Ajit Singh Randhawa, HUF, Amritsar. V. Dy. Commissioner of Income-tax, Amritsar.

ITA 240/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7796 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: P N ARORA LD
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. T.S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NO.240(ASR)/2015 ASSESSMENT YEAR:2009- 10 SH. AJIT SINGH RANDHAWA (HUF) 309, GREEN AVENUE, AMRITSAR. PAN:AACHA-7583G VS. DY. CIT, CIRCLE-V, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (LD. ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (LD. D.R) DATE OF HEARING:03.08.2017 DATE OF PRONOUNCEMENT:04.10.2017 ORDER PER N.K.CHOUDHRY: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 12.02.2015 PASSED BY THE LD. CIT(A), AMRITSAR, RELEVANT TO ASST. YEAR:2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL. (1.) THAT THE ORDER U/S 250(6) DATED 12-02-2015 PA SSED BY THE LD. CIT (A) IS BAD IN LAW AND IS AGAINST THE FACTS OF THE CASE. (2.) THAT THE LD. CIT(A) HAS GROSSLY ERRED IN ESTIM ATING EXPENDITURE ON UPROOTING, CUTTING, CLEANING, LOADING & TRANSPORTING THE POPLA R TREES AT 40% OF GROSS RECEIPTS BEING SALE PROCEEDS OF POPLAR TREES. (2.1) THAT THE LD CIT(A) HAS FAILED TO APPRECIATE T HAT A SUM OF RS.58841.00 HAD ALREADY BEEN DEDUCTED FROM SALE OF POPLAR TREES ON ACCOUNT OF UNLOADING, COMMISSION THEREBY ESTIMATING THE TOTAL EXPENDITURE ON SALE OF POPLAR TREES AT 44%. (3.) THAT THE LD CIT(A) HAS ERRED IN ESTIMATING THE TOTAL EXPENDITURE ON PRODUCTION OF WHEAT AT 32.82 % ON SALE PROCEEDS OF WHEAT & FURTHER 7.18% ON ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 2 CUTTING, THRESHING & TRANSPORTATION . THE LD CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT SUCH 32.82% INCLUDES NON CASH COST FOR HU MAN FAMILY LABOUR, COST OF OWNED ANIMAL LABOUR AND COST OF OWNED MACHINE LABOU R THE BENEFIT OF WHICH HAS NOT BEEN GRANTED TO THE APPELLANT. (4.) THAT THE LD CIT(A) HAS ERRED IN ESTIMATING THE TOTAL EXPENDITURE ON PRODUCTION OF PADDY AT 32.82 % ON SALE PROCEEDS OF PADDY & FUR THER 7.18% ON CUTTING, THRESHING & TRANSPORTATION FURTHER THE LD CIT(A) HA S FAILED TO APPRECIATE THE FACT THAT SUCH 32.82 % ALSO INCLUDES NON CASH COST FOR H UMAN FAMILY LABOUR, COST OF OWNED ANIMAL LABOUR AND COST OF OWNED MACHINE LABOU R THE BENEFIT OF WHICH HAS NOT BEEN GRANTED TO THE APPELLANT. (5.) THAT THE LD CIT(A) HAS ERRED IN ESTIMATING THE TOTAL EXPENDITURE ON INSECTICIDES, PESTICIDES AND BIRD PROTECTION ON MAN GOES TO THE TUNE OF 25% OF SALE PROCEEDS OF MANGOES. (6.) WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APP EAL, THE LD CIT(A) HAS COMMITTED A CLERICAL ERROR IN COMPUTING THE NON-AGR ICULTURAL INCOME OF THE APPELLANT AT RS.938895.00 AS AGAINST RS.877091.00 T HEREBY RESULTING IN SHORT RELIEF OF RS.61804.00. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE HAD FILED RETURN DECLARING REGULAR INCOME OF RS.13,39,480/- AND AGRICULTURAL INCOME OF RS.24,69,389 /-. THE ASSESSEE IS A HUF AND THE MAIN SOURCE OF INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS FROM THE HOUSE PROPERTY, AGRICULTURAL INCOME AND INCOME FROM OTHER SOURCES. THE CA SE WAS SELECTED FOR SCRUTINY AS PER CASS SOFTWARE AND THE ASSESSMENT WAS MADE U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 22.12.2 011. THE A.O HAS MADE AN ADDITION OF RS.9,87,755/- HOLDING THA T THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AT RS.24,69,389/ - IS HIGHLY INFLATED AND THE ASSESSEE HAS FAILED TO SATISFACTORILY EXP LAIN THE REASONS FOR INCREASE IN THE AGRICULTURAL INCOME AS COMPARED TO THE LAST YEAR AND HAS ALSO NOT SATISFACTORILY EXPLAINED THE DET AILS OF EXPENSES ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 3 INCURRED FOR EARNING AGRICULTURAL INCOME. FINALLY, THE ASSESSING OFFICER REDUCED THE AGRICULTURAL INCOME AS DECLARED BY THE ASSESSEE AT RS.24,69,389/- TO THE TUNE OF RS.14,81,633/- AND MADE AS DIFFERENCE OF RS.9,87,755/- AS ADDITION IN THE INCOME OF THE ASSE SSEE FROM OTHER SOURCES. 4. FEELING AGGRIEVED AGAINST THE ORDER, THE ASSESSEE PREF ERRED THE FIRST APPEAL BEFORE THE LD. CIT(A) AND IN SUPPORT OF ITS CASE SUBMITTED THAT THE LD. AO WRONGLY ESTIMATED THE EXPENDITURE ON FOLLOWIN G ITEMS WHICH ARE AS UNDER: (A) FIREWOOD @ 40% OF RS.12,92,505/- = RS.5,17,002/- (B) MANGO @ 25% OF RECEIPTS OF RS.4,90,544/- = 1,22,6 36 (C ) RICE EXPENSES @ 40% OF RS.3,87,669.38= 1,55,068/- (D) WHEAT EXPENSES @ 40% OF RS.3,60,474.36 = 1,44,18 9/- TOTAL=9,38,895/- THE ASSESSEE HAS ALSO FILED THE DETAILED REPLY AND SYNOPSI S IN RESPECT OF ITS CASE. THE LD. CIT(A) THOROUGHLY CONSIDERED THE SY NOPSIS AND JUDGMENT RELIED UPON BY THE ASSESSEE AND GIVEN PARTLY RELIEF OF RS.61,804/- BY DETERMINING THE ESTIMATE LABOUR EXPENSES ON UPROOTING, CUTTING, CLEANING & LOADING THE TREES ON THE TRACTOR/ TRANSPORTATION VEHI CLE AND FRIGHT EXPENSES FROM APPELLANT/ASSESSEE TO THE PURCHASER OF FIREWOOD IN L UDHIANA @ 40% OF THE GROSS RECEIPTS DECLARED BY THE APPELLANT FROM FIREWO OD SALES. FURTHER, ESTIMATED AT LEAST 25% OF THE EXPENDITURE I NCURRED ON SUCH AGRICULTURE INCOME QUA MANGOES RECEIPTS. FURTHER, BY ESTI MATING THE TOTAL EXPENDITURE ON PRODUCTION OF BODY AND WHEAT AND ITS CUTTING AND TRANSPORTATION @ 40% OF THE GROSS SALE VALUE OF PADDY A ND WHEAT. ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 4 5. THE ASSESSEE PREFERRED THE INSTANT APPEAL ON BEING NOT SATISFIED WI TH THE ORDER PASSED BY THE LD. CIT(A), AND IN SUPPORT OF ITS CASE MADE THE FOLLOWING SUBMISSIONS. THE ASSESSEE IS HAVING AGRICULTURAL INCOME AND DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SHOWED THE AGRI CULTURAL INCOME TO THE TUNE OF RS.24,69,389/-. THE AO DID NOT ACCEPT THIS INCOME AND CAME TO THE CONCLUSION THAT THE EXPENSES INCURRED ARE MORE AGAI NST RS.61,803/- SHOWN BY THE ASSESSEE. THE AO ACCORDINGLY MADE ADDITION OF R S.9,87,755/- AS PER DETAILS GIVEN HERE IN BELOW AND IN APPEAL BEFORE THE CIT(A) THE CIT(A) SUSTAINED THE SAME TO THE TUNE OF RS.9,38,895/- AGAINST RS.9,87,7 55/- ESTIMATED BY THE AO. THUS, THE CIT(A) ALLOWED THE RELIEF OF RS.48,860/-. THE DETAILS OF ADDITIONS MADE BY THE AO & SUSTAINED BY LD. CIT(A) ARE AS UNDER:- VARIETY ASSESSEE ASSESSING OFFICER WORTH CIT(A) FIREWOOD 1292505/- 1292505/- 40% X 1292505/- = 517002 BILLS AVAILABLE AT PAGE NO.64 TO 81 OF THE PAPER BOOK. MANGO 490544/- 490544/- 25% X 490544/- = 122636/- REFER PAGE NO.82 TO 90 OF THE PAPER BOOK. RICE 387669/- 387669/- 40% X 387669/- = 155068/- REFER PAGE NO.91 TO 93 [-FORM] 360478/- REFER PAGE NO.91 TO 93 [J-FORM] WHEAT LESS: EXPENSES 360478/- 2531196/- 61803/- 2469389/- 2531196/- 61803/- 2469393/- ITS 40% COMES TO RS.9,87,757/- 40% X 360478/- = 144189/- RS.9,38,895/- DIFFERENCE COMES TO RS.48,862/- IT IS PERTINENT TO POINT OUT THAT THE NECESSARY BIL LS AND FORM-J WERE DULY SUBMITTED BEFORE THE AO AS REFERRED ABOVE IN ORDER TO PROVE THAT THE SALE PROCEEDS ARE GENUINE AND THE DEPARTMENT HAS DULY VE RIFIED ALL THESE FACTS THROUGH THE INSPECTOR. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO HAS DULY VERIFIED ALL THE BILLS AND DEPUTED THE INSPECT OR SH. P.S. SALUJA TO CONDUCT FIELD ENQUIRY AND TO RECORD THE STATEMENT OF PERSON AVAILABLE AND ACCORDINGLY STATEMENT OF CARE TAKERS OF AGRICULTURAL OPERATIONS S. HAZARA SINGH, SH. ARJAN KUMAR WAS RECORDED BY INSPECTOR SH. P.S. SALUJA. IN THE STATEMENT OF S. HAJARA ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 5 SINGH RESIDENT OF VILLAGE TALWANDI LAI SINGH, TEHSI L BATALA, DISTT. GURDASPUR RECORDED ON 23/11/2011 [REFER PAGE NO.25 & 26 OF TH E PAPER-BOOK IN WHICH HE HAS ADMITTED THE FOLLOWING FACTS:- 1. WHEAT AND PADDY IS REGULARLY GROWN IN THE AGRICULTU RAL LAND OF S. AJIT SINGH RANDHAWA HUF. AND 2 - 2.5 YEARS BACK POPLAR P LANTS WERE SOLD WHICH WERE GROWN 6-7 YEARS BEFORE THE DATE OF SALE. 2. HE ALSO STATED THAT AS PER HIS MEMORY AROUND 800-8 50 POPULAR PLANTS WERE THERE AND ONE POPLAR PLANT MIGHT HAVE BEEN SOL D FOR A SUM OF RS.2000 (APP). FURTHER IN THE STATEMENT OF SH. ARJAN KUMAR RESIDEN T OF VILLAGE KANKOT CHOWK, SUJJANPUR ROAD, TEHSIL PATHANKOT RECORDED ON 23.11. 2011 THE FOLLOWING FACTS WERE ADMITTED:- [REFER PAGE NO.27 & 28 OF THE PAPER-BOOK 1. THAT AT PRESENT LITCHIS AND MANGOES HAVE BEEN GROWN IN THE AGRICULTURAL LANDS OF S. AJIT SINGH RANDHWA HUF. 2. HE ALSO STATED THAT HE IS NOT AWARE ABOUT HOW MUCH MANGOES AND FOR WHAT VALUE THEY HAVE BEEN SOLD AS HE IS ONLY A SUPERVISO R AND IS NOT CONCERNED WITH MONETARY MATTERS. FURTHERMORE, IT MAY BE SUBMITTED THAT THE AO DID NO T APPRECIATE THAT THE SALE PROCEEDS OF FIREWOOD RECEIPTS (SALE OF POPLAR) REPR ESENTS THE NET RECEIPTS AS PER FOLLOWING DETAILS:- GROSS RECEIPTS RS.13,51,348/- LESS: UNLOADING EXPENSES RS.8,457/- LESS: COMMISSION RS.50,384/- RS. 58,841/- NET RECEIPTS RS.12,92,505/- THUS, NO ADDITION IS CALLED FOR ON ACCOUNT OF SALE OF FIREWOOD AND THE ADDITION MADE MAY BE DELETED. IN THIS CONNECTION, IT IS PERT INENT TO POINT OUT THAT THE SAME QUESTION CAME UP FOR CONSIDERATION BEFORE THE IT AT, CHANDIGARH BENCH IN THE CASE OF VIVEK REKHA VS. ITO IN ITA NO. 1408/ CHD/2010 ORDER DATED 23/03/2011 ON LEASEHOLD LAND. THE COPY OF THE JUDGM ENT IS AVAILABLE AT PAGE NO.13 TO 24 OF THE COMPILATION OF JUDGMENTS IN WHIC H IT WAS HELD THAT THE EXPENSES IN THIS CASE SHOULD NOT EXCEED 15% ON POPL AR TREES. IT MAY BE POINTED OUT THAT IN CHANDIGARH CASE THE LAND WAS LEASEHOLD LAND ON WHICH LEASEHOLD CHARGES WERE ALSO PAID. THUS, THE EXPENSES SHOWN TO THE TUNE OF RS.58,841/- ARE QUITE REASONABLE AND THERE WAS NO REASON FOR MA KING ANY ADDITION ON THIS POINT. AS SUCH THE ADDITION MADE IS UNJUSTIFIED AND UNCALLED FOR AND THE SAME MAY BE DELETED. ALTERNATIVELY, THE ADDITION MADE IS VERY HIGH & EXCESSIVE. AS FAR AS MANGOES ARE CONCERNED, THE NECESSARY BILL S ON ACCOUNT OF SALES ARE AVAILABLE AT PAGE NO.82 TO 90 OF THE PAPER-BOOK FRO M WHICH IT IS CLEAR THAT THE EXPENSES INCURRED ON ACCOUNT OF LABOUR WERE DULY DE DUCTED. AS SUCH NO ADDITION IS AT ALL CALLED FOR. FOR THE PRODUCTION O F MANGO THE PRODUCTION ITSELF IS AUTOMATIC. AS SUCH THE ADDITION MADE IS UNJUSTIFIED AND UNCALLED FOR AND THE SAME MAY BE DELETED. ALTERNATIVELY, THE ADDITION MA DE IS VERY HIGH & EXCESSIVE. ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 6 AS FAR AS ADDITION MADE BY THE A.O. ON ACCOUNT OF R ICE & WHEAT IS CONCERNED BY APPLYING A RATE OF 40% IS CONCERNED, THIS ADDITION MADE IS ALSO NOT CALLED FOR. THE NECESSARY EXPENSES WERE ALSO INCURRED AND THEY HAVE BEEN DEDUCTED BY THE PURCHASER AND THESE ARE DULY PROVED FROM THE J-FORM ISSUED WHICH ARE AVAILABLE AT PAGE NO.91 TO 96 OF THE PAPER-BOOK. AS FAR AS THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) ARE CONCERNED THE CIT(A) HAS CONFIRMED THE EXPENSES AT 40% IN RICE AND WHEAT. IT IS RELEVANT TO POINT OUT THAT WE HAVE ALSO SHOWN THE C LAIM OF CERTAIN EXPENSES BUT THE CONFIRMATION OF ADDITION @ 40% IS VERY HIGH & E XCESSIVE AND THIS VIEW IS SUPPORTED BY THE DECISION OF IT AT, AMRITSAR BENCH IN THE CASE OF JAGPREET SINGH IN ITA NO.559 & 600(ASR)/2013, ORDER DATED 23 /01/2014. A COPY OF THE JUDGMENT IS PLACED AT PAGE NO.5 TO 12 OF THE PAPER- BOOK. IN THIS CONNECTION YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF P&H HIGH COURT IN THE CASE OF CIT VS. JARNAIL SINGH REPORTED IN 316 ITR 160 [R EFER PAGE NO.L TO 4 OF THE PAPER-BOOKL. THUS VIEWED FROM ALL THE ANGLES I.E. T HE ASSESSEE HAS CLAIMED EXPENSES ON THE SAID PRODUCE AND AT THE TIME OF SAL E THE BUYER HAS DEDUCTED CERTAIN EXPENSES AND LOOKING TO THE FACTS AND CIRCU MSTANCES OF THE CASE NO ADDITION IS CALLED FOR AND THE SAME MAY BE DELETED. ALTERNATIVELY THE ADDITION SUSTAINED BY THE CIT(A) IS VERY HIGH & EXCESSIVE. FINALLY, IN ADDITION TO THE SUBMISSIONS AS RECORDED ABOV E, THE LD. AR SUBMITTED THAT IN SIMILAR AND IDENTICAL CIRCUMSTANCES THE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JARNAIL SINGH REPORTED IN 316 ITR 160 HELD THAT 20% EXPENSES INCURRED WAS HELD TO BE REASONABLE AND GENU INE. FURTHER THE HONBLE ITAT CHANDIGARH BENCH, ON THE SIM ILAR FACTS AND CIRCUMSTANCES ALLOWED THE EXPENDITURE @ OF 50% ON POPLAR TREES. 6. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCE S OF THE CASE AS IN THE INSTANT CASE WITH REGARD TO THE POPLAR TREES/FI REWOOD. THE LD. CIT(A) ESTIMATED THE EXPENDITURE @ 40% OF THE GROSS RECEIPT DE CLARED BY THE ASSESSEE BY OBSERVING AS UNDER: ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 7 THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAD GOT ALL THE BILLS VERIFIED AND FILED ENQUIRY WERE CONDUCTED BY DEPUTING THE INSPECTOR AND STATE3MNTS OF CARETAKER OF AGRICULTURAL OPERATIONS SH. HAZAR SINGH AND SH. ARJAN KUMAR WERE RECORD BY THE INSPECTOR. AS REGARDS THE EXPENDITURE OF AGRICULTURAL OPERATIONS , THE APPELLANT EXPLAINED THAT NO EXPENDITURE WAS INCURRED ON THE SALE OF POPLAR TRESS (EXCEPT COMMISSION AND UPHOLDING CHARGES) WHI CH HAVE ALREADY BEEN DEDUCTED FROM GROSS RECEIPTS OF FIREWOOD. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE BASIS OF FIXATION OF PRICE ON AGRICULTURE PRODUCE BY THE APEX BODY AND TO GIVE COPY OF AGREEMEN T EVIDENCING THE BURDEN OF CLEANING, UPROOTING AND LOADING OF PO PLAR TREES. IN THIS REGARD, THE APPELLANT SUBMITTED THAT THERE WAS NO WRI TTEN AGREEMENT PERTAINING TO THE SAME BUT AS PER THE VERBAL AGREEMEN T THE PURCHASERS WERE LIABLE TO PAY THE SAME. THE OTHER EXPENSES WERE BORNE BY THE APPELLANT WHICH HAVE BEEN DEDUCTED FROM THE GROSS RECEI PTS OF POPLAR TREES. AS REGARDS THE BASIS OF FIXATION OF AGRICULTURE PR ICES THE APPLICANT SUBMITTED THE EXTRACT OF PUNJAB DATA DOWNLOA DED FROM THE WEBSITE OF DIRECTORATE OF ECONOMICS & STATISTICS FOR WHEA T AND PADDY IN PUBJAB FOR 2008-09. AFTER ANALYZING THE DATA THE AP PLICANT SUBMITTED THE ACTUAL COST INCURRED IN PROPORTION THE MINIMUM SUPP ORT PRICE FIXED WAS ONLY 32.82 PERCENT. THIS MINIMUM SUPPORT RICE IS FIX ED ON ALL INDIA BASIS AND THE ACTUAL PRICE FIXED MAY BE MORE OR LESS DEPE NDING ON THE CONDITIONS IN THAT STATE. FURTHER, IT WAS OBSERVED BY THE LD. CIT(A) THAT DURI NG THE YEAR UNDER CONSIDERATION THE APPELLANT HAVE SHOWN GROSS RECEI PTS ON SALE OF POPLAR TREES AT RS.13,51,348/- FROM WHICH AFTER DEDUCTI NG UNLOADING AND COMMISSION EXPENSES THE NET RECEIPTS DECLARED WERE RS.12,92,505/-. THE APPELLANT HAD SHOWN NO EXPENDITU RE ON CUTTING OF ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 8 POPLAR TREES, UPROOTING OF ROOTS AND TRANSPORTATION OF CUT TREES TO THE PURCHASERS. WITH REGARD TO EXPENSES ON CLEANING UPROOTING , LOADING OF POPLAR TREES THE APPELLANT STATED THAT THERE WAS NO WR ITTEN AGREEMENT PERTAINING TO THE SAME BUT AS PER VERBAL AGREEMENT WI TH THE PURCHASER, THEY WERE LIABLE TO PAY THE SAME. THE SAID CL AIM OF THE APPELLANT IS NOT SUPPORTED WITH ANY IOTA OF EVIDENCE AND UNSUBSTIA TED VERBAL AGREEMENTS ARE MEANINGLESS. CONSIDERABLE EXPENSES ARE INCURRED ON CUTTING AND UPROOTING OF POPLAR TREES WHICH AS PER THE STATEMENT OF SH. HAZARA SINGH NUMBERED 800 TO 850 TR EES, WHICH HAS NOT BEEN DISPUTED BY THE AO. THE AO HAD FURTHER ESTIM ATED AVERAGE FIREWOOD OBTAINED FROM 850 POPLAR TREE AT 3190 QUAN TIL WHICH WAS NOT DISPUTED BY THE APPELLANT. THEREFORE, CONSIDERABLE EXP ENDITURE ON LABOUR FOR CUTTING AND UPROOTING OF 850 TREES AND THE RE LOADING ON THE TRACTOR/TRANSPORT VEHICLE FOR SALE CANNOT BE DISPUTED. THE APPELLANT HAD NOT SUBMITTED ANY CONFIRMATION OR A FFIDAVIT OF THE PURCHASER OF FIREWOOD/POPLAR TREES IN SUPPORT OF HIS CONT ENTION THAT THE EXPENDITURE ON CLEANING UPROOTING AND LOADING OF POP LAR TREES WAS BORNE BY THE PURCHASERS ONUS WAS UPON THE APPELLANT TO PRODUCE EVIDENCE IN SUPPO RT OF HIS CLAIM THAT NO EXPENDITURE ON CLEANING, UPROOTING AND LOADING OF POPLAR TREES WAS BORNE BY IT BUT THE SAME HAVE NOT BEEN DISCHAR GED. FURTHER IN THE WRITTEN SUBMISSIONS DATED 10.11.2014, THE APPELL ANT HAS NOT EVEN MENTIONED THE EXPENSES AND EXPENDITURE AT CUTTING OF POPLAR TREES AND THERE TRANSPORTATION EXPENSES TO THE PURCHASER S. IT IMPLIES THAT EXPENDITURE ON CUTTING OF POPLAR TREES AND THEIR TRANSPORTATION TO THE PURCHASERS WAS BORNE BY THE APPELLANT BUT THE SAME H AS NOT BEEN SHOWN IN THE AGRICULTURE INCOME AND EXPENDITURE ACCOUNT . THE APPELLANT HAD SUBMITTED THE COPIES OF BILLS OF PURCHASERS OF FIREWOOD ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 9 NAMELY M/S NATHU RAM & SONS OF LUDHIANA AND S.R. TRADING COMPANY, LUDHIANA. THE AO HAD RIGHTLY OBSERVED THAT IN THE EXPENDITURE COLUMN OF THE BILLS THE SAID PURCHASERS OF FIREWOOD IN THE FREIGHT EXPENDITURE COLUMN MENTIONED PAID BY YOU. IT PROVES BETWEEN THAT THE EXPENDITURE ON FREIGHT ON TRANSPORT ATION ON FIREWOOD FROM THE APPELLANT TO THE PURCHASERS HAVE BORNE BY TH E APPELLANT, WHICH HAS NOT BEEN DISCLOSED BY HIM IN THE AGRICULTURE IN COME AND EXPENDITURE ACCOUNT. IN THE WRITTEN SUBMISSIONS, THE APPELLANT HAS NOT REFUT ED THE OBSERVATION OF THE AO THAT THE FREIGHT ON TRANSPORTAT ION OF FIREWOOD WAS BORNE BY THE APPELLANT AS THE SAME IS EVIDENCED BY T HE PURCHASERS BILLS OF THE PURCHASERS M/S NATHU RAM AND SONS A ND M/S S.R.TRADING COMPANY. I ESTIMATE LABOUR EXPENDITURE O N UPROOTING, CUTTING THE TREES, CLEANING & LOADING THE TREES ON THE TRACTOR/TRANSPORTATION VEHICLE AND FREIGHT EXPENSES FROM APPELLANT TO THE PURCHASERS OF FIREWOOD IN LUDHIANA @ 40% OF THE GR OSS RECEIPTS DECLARED BY THE APPELLANT FROM FIREWOOD SALES. FROM THE ORDER PASSED BY THE LD. CIT(A) AS WE LL AS ASSESSING OFFICER, IT REFLECTS THAT THE ASSESSEE HAD NOT DISCLOSED LABOUR EXPEN DITURE ON CUTTING THE TREES, CLEANING & LOADING THE TREES ON THE TRACTORS /TRANSPORTATION VEHICLE AND FREIGHT EXPENSES AND FROM THE BILLS OF PURCHASERS IT CLEARLY REFLECTS THAT FREIGHT EXPENDITURE HAS BEEN PAID BY THE ASSESSEE/APPELL ANT ONLY. EVEN CONSIDERABLE EXPENDITURE ON LABOUR FOR CUTTING AND UPR OOTING OF APPROXIMATELY 850 TREES AND ITS LOADING ON THE TRACTO R/TRANSPORT VEHICLE FOR SALE HAS NOT BEEN DISPUTED BY THE ASSESSEE AND THE APPELL ANT HAS NOT SUBMITTED ANY CONFIRMATION OR AFFIDAVIT OF THE PURCHASE R OF FIREWOOD/POPLAR TREES IN SUPPORT OF HIS CONTENTION THAT THE EXPENDITURE ON CLEANING UPROOTING AND LOADING OF POPLAR TREES WAS BORNE BY THE PURCHASERS. ONUS WAS UPON THE ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 10 APPELLANT TO BRING ON RECORD EVIDENCE IN SUPPORT OF HI S CLAIM TO THE EFFECT THAT NO EXPENDITURE ON CLEARING, UPROOTING AND LOADI NG OF POPLAR TREES WAS BORNE BY THE ASSESSEE, HOWEVER, IT IS UNDISPUTED FACT TH AT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS. HENCE, WE ARE OF THE CONSIDE RED OPINION THAT THE LD. CIT(A) RIGHTLY CONSIDERED THE EXPENSES WHICH HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN THE AGRICULTURE INCOME AND EXPENDITURE A CCOUNT, HOWEVER, CONSIDERING THE JUDGMENT RENDERED BY THE ITAT, CHANDI GARH (A) BENCH IN THE CASE OF SHRI VIVEK REKHAN VS. ITO, WARD 3, IN ITA NO.1408/CHD/2010, DATED 23.03.201 DOES NOT APPLY TO THE FACTS IN THE INSTANT CASE AS IN THE SAID CASE THE ASSESSEE HAD CLEARLY SHOWN TO HAVE BEEN INCURRED EX PENSES ON THE PRODUCTION OF CUTTING AND TRANSPORTATION OF THE POPLA R TREES, HOWEVER, IN THE INSTANT CASE, THE ASSESSEE DID NOT DISCLOSE IN THE AGRICULTU RAL INCOME AND THE EXPENDITURE ACCOUNT. WHILE RESPECTFULLY FOLLOWING THE J UDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JAR NAIL SINGH REPORTED IN (2009)316 ITR 0160 IN WHICH THE HONBLE HIGH COURT CON SIDERED THE NET EXPENSES @ 25% AS JUSTIFIED. HENCE, WHILE RESPECTFULLY FOLLOWING THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT AND EVEN OTHERWISE, IT WAS SUB MISSION OF THE LD. AR MR. P.N. ARORA FOR REDUCTION OF THE SAID ESTIMATE AS EST IMATED BY THE LD. CIT(A) TO THE EXTENT OF 25% ONLY. HENCE, WE ESTIMATE T HE EXPENDITURE ON ACCOUNT OF UPROOTING, CUTTING, CLEANING AND LOADING TR EES ON THE TRACTOR/TRANSPORTATION VEHICLE AND FREIGHT EXPENSES TO T HE TUNE OF 25%. HENCE, ORDERED ACCORDINGLY. THEREFORE, GROUND NO.2 IS ALLOWED . 7. GROUND NOS. 1 & 7 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY INDEPENDENT ADJUDICATION. 8. GROUND NO. 3 & 4:- IT WAS SUBMITTED BY THE LD. AR THAT LD. CIT(A) HAS ERRED IN ESTIMATING THE TOTAL EXPENDITURE ON PROD UCTION OF WHEAT AND ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 11 PADDY AT 32.82 ON SALE PROCEEDS OF PADDY AND FURTHER 7 .18% ON CUTTING, THRESHING & TRANSPORTATION. FURTHER, THE LD. CIT(A) H AS FAILED TO APPRECIATE THE FACT THAT SUCH 32.L82% ALSO INCLUDES NON CASH COST FOR HUMAN FAMILY LABOUR, COST OF OWNED ANIMAL LABOUR AND COST OF OWNED MACHINE LABOUR THE BENEFIT OF WHICH HAS NOT BEEN GRANTED TO THE APPELLA NT. THE ASSESSING OFFICER IN ITS ORDER GIVEN THE FOLLOWING REASONS FOR ESTIMATIN G THE EXPENDITURE ON THE AGRICULTURAL INCOME. (I) EXPENDITURE ON AGRICULTURE HAS BEEN SHOWN AT RS.61,803/ - WHICH WAS GROSSLY INADEQUATE. (II) THE ASSESSEE WAS A PRACTICING DOCTOR AT AMRITSAR AND IT IS ABUNDANTLY CLEAR THAT AGRICULTURAL ACTIVITIES HAVE BEE N CARRIED OUT BY ENGAGING LABOUR/SUPERVISOR CARRIED OUT AGRICULTURE A CTIVITY ON THE AGRICULTURAL LAND HOLDING WHICH IS SITUATED AT FAR OF PLACE. (III) THE ASSESSEE HAS NOT FURNISHED ANY DETAILS OF INCOME & EXPENDITURE IN RESPECT OF PESTICIDES, SEEDS AND AGRICULT URAL IMPLEMENTS INCLUDING TRACTOR, TROLLEY FOR THE SALE OF R ICE AND WHEAT. THE SALE OF RICE AND WHEAT HAS BEEN SHOWN AT RS.7 .47 LACS ON WHICH APPROXIMATE EXPENDITURE ON CULTIVATION IS RANGES FROM 30 TO 40% BUT THE ASSESSEE HAS NOT SHOWN THE CORRESPONDING EXPENSES ON CULTIVATION OF RICE & WHEAT CROP S. THE LD. CIT(A) WHILE ESTIMATING THE EXPENDITURE ON THE AGRICULTURAL PRODUCE, TAKEN INTO THE REASONS GIVEN BY THE AO FOR NO T ACCEPTING THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AT RS.24,69,389/ - WHICH ARE REPRODUCED HEREIN BELOW. 1. EXPENDITURE ON AGRICULTURE HAS BEEN SHOWN AT RS.61, 803/- WHICH IS GROSSLY INADEQUATE. ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 12 2. THE ASSESSEE IS A PRACTICING DOCTOR AT AMRITSAR AND IT IS ABUNDANTLY CLEAR THAT AGRICULTURAL ACTIVITIES HAVE BEEN CARRIED OUT BY EN GAGING LABOUR/SUPERVISOR IN RESPECT OF LAND HOLDING WHICH IS SITUATED AT FAR OF PLACES. THE MINIMUM EXPENDITURE ON LABOUR/SUPERVISOR IS ESTIMATED AT RS .10,000/- PER MONTH. 3. THE ASSESSEE HAS NOT FURNISHED ANY DETAIL OF INCOME & EXPENDITURE IN RESPECT OF PESTICIDES, SEEDS AND AGRICULTURAL IMPLEMENTS INCLU DING TRACTOR, TROLLEY. 4. THE SALE OF RICE & WHEAT HAS BEEN SHOWN AT RS.7.47L ACS ON WHICH APPROXIMATE EXPENDITURE ON CULTIVATION IS RANGES FROM 30% TO 40 % BUT THE ASSESSEE HAS NOT. SHOWN THE CORRESPONDING EXPENSES ON CULTIVATION OF RICE & WHEAT CROPS. 5. THE FIRE WOOD OF POPLAR TREES HAS BEEN SOLD AT LUDH IANA. THE ASSESSEE HAS STATED THAT CARRIAGE EXPENSES WERE BORNE BY THE COMMISSION AGENTS NAMELY M/S. NATHU RAM & SONS & M/S. S.R. TRADING CO. WHEREAS TH E PURCHASE BILLS OF THE COMMISSION AGENTS DO NOT SHOW FREIGHT EXPENSES. MOR EOVER, THEY HAVE MENTIONED AGAINST FREIGHT PAID BY YOU. THE LD. CIT(A) WHILE ESTIMATING THE MINIMUM EXPENDIT URE ON THE PRODUCTION OF WHEAT AND PADDY @ 32.82% OF THEIR GROSS SALE VALUE AND OBSERVED THAT THE APPELLANT HAD BORNE THE EXPENDITURE QUA PLANTAT ION, FERTILIZERS, IRRIGATION, PESTICIDES, INSECTICIDES, CUTTING AND TRANSPORTATION OF THE RICE & WHEAT PRODUCE FOR SALE. THE PLANTATION OF RICE IS LABOUR INT ENSIVE; BOTH PADDY AND WEHAT CROP REQUIRE TILLING WEEDING, MANUERING AND PR OTECTION FROM BIRDS AND ANIMALS WHICH OF REQUIRE LABOUR THROUGHOUT THE CROP G ROWING PERIOD. BESIDES, CONSIDERABLE EXPENDITURE IS INCURRED ON PROTECTIO N OF CROPS FROM PESTS BY SOIL HAS TO BE DONE TO ENSURE GOOD YIELD OF CRO P. NO EXPENDITURE ON THESE HEADS HAVE BEEN SHOWN BY THE APPELLANT IN THE AG RICULTURE INCOME AND EXPENDITURE ACCOUNT WHICH WERE ESTIMATED BY THE AO TO R ANGE FROM 30 TO 40%. THE LD. CIT(A) ALSO TAKEN THE FIXATION OF PRICE ON AGRICULTURE PRODUCE BY THE APEX BODY AND ON SPECIFICALLY BEING ASKED TO THE ASSESSEE/APPELLANT TO PRODUCE THE SAME AND THE ASSESSEE REPLY THAT THERE WA S NO WRITTEN AGREEMENT PERTAINING TO THE SAME BUT AS PER VERBAL AG REEMENT THE PURCHASERS WERE LIABLE TO PAY THE SAME AS REGARDS THE BASI S OF FIXATION OF AGRICULTURE PRICES THE APPLICANT SUBMITTED THE EXTRACT O F PUNJAB DATA ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 13 DOWNLOADED FROM THE WEBSITE OF DIRECTORATE OF ECONOMICS & STATISTICS FOR WHEAT AND PADDY IN PUBJAB FOR 2008-09. AFTER ANALYZ ING THE DATA THE APPLICANT SUBMITTED THE ACTUAL COST INCURRED IN PROPORTIO N THE MINIMUM SUPPORT PRICE FIXED WAS ONLY 32.82 PERCENT. THIS MINIMUM SUPPORT PRICE IS FIXED ON ALL INDIA BASIS AND THE ACTUAL PRICE FIXED MAY BE MORE OR LESS DEPENDING ON THE CONDITIONS IN THAT STATE AND ON THE DATA/ESTIMATES GIVEN BY THE COMMISSION, THE ASSESSEE/APPELLANT ESTIMATED THE COSTS INCURRED ON THE SALE OF WHEAT AND PADDY BY THE AGENCY DURING THE YEAR UNDER CONSIDERATION. (I) 33.01% ON THE WHEAT (II) 28.03% ON THE PADDY. THE APPELLANT EXPLAINED THAT HE HAD ALREADY DEBITED A SU M OF RS.61803.74 IN THE INCOME AND EXPENDITURE ACCOUNT BEING EXPENDITURE INCUR RED IN CROPS MAINLY WHEAT AND PADDY, THEREFORE, THE EXPENDITURE INCURRE D BY THE ASSESSEE IS ON THE LOWER SIDE S NO PAYMENT FOR SEEDS WAS MADE AS THE SE EDS WERE TAKEN FROM THE LAST YEARS PRODUCTION. ON THE AFORESAID CONSIDERATION AS THE APPELLANT HIMSELF HAS ESTIMATED THE EXPENDITURE ON WHEAT AND PADDY ON THE BASIS OF DA TA GIVEN BY THE COMMISSION @ 33.01% AND ON SALES FOR WHEAT AND 28.3% OF SALES FOR PADDY. THE COMMISSION FOR AGRICULTURE COST AND PRICES HAD ESTIMATE D THE ACTUAL COSTS INCURRED IN PROPORTION TO MINIMUM SUPPORT PRICES FI XED AT 32.82 % FOR RICE AND WHEAT AS MENTIONED BY THE APPELLANT IN HIS W RITTEN SUBMISSION DATED 10.11.2014. THEREFORE, WE ARE IN CONCURRENCE WIT H THE LD. CIT(A) WHO HAVE ESTIMATED THE MINIMUM EXPENDITURE INCURRED BY TH E APPELLANT ON PRODUCTION OF WHEAT AND PADDY @ 32.82% ON THE GROSS SAL E VALUE. FURTHER ESTIMATED THE EXPENDITURE ON CUTTING RICE AND WHEAT CROP, THRESHING, THE GRAINS AND TRANSPORTATION OF THE WHEAT AND RICE CROP FOR SALE WHICH HAS ALSO NOT BEEN DECLARED BY THE APPELLANT IN TH E AGRICULTURAL INCOME AND EXPENDITURE ACCOUNT. ACCORDINGLY, THE LD. CIT(A) EST IMATED OVER ALL ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 14 EXPENDITURE ON PRODUCTION OF PADDY AND WHEAT, THEIR CUTTING AND TRANSPORTATION @ 40% OF THE GROSS SALE VALUE OF PADDY A ND WHEAT. IN OUR CONSIDERED OPINION HAS ALSO RELIED UPON THE JUD GMENT PASSED BY THE JURISDICTIONAL HIGH COURT, THE JUSTICE WOULD BE ME T IF THE ESTIMATION OF 40% BE REDUCED TO 35% IN PROPORTION TO GROSS SALE VALUE BECAUSE THE MINIMUM EXPENDITURE HAS ADMITTED BY THE ASSESSEE @ 32.82 % CANNOT BE CONSTRUED INCLUSION OF EXPENDITURE ON CUTTING RICE AND WHEAT CROP, THRESHING THE GRAINS AND TRANSPORTATION OF THE WHEAT AND RICE CR OP FOR SALE. HENCE, WE ESTIMATE EXPENDITURE FOR OVER ALL ACTIVITIES CONCERNING THE WHEAT AND PADDY CROP TO THE TUNE OF 35% OF THE GROSS SALE VALUE. HENCE, ORDER ACCORDINGLY. 9. NOW, COMING TO GROUND NO. 4 & 5, WHILE ESTIMATING THE EXPENDITURE @ 25% ON THE MANGO RECEIPT OBSERVED AS UNDER: THE APPELLANT HAS SHOWN MANGOES RECEIPTS AT RS.4,19,544/ - BUT HAS NOT SHOWN ANY EXPENDITURE ON THE SAME. FOR THE PRODUCT ION OF MANGO FRUITS FROM BIRDS THE APPELLANT WOULD HAVE DEPLOYED CARETAKERS TO ENSURE THAT THE GROWING FRUIT IS PROTECTED FROM BIRDS. FURTHER TO PROTECT THE MANGOES FROM PESTS, INSECTICIDES HAVE TO BE AP PLIED AT SEVERAL STAGES OF THE GROWING FRUIT NORMALLY BEFORE TH E BUDDING, OF THE FLOWERS, AND THEN SEVERAL TIMES DURING THE RIPENING O F THE FRUIT CROP IS PROTECTED AND GIVES A GOOD YIELD. THE EXPENDITURE INCU RRED ON SUCH EXPENSES HAS NOT BEEN SHOWN BY THE APPELLANT IN THE AGR ICULTURE INCOME AND EXPENDITURE ACCOUNT. I ESTIMATE THAT AT LEAST 25% OF THE MANGO RECEIPTS IS EXPENDITURE INCURRED ON SUCH AGRICULTU RE OPERATIONS AS DISCUSSED ABOVE ON MANGO FRUIT. RESPECTFULLY FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT AS REFERRED ABOVE AND RELIED UPON BY THE LD. AR, WE DO NOT FIND INTENT TO ESTIMAT E THE EXPENDITURE ON MANGO RECEIPTS TO THE TUNE OF 25% WHICH ACCORDING TO OUR MIND HAS ALREADY BEEN ESTIMATED REASONABLY BY THE LD. CIT(A ) AND WE DO NOT FIND ANY REASON OR MATERIAL TO UPSET THE FINDING OF THE LD. CIT(A) ITA NO.240 (ASR)/2015 ASST. Y EAR:2009-10 15 IN THIS REGARD. HENCE, THE EXPENDITURE AT 25% OF THE MANGO RECEIPTS STANDS UPHELD. 10. GROUND NO.6 RELATES TO THE CLERICAL ERROR IN COMPUTING THE NON AGRICULTURAL INCOME OF THE APPELLANT AT RS.938,895/- A S AGAINST RS.8,77,091/- DOES NOT REQUIRE ANY INDEPENDENT ADJUDI CATION AS THE REVENUE DEPARTMENT HAS TO COMPUTE THE INCOME ON THE BA SIS OF THE AFORESAID OBSERVATIONS AND DIRECTIONS OF THE ORDER. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.10.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:04.10.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER