FOR COMPUTATION OF NET AGRICULTURAL INCOME. THE RELEVANT RULES ARE REPRODUCED HEREWITH AS FOLLOWS: - AGR ICULTURAL INCOME OF THE NATURE REFERRED TO IN SUB CLAUSE (B) OR SUB - CLAUSE (C) OF CLAUSE (LA) OF SECTION 2 OF THE INCOME TAX ACT O T HER T HAN INCOME DERIVED FROM AN Y B U ILDING REQUIRED AS A D W EL L ING - HOUSE B Y T HE RECEIVED OF THE RENT OR RE V ENUE OF THE CULTIVA TOR OR THE RECEIVER OF RENT - IN - KIND REFERRED TO IN THE SAID SUB - CLAUSE (C) SHALL BE COMPUTED AS IF IT W ERE INCOME CHARGEABLE TO INCOM E TAX UNDER THAT ACT UNDER THE HEAD ' PROFITS AND GAIN S O F BUSINESS OR PROFESSION' AND THE PROVISIONS OF SECTIONS 3 0 , 31 , 32 , 36 , 37 , 38 , 40 , 40A [O T HER THAN SUB - SECTIONS (3) AN D (4) THEREO F ) , 41 , 43 , 43A , 43B AND 43C OF THE INCOME TA X ACT SH AL L , SO FAR AS MAY BE, APPLY ACCORDINGLY. RULE 6 - WHERE THE RESULT OF T HE COMPUTATION FOR PRE V IOUS Y E A R IN RESPECT OF AN Y SOURCE OF AGRICU L T URAL INCOME I S A LOSS, SUCH LOSS SHALL BE SET OFF AGAINST THE INCOME OF THE ASSESSEE , IF ANY, FOR THAT PREVIOUS YEAR FROM AN Y SOURCE OF AGRICULTURAL INCOME. RULE 7 - ANY SUM PA Y ABLE B Y THE ASSESSEE ON ACCOUNT OF A NY T A X LEVIED B Y THE STA T E GOVERNMEN T O N THE AGR I CULTURAL IN C OME SHALL BE DEDUC T ED IN COMPUTING THE AGRI C UL T URA L INCOM E . RULE 9 - WHERE THE NET RESULT OF THE COMPUTATION MADE IN ACCORDANCE . WITH THESE RULES IS A LOSS, THE LOSS SO COMPUTED SHALL BE IGNORED AND THE NET AGRICULTURAL INCOME SHALL B E DEEMED ' TO BE NIL . RULE 11 - FOR THE PURPOSES OF COMPU T ING THE NET AGRICULTURAL INCOME OF THE ASSESSEE, THE ASSESSING OFFICER SHALL HAVE THE ITA NO . 226/C/2016 4 SAME PO W ERS AS HE HAS UNDER THE INCOME TA X ACT F OR THE PURPOSES OF ASS E SSMENT OF THE TOTAL INCOME. 5 . 4 IT IS TO BE NOTED THAT AS PER T HE FI NA NCE ACT ASSESSEE HAS TO MAIN T AIN THE COMPLETE BOOKS OF ACCOUNTS , INCLUDING THE BALANCE SHEET , P&L A/C WITH ALL SCHEDULES A N D W ITH COMPLETE E VI DENC E AND N E T PROFI T OR T HE N E T LOSS SHALL BE COMPUTED AS IN THE CASE OF BUSINESS AND PROFESSION. 5.5 AS THE ASSESSEE HAS NOT KEPT ANY BOOKS OF ACCOUNTS FOR THE AGRICULTURAL OPERATIONS CONDUCTED AND NO EVIDENCE HAS BEEN PRODUCED FOR THE INCOME AND EXPENDITURE, THE SAID INCOME CANNOT BE TAKEN AS RECEIVED FROM THE AGRICULTURE AND THE SA ME IS TAXED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. EVEN IF THE ASSESSEE HAS THE LANDS , IT DOES NOT MEAN THAT THE ASSESSEE HAS CROPS, AND IF THE ASSESSEE HAS CROPS THAT DOES NOT MEAN THAT THE CROPS ARE YIELDING, AND EVEN IF THE CROPS YIELD THE FRUITS TH AT DOES NOT MEAN THAT THE FRUITS GIVE THE ASSESSEE A NET AGRICULTURAL INCOME. THEREFORE THE INCOME TAX ACT HAS PROVIDES THE CORRECT METHOD OF MAINTENANCE OF AGRICULTURAL INCOME AND EXPENDITURE AND THE DETAILED RULES FOR THE SAME IN ORDER TO CLAIM ANY INCOM E FROM THE AGRICULTURAL OPERATIONS. 5.6 IT IS TO BE NOTED THAT IT IS A NORMAL PRACTIC E TO CLAIM AGRICULTURAL INCOME IN THE RETURN OF INCOME AS IT IS A TAX FREE INCO ME AND THE BEST SOURCE EXPLAIN EVERY INVESTMENT IN ALL THE YEARS AS THERE IS NO TAXATION FO R THE AGRICULTURAL INCOME. THE SAME IS TAKEN FOR GRANTED AND ANY AMOUNT THAT WILL SUFFICE TO COVER THE INVESTMENTS MADE FROM THE UNDIS CLOSED INCOME IS PUT UNDER THE HEAD 'AGRICULTURAL INCOME' FOR ALL THE YEARS. IT IS TO BE NOTED THAT IT IS ONE OF THE CONCE SSIONS GRANTED BY AND IN THE WISDOM OF THE HON. PARLIAMEN T OF INDIA THROUGH THE INCOME TAX ACT IN ORDER TO HELP T HE FARMERS TO MAKE A LIVING BY DOING AGRICULTURE AND TO ENCOURAGE AGRICULTURE AND IT IS NEVER MEANT FOR MISUSE. 5.7 AS THE ASSESSEE HAS NOT K EPT ANY BOOKS OF ACCOUNTS FOR THE AGRICULTURAL OPERATIONS CONDUCTED AND NO EVIDENCE HAS BEEN KEPT AND PRODUCED FOR THE INCOME AND EXPENDITURE, THE SAID INCOME WHICH IS CLAIMED TO HAVE RECE IVED FROM AGRICULTURE CANNOT BE TAKEN AS GENUINE AND THE SAME IS CON SIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE AND TAXED AS THE UNEXPLAINED CASH CREDIT U / S 68 OF THE INCOME TAX ACT 1961 . THE SAID INCOME OF RS . 48,95,000J - RETURNED FOR THE AY 2011 - 12 IS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE. ITA NO . 226/C/2016 5 3 AGGRIEVED BY THE ASSESS MENT ORDER , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY ORDER DATED 3.2.2016. THE RELEVANT FINDINGS OF THE CIT(A), READ AS FOLLOWS: 5. IT IS SEEN THAT IN PARA 2(I) OF THE GROUNDS OF APPEAL THE APPELLANT HAS SUBMITTED THAT FOR THE ASST.YEARS 2004 - 05 TO 2009 - 10 AGRICULTURE INCOME WAS ESTIMATED BY THE AO AS WELL AS THE CIT(A). BUT, NO SUCH ORDERS FOR ESTIMATED AGRICULTURE INCOME ARE MADE AVAILABLE. IT IS ALSO NOT CLARIFIED WHETHER THE ASSESSEE INTENDS TO FOLLOW THE PRECEDENCE BASED ON THE ESTIMATION OF AGRICULTURAL INCOME OR ELSE, THE GROUND HAS BEEN RAISED ONLY FOR THE SAKE OF CREATING A SP ACE FOR SUBJECTIVE ARGUMENTS. AS A MATTER OF FACT, THE APPEAL ON THIS GROUND SINCE NOT SUBSTANTIATED WITH FACTS, FIGURES AND SU PPORTIVE DOCUMENTS, THE SAME IS NOT CONSIDERED FR DECIDING THE INSTANT APPEAL. II) THE ONLY SUBMISSION RELIED UPON BY THE APPELLANT, AND RAISED IN GR OUND NO.2(II) IS THE REPORT OF E STATE & A G RICULTURE INCOME VALUATION FROM WT APPROVED VALUER DATED 16.11.2 012 . 5.1 THE AO HAS MADE IT AMPLY CLEAR THAT (I) RULE S PRESCRIBED FOR THE COMPUTATION OF AGRICULTURAL INCOME IN PART IV OF THE FINANCE ACT HAVE NOT BEEN FOLLOWED AND (II) THE ASSESSEE HAS NOT KEPT ANY BOOKS OF ACCOUNTS AND NO DETAILS IN RESPECT OF INCOME AND EXPENDITURE WERE PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS . 5.2 AS A MATTER OF FACT THE OBSERVATIONS RAISED BY THE AO ARE VALID, AND IT IS FOUND THAT NOT FOLLOWING THE RULES FOR THE COMPUTATION OF AGRICULTURAL INCOME AND NOT PRODUCING THE BOOKS OF ACCOUNTS BEFORE THE AO, DESPITE GIVEN OPPORT UNITIES, COULD NOT BE SUBSTITUTED WITH A VALUATION REPORT SUGGESTING CERTAIN AGRICULTURAL INCOME. AS SUCH, THE AGRICULTURAL INCO ME SHOWN ON THE BASIS OF VALUATION REPORT CANNOT BE ACCEPTED IN VIEW OF THE NON - MAINTENANCE AND PRODUCTION OF THE BOOKS OF ACC OUN TS AND RELATED EVIDENCES. 5.3 PARA 2(II) IT HAS BEEN RAISED BY THE APPELLA NT THAT THE DETAILS OF AGRICULTURE SALES PROCEEDS AND EXPENSES ARE REFLECTED IN THE ACCOUNT COPY O THE CAPIT AL ACCOUNT SUBMITTED BEFORE THE AO. THE CONTENTION IN THE ASSESSMENT ORDER THAT NO ACCOUNTS FOR AGRIC ULTURE I NCOME WERE PRODUCED BEFORE HIM, HAS GOT NO PRIMA FACIE BASIS, TO ACCEPT THAT THE AO HAS DELIBERATELY ESCAPED, TO TAKE N OT E OF THE PRODUCTION OF ACCOUNTS ETC. FILING OF DETAILS AT THE TIME OF APPEAL PROCEEDINGS , WITHOUT SUBSTANTIATING AS TO WHAT HAVE BE EN THE REASONS BY VIRTUE OF WHICH THE DETAILS WERE NOT SUBMITTED BEFORE THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE SAME OTHERWISE CANNOT EVEN BE ADMI TTED AS ADDITIONAL EVIDENCE . ITA NO . 226/C/2016 6 6 ACCORDINGLY, IT IS HELD THAT THE ADDITIONAL EVIDENCE PRODUCED BEFORE APPEAL PROCEEDINGS WITHOUT GIVING ANY JUSTIFICATION AS TO WHY THE ASSESSEE FAILED TO PRODUCE BEFORE THE AO, THE SAME IS NOT ACCEPTED. IN VIEW OF THIS, THE ADDITION MADE BY THE AO IS UPHELD AND THE APPEAL IS DISMISSED. 4 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1 . THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - IV , KOCHI , I N APPEAL NO. ITA NO . /100/CIT - IV/14 - 15 DATED 03 . 02 . 2016 FOR THE ASSESSMENT YEAR 2011 - 12 IS OPPOSED TO LAW, WEIGHT OF EVIDENCE , FACTS AND CIRCUMSTANCES OF THE CASE. 2 . THE REASON CITED BY THE LD. CIT (APPEALS) FOR NOT ESTIMATING THE AGRICULTURAL INCOME OF THE APPELLANT IS NOT LEGALLY SUSTAINABLE .(VIDE PARA 5 OF THE APPELLA TE ORDER) I . THE REASONING OF THE LD . CIT (APPEALS) THAT, ORDERS OF THE LD . CIT (APPEALS) FOR THE EARLIER ASST . YEARS 2004 - 2005 TO 2009 - 2010 , WHERE AGRICULTURAL INCOME OF THE APPELLANT WAS ESTIMATED BY THE LD . ASSESSING OFFICER AS WELL AS BY THE LD . CIT (APPEALS), WERE NOT PRODUCED BEFORE THE LD. CIT (APPEALS) WAS AVE RTABLE, IN AS MUCH AS THE SAID RECORDS ARE AVAILABLE IN HIS OWN OFFICE OR ALTERNATIVE L Y HE SHOULD HAVE GIVEN THE APPELLANT AN OPPORTUNITY TO PRODUCE THE SAME, BEING AN EVIDENCE WHICH IS RELEVANT TO THE GROUND OF APPEAL . I I . THE LD . CIT (APPEALS) ERRED I N NOT CONSIDERING T HE SAID EVIDENCES FOR DECIDING THE INSTANT APPEAL . (VIDE PARA 5 OF THE APPELLATE ORDER) 3 . THE LD. CIT (APPEALS) ERRED LEGALLY IN NOT ACCEPTING THE ADDITIONAL EVIDENCE PRODUCED BEFORE APPEAL PROCEEDINGS (VIDE PARA 6 OF THE APPELLATE ORDER ) I . THE PLEADING OF THE APPELLANT THAT THE FILE CONTAINING THE SALE BILL OF RUBBER SHEETS , SLAUGHTER TAPPING AGREEMENTS ETC . WERE MISPLACED AND HENCE COULD NOT BE PRODUCED BEFORE THE LD. ASSESSING OFFICER , OUGHT TO HAVE BEEN ACCEPTED BY THE LD . CIT (APP E ALS), SINCE SUCH MISPLACEMENT CANNOT BE DELIBERATE , AS THE ASSESSEE DOES NOT STAND TO GAIN BY SUCH AN ACTION . ITA NO . 226/C/2016 7 II . THE LD. CIT (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE ABOVE SITUATION IS AN EXCEPTION TO RULE 46A WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE LD . ASSESS I NG OFFICER AN EVIDENCE WHICH IS RELEVANT TO THE GROUND OF APPEA L . RELIANCE IS PLACED ON RULE 46A (1) (C) OF THE INCOME TAX RULES. 4 . THE LD. ASSESSING OFFICER ERRED LEGALLY IN ASSESSING AS UNEXPLAINED CREDITS, AMOUNTS WHICH ARE NOT CREDITED IN THE BOOKS OF THE ASSESSEE RS . 15,00,609/ - (VIDE PARA 6 OF THE ASSESSMENT ORDER ) OUT OF THE TOTAL AGRICULTURAL INCOME OF RS.48,95,000/ - , THE APPEL L ANT HAS CREDITED ONLY RS. 33,94,391/ - IN THE CAPITAL A/C AS SALES PROCEEDS OF RUBBER SHEETS/SCRAPS DURING THE CURRENT ASSESSMENT YEAR , WHICH HAS BEEN ADDED BY THE LD . A . O . TO THE TOTAL INCOME CONSIDERING IT AS UNEXPLAINED CASH CREDIT U/S . 68 . FURTHER ADDITION OF RS . 15 , 00,609/ - AS UNEXPLAINED CREDITS IS NOT WARRANTED FOR THE BALANCE AMOUNT (RS . 48 , 95,000 - RS.33,94,391) , AS THIS AMOUNT HAS NOT BEEN CREDITED ANYWHERE IN THE BOOKS OF ACCOUNT OF THE APPELLANT . SEC . 68 IS ATTRACTED ONLY WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE . 5 . THE LD. ASSESSING OFFICE R ERRED IN LAW AND FACT BY MAKING AN ADDITION U/S.68 ON ACCOUNT OF DISALLOWANCES OF AGRICULTURE INCOME CREDITED IN THE BOOKS RS.33,94.391/ - (RS. 48,95,000 - RS.15,00,609) THE LD . ASSESSING OFFICER ERRED IN LAW AND FACT BY MAKING AN ADDITION OF RS. 33 , 9 4,391/= U/S. 68 ON ACCOUNT OF DISALLOWANCES OF AGRICULTURE INCOME, ON THE FOLLOWING GROUNDS: - I . THE LD . AO SHOULD HAVE CONSIDERED THE FACT THAT THE AGRICULTURE INCOME OF THE APPELLANT IS ESTIMATED BY THE AO AS WELL AS BY THE HON ' BLE COMMISSIONER (APPEALS) FOR THE ASST . YEARS 2004 - 05 TO 2009 - 10 AND HENCE, THE ENTIRE DISALLOWANCE OF AGRICULTURE INCOME RS . 48,95,000/ - IS HIGHLY UNWARRANTED. II. THE LD . AO HAS SHOULD HAVE CONSIDERED THE REPORT OF ESTATE & AGR I CULTURE INCOME VALUATION FROM WT APPROVED VALUE R DATED 16 - 11 - 2012 SUBMITTED BY THE APPELLANT IN SUPPORT OF THE CLAIM OF AGRICULTURE INCOME. THE RELEVANT PORTION OF THE CERTIFICATE IS REPRODUCED BELOW : - ITA NO . 226/C/2016 8 'THE PLANTATION IS CONSISTING OF THREE BLOCKS . ONE BLOCK MEASURING 76 ACRES AT KOTTEMPADAM I AND T WO BLOCKS MEASURING 4 ACRES 80 CENTS AND 4 ACRES ARE LOCATED IN KIZHAKKANCHERY VILLAGE . THE DISTANCE BETWEEN LATER TWO BLOCKS IS ABOUT FIVE KILOMETERS. EACH BLOCK I S LOCATED ABOUT 50 KILOMETERS AWAY FROM PALAKKAD . SY. NO. 235A/1,2 MEASURING 76 ACRES, WHI CH HAS AROUND 11000 RUBBER TREES, COCONUT TREES AND ARECA NUT PLANTS. OUT OF 11000 TREES 6000 TREES OF 8 YEARS OLD AND REMAINING 5000 TREES ARE OF 25 YEARS OLD . 6000 TREES ARE IN THE INITIAL STAGE OF YIELDING AND 5000 TREES . ARE IN PEAK LEVEL OF YIELDING. BESIDES, COCONUT TREES AND ARECA PLANTS ARE IN YIELDING STAGE . SY. NO. 351/P MEASURING 4 ACRE 80 CENTS HAS 1050 RUBBER TREES OF 18 YEARS AGES AND ARE YIELDING. SY NO. 448/P MEASURING 4.00 ACRES HAS 700 RUBBER TREES AND IS YIELDING. MAINTENANCE OF THE RUBB ER PLANTATION AREA IS SATISFACTORY' III . AGRICULTURE INCOME IS VALUED BY THE WT APPROVED VALUER FOR THE CURRENT ASST . YEAR IS RS. 56.35 LAKHS. HENCE, NET AGRICULTURAL INCOME OF RS.48.95 LAKHS DECLARED BY THE APPELLANT DURING THE CURRENT ASSESSMENT YEAR IS GENUINE AND SUPPORTED BY CONVINCING EVIDENCES. THE SAID VALUATION REPORT SHOULD HAVE BEEN ACCEPTED BY THE AOICIT (APPEALS) FOR THE PURPOSE OF ESTIMATION OF AGRICULTURAL INCOME OF THE APPELLANT AS IN EARLIER YEARS . IV. AS THE DETAILS OF AGRICULTURAL SA LES PROCEEDS AND EXPENSES ARE REFLECTED IN THE ACCOUNT COPY OF THE CAPITAL ACCOUNT SUBMITTED BEFORE THE AO, THE CONTENTION IN THE ASSESSMENT ORDER THAT NO ACCOUNTS FOR AGRICULTURE INCOME WERE PRODUCED BEFORE HIM IS NOT SUSTAINABLE. V . THE LD . CIT (APPEALS) O UGHT TO HAVE CONSIDERED THE ADDITIONAL EVIDENCES BEING SALE BILL OF RUBBER SHEETS, SLAUGHTER TAPPING AGREEMENTS ETC. PRODUCED BEFORE HIM, BEFORE DISMISSING THE ENTIRE AGRICULTURAL INCOME OF THE APPELLANT . 5 THE ASSESSEE HAS ALSO FILED THE PAPER BOOK COMP RISING OF 70 PAGES. THE PAPER BOOK CONSISTS OF COPIES OF THE ORDERS OF THE CIT(A) FOR THE AYS 2007 - 08 TO ITA NO . 226/C/2016 9 2009 - 10; PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES AND AN AFFIDAVIT IN SUPPORT OF THE ABOVE PETITION; COPIES OF THE INVOICES OF RUBBER SHEET SALE S AND COPY OF RUBBER SLAUGHTER TAPPING AGREEMENT. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN REJECTING THE EVIDENCE FURNISHED BEFORE HIM IN SUPPORT OF THE CLAIM OF AGRICULTURAL INCOME. IT WAS SUBMITTED THAT THE EVIDE NCE , NOW PRODUCED BEFORE THE TRIBUNAL , WAS ALSO PRODUCED BEFORE THE C IT (A), WHICH WAS NOT TAKEN ON RECORD BY HIM FOR THE REASON THAT IT WAS NOT FURNISHED BEFORE THE AO. THE ASSESSEE HAD FILED AN AFFIDAVIT BEFORE THE CIT(A) STATING THE REASONS FOR NON PR ODUCTION OF THE EVIDENCES BEFORE THE AO. THE REASONS STATED FOR NON PRODUCTION OF THE EVIDENCES BEFORE THE AO WAS THAT THE FILE CONTAINING THE SALE INVOICES OF RUBBER SHEETS AND COPY OF THE RUBBER SLAUGHTER TAPPING AGREEMENT, WERE MISPLACED AND THE SAME W AS TRACED ONLY DURING THE APPELLATE PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT THE NON PRODUCTION OF EVIDENCES BEFORE THE AO, WAS NOT DELIBERATE AS THE ASSESSEE COULD NOT STAND TO GAIN BY SUCH AN ACTION SINCE THE EVIDENCES ARE IN HER FAVOUR. THEREFORE, I T PRAYED THAT THE CIT(A) IS NOT JUSTIFIED IN NOT ADMITTING THE ADDITIONAL EVIDENCE. THE LD DR PRESENT WAS DULY HEARD. 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTED FACTS ARE THAT THE ASSESSEE IS THE OWNER OF ALMOS T 86 ACRES OF AGRICULTURAL LAND HAVING RUBBER PLANTATION, COCONUT TREES AND OTHER CROPS. THE AGRICULTURAL INCOME DECLARED IN THE PREVIOUS ASSESSMENT YEARS WERE ACCEPTED ITA NO . 226/C/2016 10 BY THE INCOME TAX AUTHORITIES. THE DETAIL S OF AGRICULTURAL INCOME ESTIMATED FOR THE EA RLIER ASSESSMENT YEARS ARE AS FOLLOWS : SL. N O ASST YEAR AGRL INCOME DECLARED IN IT RETURN ASST MADE U/S AGRL.INCOME ESTIMATED BY AO AGRL INCOME ESTIMATED/ADMITTED BY CIT(A) AGRL.INCOME ESTIMATED BY DEPT APPROVED VALUER 1 2007 - 08 5,19,324 153A 1,00,000 5,19,324 - 2 2008 - 09 15,41,950 153A 2,00,000 1 5,41,950 - 3 2009 - 10 15,96,842 143(3) 2,00,000 15,96,842 - 4 2010 - 11 18,27,682 O RDER U/S 143(1) RECEIVED ACCEPTING RETURNED INCOME 5 2011 - 12 48,95,000 143(3) NIL NIL 56,35,000 6.1 THE REASON FOR INCREASE IN THE AGRICULTURAL RECEIPTS FOR THE RELEVANT ASSESSMENT YEAR NAMELY AY 2011 - 012 IS ON ACCOUNT OF SLAUGHTER TAPPING. THE RECEIPT AGAINST THE RUBBER SLAUGHTER TAPPIN G IS TO THE TUNE OF RS. 42 LACS. COPY OF THE SLAUGHTER TRAPPING AGREEMENT OF RUBBER TREE S IS FURNISHED ON RECORD AT PAGES 52 TO 69 OF THE PAPER BOOK FURNISHED BY THE ASSESSEE. THE SALE OF RUBBER SHEETS BY THE ASSESSEE IS SUPPORTED BY SALE BILLS/INVOICES . THE TOTAL SALE RECEIPTS FOR RUBBER SHEETS IS TO THE TUNE OF RS . 11,26,762/ - . THE COPY OF SALE INVOICE S OF THE RUBBER SHEET IS FURNISHED AT PAGES 53 TO 67 OF THE PAPER BOOK FURNISHED BY THE ASSESSEE. THE ACCOUNT OF THE AGRICULTURE OPERATIONS FOR RUBBER PL ANTATION FOR THE AY 2011 - 12 FURNISHED BEFORE THE CIT(A) ARE AS FOLLOWS: A) SALE OF RUBBER SHEET SUPPORTED BY BILLS RS.11,26,762/ - B) RECEIPTS AGAINST SLAUGHTER TAPPING AGREEMENT RS. 42,00,000/ - TOTAL AGRICULTURAL RECEIPTS RS. 53,26,762 LESS AGRICULTURAL EXPENSES RS. 4,31,762 / - NET AGRICULTURAL INCOME DECLARED IN I T RETURN RS.48,95,000/ - ============ ITA NO . 226/C/2016 11 AGRICULTURAL INCOME CREDITED IN THE BOOKS DURING THE AY 2011 - 12 (CAPITAL ACCOUNT OF THE FIRM)(SUBMITTED BEFORE THE AO) RS.33,94,391/ - ============= 6.2 THE SALE RECEIPTS OF RUBBER SHEETS AND THE RECEIPT AGAINST THE SLAUGHTER TAPPING ARE SUPPORTED BY SALE INVOICES AND THE RUBBER SLAUGHTER TAPPING AGREEMENT. THE AGRICULTURAL INCOME RETURNED IN THE PREVIOUS ASSESSMENT YEAR S NAMELY AYS 2007 - 08 TO 2009 - 10 HAS BEEN ACCEPTED BY THE CIT(A ). FO R THE AY 2010 - 11 THE RETURNED INCOME WAS ACCEPTED IN THE ORDER PASSED U/S 143(1) OF THE A CT. THE REASON ING OF THE CIT(A) THAT THE ORDERS OF THE CIT(A) FOR THE EARLIER ASSESSMENT YEARS WHERE THE AGRICULTURAL INCOME OF THE ASSESSEE WAS ACCEPTED WERE NOT PRODUCED BEFORE THE CIT(A), ACCORDING TO US , IS NOT JUSTIFIED IN AS MUCH AS SUCH THE ORDERS/ RECORDS ARE AVAILABLE IN HIS OWN OF FICE OR ALT ERNATIVELY, HE SHOULD HAVE GIVEN ASSESSEE AN OPPORTUNITY TO PRODUCE THE SAME. THE PLEA OF THE ASSESSEE IS THAT THE FILE S CONTAIN ING THE SALE BILL S OF THE RUBBER SHEETS, THE SLAUGHTER TAPPING AGREEMENT ETC., WERE MISPLACED AND THE SAME COULD NOT BE FURNISHED BEFORE THE AO OUGHT TO HAVE BEEN ACCEPTED BY THE CIT(A) , SINCE SUCH THING CANNOT BE DELIBERATE AS THE ASSESSEE DOES NOT STAND TO GAIN OF SUCH ACTION. THE CIT(A) OUGHT TO HAVE CONSIDERED THE ABOVE SITUATION AND HELD THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING EVIDENCES BEFORE THE AO A ND ADMITTED THE SAME ON RECORD. T HESE EVIDENC ES, IN THE FORM OF SALE INVOICE, RUBBER SLAUGHTER TAPPING AGREEMENT AND ORDER S OF THE CIT(A) FOR EARLIER ASSESSMENT YEARS , ACCEPTING THE ITA NO . 226/C/2016 12 AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE ARE CRUCIAL EVIDENCE FOR DECIDING THE ISSUE ON HAND . HENCE, WE ADMIT THE SAME ON RECORD , FO R SUBSTANTIAL CAUSE AND JUSTICE . SINCE THE ADDITIONAL EVIDENCES ARE TAKEN ON RECORD, IT IS TO BE EXAMINED BY THE AO. ACCORDINGLY , THE MATTER IS REMIT TED TO THE FILE OF THE AO FOR DE - NOVO CONSIDERATION. THE AO SHALL EXAMINE THE ADDITIONAL EVIDENCES NOW FURNISHED BEFORE US AND SHALL DISPOSE OFF THE MATTER AS EXPEDITIOUSLY AS POSSIBLE AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF SEPT 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCH IN: DATED 9 TH SEPT 2016 RAJ* ITA NO . 226/C/2016 13 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN