The ITO, Ward-2, Vapi V. Smt. Nirmalaben Ramanlal Shah, Vapi

ITA 2416/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0298 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 17-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: N O N E
• Keywords: Difference of opinion; Tax effect; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGARWAL, A.M.) I.T.A. NO. 2416/AHD./2009 ASSESSMENT YEAR : 2004-2005 INCOME TAX OFFICER, VAPI WARD-2, VAPI -VS.- SMT. NIRMALABEN RAMANLAL SHAH, VAPI (P.A. NO. AEQPS 7724 B) (APPELLANT) (R ESPONDENT) & C.O. NO. 207/AHD./2009 (ARISING OUT OF I.T.A. NO. 2416/AHD/2009) ASSESSMENT YEAR : 2004-2005 SMT. NIRMALABEN RAMANLAL SHAH, VAPI -VS.- I NCOME TAX OFFICER, WARD-2, VAPI (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : N O N E DEPARTMENT BY : SMT. NEETA SH AH O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- THE APPEAL BEING ITA NO. 2416/AHD/2009 BY THE REVENUE AND CROSS OBJECTION BEING C.O. NO. 207/AHD/ 2009 (ARISING OUT OF ITA NO. 2416/AHD/2009) BY THE ASSESSEE ARE AGAINST THE ORDE R DATED 29.05.2009 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VALSAD FOR TH E ASSESSMENT YEAR 2004-2005. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE FILED HER RETURN OF INCO ME ON 30.08.2004 DECLARING TOTAL INCOME AT RS.3,12,080/- AND AGRICULTURAL INCOME OF RS.4,50,29 0/-. THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 21.07.2006. SUBSEQUENTLY, THE CAS E WAS RE-OPENED AFTER RECORDING THE SATISFACTION AND REASON BY THE A.O. AND DUE APPROVA L FROM THE JOINT CIT, VAPI RANGE. THE SAID NOTICE WAS ISSUED ON 28.01.2008. THEREAFTER AFTER C ALLING NECESSARY DETAILS, THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 147 READ WITH SECTION 143( 3) ON 24.12.2008, WHEREIN HE TREATED RS.3,00,000/- AS INCOME FROM OTHER SOURCES. 3. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS), IT WAS CONTENDED THAT AGRICULTURAL INCOME FROM FRUIT ORCHARDS (MAINL Y MANGOES & CHIKOOS) WAS DULY EXAMINED AND THEN ACCEPTED BEFORE COMPLETION OF ORIGINAL ASSESSM ENT ORDER UNDER SECTION 143(3) ON 21.07.2006. HE CONTENDED THAT THOSE ORCHARDS WERE G IVEN TO CONTRACTOR SHRI DILIP J. DESAI IN 2 PURSUANCE OF WRITTEN CONTRACT. ACCORDINGLY, CORRESP ONDING SUMS WERE RECEIVED BY THE ASSESSEE FROM SHRI DILIP J. DESAI AND SHOWN AS PART OF GROSS RECEIPTS OF AGRICULTURAL INCOME. LATER ON (IN OR ABOUT NOVEMBER, 2006) PRESUMABLY IN THE COURSE O F HIS INCOME-TAX PROCEEDINGS SHRI DILIP J. DESAI CLAIMED THAT HE DID NOT HAVE ANY SUCH TRANSAC TION (OF PURCHASE AND SALE) WITH THE ASSESSEE. ON THAT BASIS, ASSESSEES ASSESSMENT WAS REOPENED I N JANUARY, 2008 AND WAS COMPLETED IN DECEMBER, 2008 BY MAKING ADDITION FOR THE AFORESAID AGRICULTURAL INCOME. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IT WAS ALSO CO NTENDED THAT RE-OPENING OF ASSESSMENT IS BAD IN LAW. 4. IN THE IMPUGNED ORDER, AFTER CONSIDERING THE VAR IOUS SUBMISSIONS, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPHELD THE ACTI ON OF A.O. REGARDING RE-OPENING OF ASSESSMENT. HOWEVER, HE DELETED THE ADDITION OF RS. 3,00,000/- FOR THE DETAILED REASON GIVEN IN PARA 23 OF HIS ORDER, WHICH IS AS UNDER :- 23. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE RE LEVANT FACTS AND SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. THERE IS NO DISPUTE THAT, THE ASSESSEE ALONGWITH OTHER FAMILY MEMBERS OWNS SUBSTA NTIAL AGRICULTURAL LAND ADMEASURING 83 ACRES AND THERE ARE 1500 MANGO TREES AND 1450 CHIKOO TREES ON THIS LAND. FROM YEAR TO YEAR THE ASSESSEE HAS BE EN REGULARLY DISCLOSING AGRICULTURAL INCOME BY WAY OF SALE OF MANGOES AND C HIKOOS AND OTHER SEASONAL CROPS. SUCH AGRICULTURAL INCOME HAS BEEN ACCEPTED B Y THE DEPARTMENT. EVEN DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ADMITTED THAT, THE ASSESSEE OWNS AGRICULTURAL LAND WITH MANG O TREES AND CHIKOO TREES. IT, THEREFORE, FOLLOWS THAT, THE ASSESSEE DID EARN AGRI CULTURAL INCOME. THE ONLY BASIS FOR REJECTING THE ASSESSEE'S CLAIM IS A STATE MENT GIVEN BY SHRI DILIPBHAI J. DESAI THAT HE DID NOT ENTER INTO ANY AGREEMENT W ITH THE ASSESSEE FOR PLUCKING OF MANGOES. AS A MATTER OF FACT, DURING TH E COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS FOR THIS ASSESSMENT YEAR THE ASSESSING OFFICER DID EXAMINE THE RELEVANT MATERIAL AND ACCEPTED THE AGRI CULTURAL INCOME. THERE DOES NOT APPEAR TO BE ANY JUSTIFICATION FOR REJECTI NG THE ASSESSEE'S CLAIM FOR THE ASSESSMENT YEAR UNDER APPEAL MERELY ON THE BA SIS OF THE STATEMENT OF SHRI DILIPBHAI J. DESAI. THERE IS NO MATERIAL OR EVIDENC E BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ESTABLISH THE VERACITY OF THE STATEMENT GIVEN BY SHRI DILIPBHAI J. DESAI. CONSIDERING THE ENTIRE FACTS AN D CIRCUMSTANCES, I HOLD THAT THERE IS NO JUSTIFICATION FOR THE ADDITION OF RS.3, 00,000/- WHICH IS DELETED. 5. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER O F INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- L. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT (A) HAS ERRED IN QUASHING THE REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE BROUGHT IN BY THE AO IN ITS ENTIRETY. 3 1.1. THE ID. CIT (A) HAS ERRED IN OBSERVING THAT N O EVIDENCES PERTAINING TO THE SALE OF AGRICULTURE PRODUCE TO SHRI DILIP J.DESSAI WERE COL LECTED BY THE AO WITHOUT CONSIDERING THE FACT THAT SHRI DILIP J. DESAI HAS C ATEGORICALLY DENIED TO HAVE MADE PURCHASE OF AGRICULTURE FROM THE ASSESSEE IN T HE STATEMENT RECORDED ON OATH. 1.2. THE ID. CIT (A) HAS ERRED IN OBSERVING THAT C OPY OF THE STATEMENT OF SHRI DILIP J.DESAI WAS NOT PROVIDED TO THE ASSESSEE WITHOUT CO NSIDERING THE FACT THAT AFFIDAVIT FILED BY SHRI DESAI, CONTAINING IDENTICAL CONTENTS WAS PROVIDED TO ASSESSEE FOR CROSS EXAMINATION. 1.3. THE ID CIT (A) HAS ERRED IN HOLDING THAT THE REASSESSMENT WAS BASED ON CHANGE OF OPINION WITHOUT CONSIDERING THAT FACT THAT THE R EASSESSMENT PROCEEDINGS WERE ON THE BASIC OF DEFINITE AND SPECIFIC INFORMATION R ECEIVED BY THE AO. 2. ON THAT FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 3 LACS WITHOUT CONS IDERING THE FACT THAT ASSESSEE FAILED TO DISCHARGE THE BURDEN OF PROVING THE AGRIC ULTURE INCOME WITH SUBSTANTIVE EVIDENCES. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L EARNED CIT (A) BE SET ASIDE AND THAT THE ORDER OF THE AO BE RESTORED. 6. NO ONE APPEARED ON BEHALF OF THE ASSESSEE WHEN T HE CASE WAS CALLED FOR HEARING. HOWEVER, AN ADJOURNMENT APPLICATION IS FILED. PRIMA FACIE IT APPEARS THAT TAX EFFECT IN THIS CASE IS LESS THAN RS.2 LAKHS. IN VIEW OF THIS, ADJOURNMENT IS REFUSED AND WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASS ESSEE ON THE BASIS OF SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTATIVE AND MATERIAL AVAILABLE ON RECORD. 7. AT THE TIME OF HEARING, SMT. NEETA SHAH, APPEARE D ON BEHALF OF THE REVENUE WITH A QUERY FROM THE BENCH ADMITTED THAT THE TAX EFFECT IS LESS THAN RS.2,00,000/-. HOWEVER, ON MERIT, SHE POINTED OUT RELYING ON THE REASONING GIVEN BY THE A .O. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE UPHELD THE ACTION OF A.O. REGARDING RE-OPENING OF ASSESSMENT UNDER SECTION 147 BECAUSE INCOME HAS ESC APED ASSESSMENT WITHIN THE MEANING OF SECTION 147. ON MERIT, SHE CONTENDED THAT EARNING O F AGRICULTURAL INCOME IS AN IRREGULAR ACTIVITY GOVERNED BY VARIOUS FACTORS LIKE MONSOON FAILURE, P ESTS, ADVERSE MARKET CONDITIONS, ETC. HENCE, THE NON-EARNING OF AGRICULTURAL INCOME OR SUBSTANTI ALLY LOWER ACCRUAL OF INCOME IN A PARTICULAR YEAR CANNOT BE RULED OUT. THE MERE FACT THAT IN EAR LIER AND SUBSEQUENT YEARS, THE ASSESSEES AGRICULTURAL INCOME IS ACCEPTED AND IN THIS YEAR AL SO, THE ASSESSEE HAS EARNED AGRICULTURAL INCOME TO THE TUNE OF RS.4.5 LAKHS. LOOKING TO THE FACTS A ND MATERIAL AVAILABLE ON RECORD, THE A.O. RIGHTLY 4 TREATED RS.3,00,000/- AS NON-AGRICULTURAL INCOME. T HEREFORE, SHE SUGGESTED THAT THE ADDITION OF RS.3,00,000/- DELETED BY THE LEARNED COMMISSIONER O F INCOME TAX(APPEALS) BE RESTORED. 8. AS ADMITTED BY THE LD. D.R., TAX EFFECT IN THIS APPEAL IS LESS THAN RS.2 LAKHS. THIS APPEAL OF THE REVENUE IS, THEREFORE, NOT MAINTAINABLE IN V IEW OF THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS.- CONCORD PHARMAC EUTICALS REPORTED IN (2008) 220 CTR (GUJ.) 117. 9. EVEN ON MERIT ALSO, IN OUR OPINION, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE ADDITION BECAU SE THERE IS A WRITTEN AGREEMENT AVAILABLE ON WHICH SIGNATURES OF SHRI DILIP J. DESAI HAVE BEEN ADMITTE D BY HIM TO BE HIS. HIS ALLEGATION WAS THAT HIS THOSE SIGNATURES WERE TAKEN IN EARLIER YEAR ON A BL ANK PAPER IN CONNECTION WITH A PURCHASE BILL OR SOME PESTICIDES TO BE USED IN THE ORCHARDS OF THE A SSESSEE. THIS HAS BEEN FOUND TO BE TOTALLY FALSE, INTER ALIA FOR THE FOLLOWING THREE REASONS ALSO :- (I) SIGNATURES OF SHRI DILIP J. DESAI ARE NOT ON A BLANK PAPER BUT ON A REVENUE STAMP AFFIXED THEREON. (II) SHRI DILIP J. DESAIS CLAIM THAT SOME BILL FOR PESTICIDES WAS MUTILATED AND TORN WHICH WAS PERHAPS PASTED OR STA PLED ON THE AFORESAID PAPER SIGNED BY SHRI DILIP J. DESAI HAS B EEN DISPROVED BECAUSE ON THAT PAPER (AS ADMITTED BY SHRI DILIP J. DESAI ALSO) THERE WAS NO INDICATION OF PASTING OR STAPLING OF ANY PAP ER. (III) YET ANOTHER IMPORTANT FACTOR IN FAVOUR OF THE ASSESSEE IS THAT THE ACCEPTANCE OF ORCHARDS AND AVAILABILITY OF AGRICULT URAL PRODUCE) VIZ. FRUITS IN THIS CASE) HAS NOT BEEN QUESTIONED AT ALL AND EVEN CORRESPONDING FIGURES FOR SIX YEARS HAVE BEEN GIVEN WHICH SHOW GROSS RECEIPTS AND NET INCOMES OF THE SIMILAR ORDER YEAR AFTER YEAR INCLUDING THIS YEAR. 10. WITHOUT PREJUDICE TO ABOVE, IN OUR OPINION, THE DENIAL OF A DEPOSIT OR CASH IS CONCEPTUALLY DIFFERENT FROM THAT OF A PURCHASER OF GOODS (FRUITS IN THIS CASE). THIS IS SO BECAUSE A CASH DEPOSIT INVOLVES ONLY ONE PRONG OF TRANSACTION VIZ. GIVING OF MONEY BY THE DEPOSITOR. ON THE OTHER HAND, PURCHASE OF GOODS INVOLVES ONE MORE PRONG OF TRANSA CTION, VIZ. TAKING OF DELIVERY OF THE GOODS. THEREFORE, MERE DENIAL BY A PURCHASER SHOULD NOT BE TAKEN ON ITS FACE VALUE WITHOUT CONSIDERING THE ASPECT OF THE AVAILABILITY AND DELIVERY OF GOODS PU RCHASED. IN THIS CASE, THE EXISTENCE OF AGRICULTURA L PRODUCE OF SUCH QUANTITIES AND VALUES HAS BEEN PROV ED TO BE EXISTING YEAR AFTER YEAR AND HENCE THIS FACTOR NEEDS TO BE APPRECIATED VIS--VIS SHRI DILIP J. DESAIS DENIAL OF TAKING THE CONTRACT OF ASSESSEES ORCHARDS. IN THESE CIRCUMSTANCES, WITHOU T GOING TO THE CONTROVERSY WHETHER SHRI DILIP J. 5 DESAI IS TELLING THE TRUTH THAT HE GAVE THE MONEY, BUT THE ASSESSEES CLAIM OF RECEIPT OF AGRICULTURAL INCOME PER SE CANNOT BE OUTRIGHT REJECTED. APART FROM THIS, ONE CANNOT RULE OUT THE POSSIBILITY OF SHRI DILIP J. DESAI TAKING A STAND, AS HE DID, FOR AVOIDING HIS TAX LIABILITY BECAUSE IN HIS CASE, THE CONSEQUENTIAL INCOME WOULD NOT BE EXEMPT AS HIS AGR ICULTURAL INCOME. LOOKING TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, IN OUR OPINION, THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASON FOR RE-OPENING THE ASSESSMENT U NDER SECTION 148 AND DELETING THE ADDITION OF RS.3 LAKHS. WE, THEREFORE, DECLINE TO INTERFERE. 11. THE ONLY GROUND INVOLVED IN THE CROSS OBJECTION BY THE ASSESSEE IS AGAINST RE-OPENING OF ASSESSMENT UNDER SECTION 147/ 148. WHILE DECIDING T HE APPEAL OF THE REVENUE, WE HAVE UPHELD THE REASONING OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS) UPHOLDING THE ACTION OF A.O. REGARDING RE-OPENING OF ASSESSMENT. THEREFORE, THIS GROUND OF CROSS OBJECTION IS REJECTED. 12. IN THE RESULT, THE APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED. THE ORDER PRONOUNCED IN THE COURT ON 16.10.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 / 10 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE RESPONDENT 3) THE CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.