M/s Bansi Dairy Pvt. Ltd, Nagpur V. Dy. Commissioner of Incom e tax, Cir. 4, Nagpur, Nagpur

ITA 248/NAG/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2200 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 29-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Capital asset; Business income; Depreciation; Principle of natural justice; Opportunity of cross examination; Additional evidence; Corroborative evidences; Onus to prove; Reassessment proceedings
• Section: 143(3); 131; 63; 144; 68

Judgement Text

1 ITA NO. 248/NAG/2012. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR . BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 248/NAG/2012 ASSESSMENT YEAR : 2003 - 04. M/S BANSI D AIRY PVT. LTD., DY. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 4, NAGPUR. PAN AABCB6749F. APPELLANT RESPONDENT APPELLANT BY : SHRI C.J. THAKAR & SHRI S.C. THAKAR. RESPONDENT : SHRI NARENDRA KANE. DATE OF HEARING : 05 - 04 - 2 016 DATE OF PRONOUNCEMENT : 31 ST MAY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATING FROM THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 14 - 03 - 2012. THE GROUNDS RAISED ARE HEREBY DECIDED AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.39,88,590/ - U/S 68 TREATING THE AGRICULTURAL RECEIPT AS UNEXPLAINED CASH CREDIT. 2. ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS - EXAMINE THE PERSONS WHO EARLIER GAVE CONFIRMATIONS OF HAVING PURCHASED AGRICULTURAL PRODUCE AND LATER ON DENIED AND/ OR DID NOT RESPOND. THUS THE ORDER CONFIRMING THE ADDITION ON SUCH DENIAL IS VITIATED BY PRINCIPLES OF NATURAL JUSTICE. 3. WITHOUT PREJUDICE TO ABOVE GROUNDS THE LEARNED LOWER AUTHORITIES ERRED IN MAKING AND/OR CONFIRMING THE ADDITION OF RS.39,88,590/ - U/S 68 WHEN THE NET AGRICULTURAL INCOME WAS SHOWN AT RS.28,46,915/ - ONLY. WHEN AND IF THE ENTIRE AGRICULTURAL INCOME IS TREATED AS NON - GENUINE THEN ALL RECEIPTS ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE AND 2 ITA NO. 248/NAG/2012. AGRICULTURAL EXPENSES ARE NON - GENUINE AND HENCE THE ON LY ADDITION THAT COULD HAVE BEEN MADE OR RETAINED WOULD BE ONLY RS.28,46,915/ - AND NOT RS.39,88,950/ - . 2. IN THESE THREE GROUNDS THE ONLY ISSUE IS IN RESPECT OF AN ADDITION MADE U/S 68 BY TREATING THE ALLEGED AGRICULTURAL INCOME AS UNEXPLAINED CASH CREDIT. BEFORE WE DISCUSS THE FACTS AS NARRATED BY THE AO, IT IS WORTH TO MENTION IN THE BEGINNING ITSELF THAT IN THE PAST THIS ISSUE HAD REACHED UPTO THE STAGE OF THE TRIBUNAL AND THE ITAT, NAGPUR BENCH IN ITA NO. 164/NAG/2008 FOR ASSESSMENT YEAR 2003 - 04 TITLED AS M/S BANSI DAIRY P. LTD. VS. ACIT ORDER DATED 13 - 05 - 2009 HAS RESTORED THE ISSUE TO THE FILE OF THE AO TO BE DECIDED DENOVO. AN OBSERVATION WAS MADE BY THE RESPECTED COORDINATE BENCH THAT AN EXPARTE ORDER U/S 14 4 WAS PASSED BY THE AO AND THE ASSESSEE HAD TRIED TO FILE CERTAIN EVIDENCES BEFORE THE LEARNED CIT(APPEALS) WHICH WERE NOT ENTERTAINED ON THE PRETEXT OF ADDITIONAL EVIDENCES, THEREFORE, THE MATTER WAS RESTORED BACK BY THE TRIBUNAL WITH THE DIRECTION TO THE AO TO CONSIDER ALL THOSE EVIDENCES. S IDE BY SIDE, ON THE OTHER HAND, THE ASSESSEE WAS DIRECTED TO COOPERATE AND COMPLY WITH THE PROCEEDINGS. 2.1 AS A RESULT, A FRESH ASSESSMENT ORDER WAS MADE U/S 143(3) READ WITH SECTION 254(1) DATED 29 - 12 - 2010. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACT URING AND TRADING OF PASTEURISED MILK . A RETURN OF LOSS OF RS.7,97,098/ - WAS FILED. THE AO HAS MADE AN OBSERVATION THAT IN THE FIRST ROUND OF ASSESSMENT AN ADDITION U/S 68 OF RS.39,88,590 / - WAS MADE BECAUSE THE ASSESSEE HAD FAILED TO FURNISH THE BASIC DOC UMENTS, NAMELY : - (A) LEASE AGREEMENT OF THE LAND ON WHICH AGRICULTURAL ACTIVITY WAS CLAIMED TO HAVE CARRIED OUT. (B) DOCUMENTARY EVIDENCE OF PURCHASE AND SALE BILLS REGARDING AGRICULTURAL INCOME AND EXPENSES. (C) ORIGINAL BILLS AND VOUCHERS OF THE E XPENSES CLAIMED. 3 ITA NO. 248/NAG/2012. THE ASSESSEE WAS GIVEN OPPORTUNITY TO EXPLAIN THE GENUINENESS OF THE AGRICULTURAL INCOME. IN COMPLIANCE THE ASSESSEE HAS FURNISHED ALL THOSE DOCUMENTS WHICH WERE FILED BEFORE THE TRIBUNAL. THE AO HAS REPRODUCED TH E INDEX OF THE EVIDENCE S IN THE ASSESSMENT ORDER. THE AO HAS ALSO PRODUCED THE DOCUMENTS WHICH WERE CLAIMED TO HAVE BEEN FILED BEFORE THE LEARNED CIT(APPEALS) AS PER THE PROVISIONS OF RULE 46A OF I.T. ACT. ON PERUSAL THE OBSERVATION OF THE AO WAS THAT THOSE DOCUMENTS HAVE NOT S UPPORTED THE CLAIM OF AGRICULTURAL INCOME. THE OBJECTION OF THE AO WAS AS UNDER : (A) YOU HAVE FAILED TO PRODUCE THE COPY OF LEASE AGREEMENT IN R/O OF AGRICULTURAL LAND TILL DATE. AS YOU HAVE CLAIMED THAT AGRICULTURAL INCOME HAS BEEN DERIVED FROM THE L EASED LAND, THEN THE FIRST AND THE FOREMOST EVIDENCE REQUIRED TO ESTABLISH THE GENUINENESS OF THE AGRICULTURAL INCOME IS THE LEASE AGREEMENT. THUS HAVING FAILED TO SUBMIT THE LEASE AGREEMENT, THE AGRICULTURAL INCOME FROM LEASED LAND DOES NOT STAND ESTABLIS HED. (B) YOU HAVE FAILED TO PRODUCE EXTRACT OF 7/12 TO ESTABLISH THE LAND HOLDING OF THE LESSOR AND THE NATURE OF THE CROP GROWN ON SUCH LAND. (C) YOU HAVE NOT BEEN ABLE TO SUBMIT THE DETAILS OF THE SALES AND CORRESPONDING SALE BILLS NOR THE NAME OF THE PARTIES TO WHOM SALES HAVE BEEN MADE. THERE IS NO EVIDENCE OF RECEIPT OF SALE OF AGRICULTURAL PRODUCE FROM DIFFERENT PARTIES EITHER BY WAY OF CHEQUE OR CASH IN THE BANK ACCOUNT. (D) THE HAND WRITTEN VOUCHERS OF AGRICULTURAL EXPENSE HAVE NO EVIDENTIARY VALUE S INCE THE IDENTITY OF THE PARTIES TO WHOM THE PAYMENT HAVE BEEN MADE HAS NOT BEEN ESTABLISHED. FURTHER YOU HAVE NOT FILED ANY EVIDENCE OF PAYMENT MADE TO THESE PARTIES. YOU WERE ASKED VIDE ORDER SHEET ENTRY DT.09/11/10 TO FILE CONFIRMATIONS FROM THESE PARTI ES, HOWEVER YOU HAVE NOT FILED ANY OF THEM. (E) THE SO CALLED PAYMENT BY CHEQUE TO ALWYN COOPER & CO. DOES NOT ESTABLISH AT THE FIRST PLACE THAT THE SO CALLED PAYMENT HAS BEEN MADE TOWARDS LEASE RENT FOR AGRICULTURAL LAND. IT ALSO DOES NOT ESTABLISH THE NEXU S BETWEEN THE SAID COMPANY AND SHRI V.C.SHUKLA. FURTHER THE SO CALLED PAYMENT BY CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE 4 ITA NO. 248/NAG/2012. GENUINENESS OF THE AGRICULTURAL INCOME, UNTIL AND UNLESS IT IS SUPPORTED BY OTHER CORROBORATIVE EVIDENCE. THE HONBLE CALCUTTA HUGH C OURT IN THE CASE OF CIT VS. PRECISION FINANCE P. LTD. [1994] HAS HELD THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON - GENUINE TRANSACTION GENUINE. THE HONBLE HIGH COURT IN ITS RULINGS CASTED THE ONUS ON THE ASSESSEE TO SU BSTANTIATE THE PARTICULARS PRODUCED TO JUSTIFY THE GENUINENESS OF THE TRANSACTION. 2.2 THE ASSESSEE HAD FURNISHED A LETTER FROM ONE ABDUL MAJID KHAN IN WHICH IT WAS STATED THAT SUGARCANE WAS PURCHASED IN FEBRUARY, 2003 FOR A SUM OF RS.8,95,185/ - IN CASH. ONE MORE LETTER FROM M/S JETHWA KR U SHI FARM WAS FURNISHED WHEREIN IT WAS STATED THAT SUGARCANE OF RS.9,35,000/ - WAS PURCHASED FROM THE ASSESSEE. A THIRD LETTER OF M/S KAILASH KR U SH I FARM WAS PRODUCED CONF IRMING THE PURCHASE OF SUGAR CANE OF RS.7,62,117/ - . T O VERIFY THE CORRECTNESS OF THE CONFIRMATION THE AO HAD ISSUED SUMMONS U/S 131. IN COMPLIANCE ONE OF THE PARTY, NAMELY, M/S JETHWA KR U SHI FARM H AS RESPONDED AS UNDER : 5.6 IN RESPONSE TO THE SUMMONS ISSUED M/S. JETHWA KRUSHI FARM VIDE THEIR WRITTEN SUBMISSION DT.15/12/2010 HAS STATED AS UNDER : - (ANNEXURE - 7) 1) THAT NO SUGARCANE WAS PURCHASED BY US FROM M/S. BANSI DAIRY PVT. LTD, NEAR NEW S.T. STAND WARD NO. 7, NAGPUR FOR RS.9,85,000/ - IN CASH DURING FINANCIAL YEAR 2002 - 03. 2) WE ARE AGRICUL TURIST AND NO SUGARCANE IS PURCHASED BY US. OUR FAMILY IS HAVING 22 ACRES OF AGRICULTURAL LAND. 3) THAT COPY OF RECEIPT OF RS.9,85,000/ - ON THE LETTER HEAD JETHWA KRISHI FARM SENT BY YOUR HONOUR DOES NOT BELONG TO US. IT IS NOT SIGNED BY US. WE NEVER US E SUCH LETTER HEAD WITH THE DESCRIPTION IN IT. IT IS SIGNED BY ONE MUNNA SINGH. WE ALSO DO NOT KNOW MUNNA SINGH. 2.3 ONE OF THE PERSON, NAMELY, SHRI ABDUL MAJID KHAN HAS RESPONDED IN COMPLIANCE OF THE SUMMONS AS UNDER : 5 ITA NO. 248/NAG/2012. 5.7 FURTHER SHRI ABDUL MAJID KHAN, IN HIS WRITTEN SUBMISSION DT. 15/12/2010 IN RESPONSE TO SUMMONS U/S. 131 HAS STATED THAT (ANNEXURE - 8) (A) HE DEALS ONLY IN LEMON. (B) THE LETTER HEAD OF THE CONFIRMATION LETTER, THE HANDWRITING AND SIGNATURE THEREIN ARE NOT H IS. (C) HE DOES NOT KNOW M/S. BANSI DAIRY, NAGPUR AND THAT HE HAS NOT DONE ANY TRANSACTION OF ANY KIND WITH IT. (D) HE HAS NEVER PURCHASED OR SOLD ANY SUGARCANE. 2.4 SUMMONS ISSUED TO M/S KAILASH KR U SHI FARM WERE RETURNED UNSERVED WITH THE POSTAL REMARK NOT KN OWN. THE AO HAD COMMENTED THAT IT WAS SURPRISING TO NOTE THAT THE ASSESSEE HAD FURNISHED A CONFIRMATION FROM THE SAID PARTY ONLY A WEEK AGO BUT NOW TH E SAID PARTY WAS NOT TRACEABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. 3. THE ASSESSEE HAS ALSO FURNISHED T HE EVIDENCE IN RESPECT OF PURCHASE OF SEED AND FERTILIZER FROM THE TWO PARTIES, NAMELY, M/S GANESH KR U SHI SEVA KENDRA AND M/S SHIVA TRADERS. THE AO HAD ALSO ISSUED SUMMONS U/S 131 TO THOSE PARTIE S . HOWEVER, THE SUMMONS WERE RETURNED WITH THE REMARK NOT K NOWN. THEREFORE, THE AO HAS COMMENTED THAT NEITHER THE SALE OF SUGARCANE COULD BE ESTABLISHED NOR THE PURCHASE OF SEEDS ETC. COULD BE ESTABLISHED BY THE ASSESSEE. THE AO HAS SHOWN THE REPLIES OF THOSE PARTIES TO THE COUNSEL OF THE ASSESSEE. THE COUNSEL OF THE ASSESSEE WAS INFORMED THAT M/S JETHWA KR U SHI FARM HAD INFORMED THAT NO SUGARCANE WAS PURCHASED FROM M/S BANSI DAIRIES. THE SAID PARTY HAD DENIED THE ISSUANCE OF ANY SUCH CONFIRMATION LETTER. THE EXPLANATION OF THE ASSESSEE WAS THAT THE AGRICULTURAL L AND BELONGED TO M/S ALW Y N COOPERS WHICH WAS GIVEN ON LEASE TO THE ASSESSEE FOR AGRICULTURE OPERATION. THE MATTER RELATED TO ASSESSMENT YEAR 2003 - 04. HOWEVER, THE SUMMONS HAD BEEN ISSUED IN THE YEAR 2010 DUE TO WHICH THE PARTIES HAVE EITHER LEFT THE PLACE OF BUSINESS OR THEY HAVE NOT COOPERATED WITH THE ASSESSEE TO AVOID 6 ITA NO. 248/NAG/2012. THE INCOME - TAX PROCEEDINGS. THE ASSESSEE HAS ALSO ASKED TO CROSS EXAMINE THOSE PARTIES, HOWEVER, THE AO HAD CONVEYED THAT THE PARTIES IN QUESTION WERE THE WITNESSES OF THE ASSESSEE BECAUSE THE ASSESSEE HAD FURNISHED THE CONFIRMATION LETTERS OF THOSE PARTIES. ACCORDING TO THE AO THE GENUINENESS OF THE CLAIM OF AGRICULTURAL INCOME WAS REQUIRED TO BE ESTABLISHED BY THE ASSESSEE. ACCORDING TO THE AO THE ASSESSEE HAD NEITHER PROVED THE IDENTITY OF THOSE PARTIES NOR ESTABLISHED THE GENUINENESS OF THE AGRICULTUR E TRANSACTION. THE AO HAS CONCLUDED THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE BURDEN, RATHER THE PARTIES HAVE DENIED OF THEIR SIGNATURES AND THE EXISTENCE OF THE TRANSACTION, HENCE THE A MOUNT OF RS.39,88,590/ - ; FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE , WAS TAXED U/S 68 OF I.T. ACT. AGAINST THE IMPUGNED ADDITION, THE MATTER WAS CARRIED SECOND TIME TO THE FIRST APPELLATE AUTHORITY. 4. BEFORE THE LEARNED CIT(APPEALS) THE EVI DENCES WHICH WERE PLACED BEFORE THE AO HAVE BEEN RELIED UPON. LEARNED CIT(APPEALS) HAS ALSO REPRODUCED A STATEMENT OF SHRI TANUJ PANDE, DIRECTOR OF M/S BANSI DAIRY P. LTD. IN THE STATEMENT HE HAS MENTIONED THAT 55 ACRES OF LAND WAS TAKEN ON LEASE FROM SHRI V.C. SHUKLA. THE LAND WAS USED FOR THE CULTIVATION OF CAULI - FLOWER, TOMATO ETC. HE WAS ASKED THAT WHETHER THE AGRICULTURAL INCOME WAS DEPOSITED IN THE BANK AND IN COMPLIANCE HE HAS STATED THAT NO AGRICULTURAL MONEY WAS DEPOSITED IN THE BANK. HE HAS ALS O STATED THAT THE AGRICULTURAL PRODUCE WAS SOLD THROUGH A DALAL AT RAIPUR. HE HAS MENTIONED THAT THE AGRICULTURE OPERATION WAS SUPERVISED BY HIM AT RAIPUR. HE HAS ALSO INFORMED THAT LEASE AMOUNT OF RS.1 LAKH PER QUARTER WAS PAID TO SHRI V.C. SHUKLA BY ACCO UNT PAYEE CHEQUES. THE ASSESSEE HAD INCURRED AGRICULTURE EXPENDITURE OF RS.11,41,675/ - . LEARNED CIT(APPEALS) HAS REPRODUCED THE RELEVANT PORTION OF THE ASSESSMENT ORDER AS WELL AS THE REPLY OF THE ASSESSEE AND THEREAFTER HELD AS UNDER : 7 ITA NO. 248/NAG/2012. 5.0 FIRST WE TA KE UP THE ISSUE OF AGRICULTURAL INCOME - [GROUND NO.1, 2, 3 & 4] (A) IN THE ORIGINAL ASSESSMENT PROCEEDINGS, STATEMENT OF SHRI TANUJ PANDEY WAS RECORDED WHO WAS THE DIRECTOR OF COMPANY ON 06.10.2005 BY A.O. (A) HE CLAIMED THAT THEY PURCHASED (I) PADDY (II) TOMADO (III) CAULIFLOWER (B) HE SUBMITTED THAT PRODUCE WAS SOLD VERY CHEAP (C) HE SUBMITTED THAT OVERALL THERE WAS LOSS AND NO CASH WAS DEPOSITED IN BANK. (D) BEFORE CIT, VIDE LETTER DT.09.02.2007 PAGE - 2(VI) AGAIN IT WAS CLAIMED THAT PA DDY TOMATO & CAULIFLOWER WAS GROWN PARA - 4 OF CIT(A) ORDER DT.31.01.2008. E) AS POINTED OUT ABOVE, APPELLANT CLAIMED THAT (I) PADDY, (II) LEMON (III) CAULIFLOWER WAS GROWN. BUT NOW BILL PRODUCED ON 9 T H DECEMBER, 2010 INDICATES THAT APPELLANT HAS SOLD SUGAR CANE AND POTATOS WORTH ; I. SUGARCANE .. RS.33,91,042/ - II. POTATOS .. RS. 2,14,476/ - RS.36,05,518/ - I.E. OUT OF SUM OF RS.39,88,590/ - CREDITED AS AGRICULTURAL INCOME, THESE TWO PRODUCE AN NEARLY 90% IN VALUE AND NEVER IN LAST 6 - 8 YEARS OF PROCEEDING, APPELLANT COMPANY NEITHER BEFORE A.O. NOR IN APPEAL BEFORE CIT(A) OR BEFORE ITAT THESE PROCEED FORMATION AND ONLY PADDY TOMATO AND CAULIFLOWER WERE MENTIONED AND ONLY IN DECEMBER,2010 FIRST TIME THE SUGARCANE AND POTATO SALE IS SHOWN AND OUT OF THESE CONFI RMATIONS FILED ON 9 TH DECEMBER, TWO PARTIES REFUSED TO HAVE PURCHASED SUGARCANE AND THIRD ONE WAS NE AVAILABLE AT THE GIVEN ADDRESS. (B) I) LET US SEE THE FACT OF CONFIRMATIONS FILED BY THE APPELLANT ON 09.12.2010. 3 PARTIES FOR MACHINERY 3 PARTIES FOR SUGARCANE 2 PARTIES FOR SALE OF SEEDS / FERTILIZERS ETC. DURING REASSESSMENT PROCEEDINGS, ONLY ON 09.12.2010, 8 ITA NO. 248/NAG/2012. APPELLANT HAS FILED THE CONFIRMATIONS OF SIX PARTIES REGARDING PURCHASE OF MACHINERY I. ZEUZAR INDIA DT.02.11.2010 0 .. 131 - 'LEFT, ADDRESS NOT KNOWN' II. M.G.FABRICATANT DT.11.11.2010 ..131 - DID NOT REPLY. III MICRON ENGG. DT.12.11.2010 .. 131 - 'LEFT' AND REGARDING PURCHASE OF AGRICULTURAL PRODUCE IV ABDUL MAJID KHAN SUGA RCANE LETTER DT.28.02.2003 - RS.8,95,185/ - REPLY TO 131 DENIAL DEALS IN ONLY LEMON V M.S. JELTHUR KRISHI FORM - SUGARCANE LETTER DT.05.09.2002 RS.9,35,000/ - REPLY TO 131 NEVER PURCHASED ANYTHING NEVER SIGNED BY US VI M.S.KAILASH KR ISHU FORM SUGARCANE LETTER DT.28.08.2002 - RS.7,62,117/ - REPLY TO 131 NOT KNOWN VII SUMMONS ISSUED TO A) GANESH KRUSHI SEVA KENDRA, RAIPUR - NOT KNOWN B) SHIVA TRADERS, RAIPUR - NOT KNOWN HENCE, IT IS CLEAR THAT NONE OF THE PARTIES COULD CONFIRM THE TRANSACTIONS OF THE APPELLANT AND APPELLANT HAS FAILED SINGULARLY IN DISCHARGING BURDEN OF PROOF. A CLEAR LOOK AT THE BILLS FOR SUCH PRODUCE BY THE APPELLANT WILL GIVE VERY STARTLING / IMPOSSIBL E RESULTS. (C) A) EVEN IF IT IS ACCEPTED THAT APPELLANT HAS TAKEN LAND ON LEASE FOR A YEAR AS PER ALLEGED CONFIRMATION OF MR.V.C. SHUKLA THEN APPELLANT HAD - LAND FROM APRIL MARCH - 2002 - 03 B) SUGARCANE SOLD ALLEGED LETTER OF SALE I) ABDUL MAJID KHA N DT.16.02.2003 RS.8,95,185/ - II) M S JELTHUR KRUSHI FORM DT.05.09.2002 RS.9,35,000/ - III) M S KAILASH KRISHU FORM DT.28.08.2002 RS.7,62,117/ - IV) SHEIKH ABDULLA & CO. DT.19.02.2003 RS.6,98,740/ - RS.33,91,042/ - C) POTATO I) OM TRADING CO. NO DATE RS. 20,568/ - II) TIKAMDAS & CO. 31.01.2003 RS.1,93,908/ - 9 ITA NO. 248/NAG/2012. RS.2,14,476/ - D) PADDY I) MAN VEGETABLE COMPANY 29.03.2003 RS.67,617/ - E) VEGETABLE I) SHARDA SABJI BHANDAR 04.04.2002 RS.17,416/ - FROM THE ABOVE TABLE AND FOLLOWING ARGUMENT, IT WILL BECOMES CLEAR THAT APPELLANT HAS FABRICATED THESE DOCUMENTS AND THE DENIAL BY SO CALLED PURCHASERS, WHO ARE APPELLANT'S WITNESS IS CORRECT. I) M S JELTHUR KRUSHI FORM DT.05.09.2002 RS.9,35,000/ - II) M S KAILASH KRISHU FORM DT.28.08.2002 RS.7,62,117/ - III) ABDUL MAJID KHAN DT.16.02.2003 RS.8,95,185/ - IV) SHEIKH ABDULLA & CO. DT.19.02.2003 RS.6,98,740/ - APPELLANT HAS SHOWN THAT THE LAND WAS TAKEN IN F.Y.2002 - 03 AND APPELLANT HAD SHOWN FIRST SALE OF VEGETABLE BILL ON 04.04.2002 I.E. I) SHARDA SABJI BHANDAR DT.04.04.2002 RS.17,416/ - I.E. WITHIN FOUR DAY OF TAKING OVER APPELLANT COULD PRODUCE & SELL VEGETABLE ON 4TH APRIL, 2002. I) SUGARCANE TAKES 18 MONTHS TO GROW IF PLANTED 11) IT IS NORMALLY PLANTED IN INDIA IN JULY TO MARCH PERIOD (D) IN CASE OF THE APPELLANT COMPANY NOT ONLY SUGARCANE WAS PLANTED IN APRIL OR MAY, BUT IT STARTED GIVING PRODUCE WHICH APPELLANT WAS ABLE TO SELL IN AUGUST, 2002 AND SEPTEMBER, 2002 AND 'MADE A KILLING' BY WAY OF RECEIPT OF [RS.9,32,000 + RS.7,62,117 ] = RS. 16,94,117/ - IN 6 MONTHS NEARLY 40% OF RECEIPTS WERE IS OUT OF SUGARCANE AND MADE A FURTHER GAIN OF {RS.8,95,125 + RS.6,98, 740 ] = RS. 15,93,865/ - BY 19 TH FEBRUARY I.E. IN 11 MONTHS, APPELLANT NOT ONLY PLANTED BUT THE SUGARCANE GROW AND WERE HARVESTED AND SOLD AND MONEY WAS RECEIVED ALONG WITH DULY ACKNOWLEDGED RECEIPT OF SUCH PAYMENT. AND IF APPELLANT HAD OBTAINED THESE SUGARCANE RECEIPTS AS FAR AS BACK IN 2002 - 03 [AS PER DATES GIVEN IN THEM] THEN WHY THEY WERE NOT PRODUCED IN LAST 8 YEARS BEFORE A.O. IT IS CLEAR THAT APPELLANT HAS MADE AN IMPOSSIBLE CLAIM OF PRODUCING SUGARCANE 'IN THE COUNTRY' IS 5 - 6 MONTHS A BIOLOGICAL IMPOSSIBILITY AT PRESENT LEVEL OF DEVELOPMENT OF CROP SCIENCE IN INDIA. HENCE, THE CLAIM OF APPELLANT IS NOT ONLY MISCHIEVOUS AND BOR DERING FRAUD BUT IT IS ALSO CHALLENGING THE 'SCIENCE' AT PRESENT LEVEL OF DEVELOPMENT IN INDIA. AS ALL OF US READ IN SCHOOLS THAT SUGARCANE TAKES 14 - 18 MONTHS TO MATURE AND MAY BE BETTER TECHNOLOGY CAN ADVANCE IT BUT 10 ITA NO. 248/NAG/2012. 6 MONTHS HAS NOT BEEN DELIVERED SO FAR ANYWHERE IN THE WORLD IN 2002 - 03 AND HENCE CLAIM OF THE APPELLANT FOR SALE OF SUGARCANE IS COMPLETELY UNACCEPTABLE. OUT OF RS.39,88,590/ - CLAIM OF RECEIPT OF RS.33,91 ,042/ - OUT OF SALE OF SUGARCANE IS COMPLETELY BOGUS. (E) THE BEST PART OF THE STORY IS IN ANNEXURE - A - 1 TO 4. ALL THE PURCHASE DETAILS SUBMITTED BY THE APPELLANT BEFORE A.O. ARE SUMMARIZED AS (A) GANESH KRISHNA - ANNEXURE - A 1 (B) SHIVA TRADERS - ANNEXURE - A2 GIVE DETAILS OF PURCHASE MADE BY APPELLA NT FOR CARRYING OUT THE AGRICULTURE. LETTERS SENT BY A.O. CONFIRMING SALES BY THEM, RETURNED UNSERVED, ANNEXURE - A3, ANNEXURE - A4. EVEN IF WE PRESUME FOR SAKE OF ARGUMENT FOR A MOMENT THAT THESE ARE GENUINE THE WE SEE THAT MOST INTERESTING ASPECT IS 'PURCHAS E OF SEEDS'. TOTAL PURCHASE OF SEEDS IS RS.1, 16,029/ - AND OUT OF WHICH POTATO SEEDS ARE FOR RS.32,000/ - .. 18.11.2002 RS.15,036/ - .. 01.12.2002 RS.47,036/ - I.E. RS.1,16,029/ - RS.47,036/ - RS. 68,993/ - THIS IS THE BALANCE SEEDS PURCHASED. BUT THERE IS NO EXPENSES FOR PURCHASE OF SUGARCANE PLANTS I.E. TISSUE CULTURE PLANT, WHICH IS RS.5 - RS.6 PER PLANT AND PER HECTARE REQUIRES 10,000 PLANTS I.E. 50 - 60 THOUSAND PER HECTARE. EVEN IF APPELL ANT PURCHASED IT FROM FARMER THEN THE OUT GO HAS TO BE CONCERNED FARMERS, THEN THE FERTILIZERS BILL ARE NOT THERE WHEREAS TO GET SUCH A GOOD OUTPUT, A LARGE AMOUNT OF FERTILIZER IS REQUIRED THIS POINT OUT THAT THE STORY OF PRODUCTION OF SUGARCANE IS COMPLE TELY UNTRUE. (F) IT LEAVES RS.5,97,548/ - AND OUT OF THIS ALSO POTATO BILLS ARE RS.2,14,476/ - NOW PRODUCED, AS MENTIONED ABOVE THE CLAIM OF HAVING GROWN POTATO WAS MADE FIRST TIME IN DECEMBER, 2010 AND THAT HAS ALSO BEEN GROWN AND MATURED AND SOLD BEFORE JANUARY, WHEREAS IT TAKES 3 MONTHS TO PRODUCE GOOD CROP AND FIRST PURCHASE OF SEEDS WAS ON 18.11.2002 AND SEEDS ON 01.12.2002. TIKAMDAS - POTATO 31.01.2009 RS.1,93,908/ - OM TRADING CO. - NO DATE RS.20,568/ - 11 ITA NO. 248/NAG/2012. THESE SALES ARE ALSO NOT CONFIRMED AND APPEARS TO BE BOGUS. HENCE, IT IS SEEN THAT APPELLANT HAS MADE DIFFERENT CLAIM AT DIFFERENT TIMES AND THEY WERE NOT RELIABLE AND A.O., WHEN TRIED TO CONFIRM THEM, THEY WERE FOUND TO BE UNTRUE. HENCE, THE CLAIM REGARDI NG AGRICULTURE INCOME IS COMPLETELY AND UNACCEPTABLE AS APPELLANT HAS FAILED TO SUBSTANTIATE IT COMPLETELY AND THE EVIDENCE PRODUCED HAVE BEEN FOUND TO BE UNRELIABLE AND EVEN FALSE AS IN CASE OF SALE OF SUGARCANE BOTH IN TERMS OF DENIAL BY CONCERNED PARTIE S AND ALSO IN TERMS OF PHYSICAL IMPOSSIBILITY OF GROWING SUGARCANE IN 5 - 6 MONTHS AND NOT PURCHASING PLANTS 1 FERTILIZERS ETC. FOR SUCH PRODUCTION. (G) (A) NOW APPELLANT HAS FILED THE BILLS ON 9 TH DECEMBER, 2010 I.E. 21 DAYS BEFORE CASE GOT TIME BARRED THE SALE BILLS OF VARIOUS PRODUCED AND A.O. SENT FOR VERIFICATION AND AS PER A.O'S ORDER CERTAIN PROVISIONS REFUSED TO HAVE PURCHASED GOODS FROM HIM AND OTHER WERE NOT AVAILABLE AT ADDRESS GIVEN AND SUMMONS SENT RETURNED WITH THE REMARKS 'LEFT'. NOT KNOWN AND WHEN THIS WAS BROUGHT TO APPELLANT'S NOTICE BY A.O. AS PER ORDER SHEET NOTINGS DT.20.12.2010 & 24.12.2010 [ANNEXURE - 'D'] (I) APPELLANT FILED A LETTER DT.27.12.2010 ASKING A.O. TO ALLOW HIM CROSS EXAMINATION OF THE PARTIES REFUSING THE TRANSACTIONS. (II) APPELLANT EVEN SUGGESTED THAT CONCERNED 'POST OFFICE OFFICIALS' HAVE TO BE EXAMINED WITH THEIR ALLEGED 'REMARKS' WHICH WER E NOT ACCEPTABLE TO APPELLANT. APPELLANT FORGOT THAT THESE PERSONS ARE HIS 'WITNESSES' AND 'BURDEN OF PROOF LIES ON HIM (I) FIRST TO PROVE THAT CLAIM OF EXEMPTION AND THE CLAIM THAT PRODUCE WERE SOLD TO THESE PARTIES LIES ON HIM. (II) SIMILARLY THE BURD EN TO PROVE THAT MACHINERY WAS INDEED PURCHASED LIES ON HIM. (III) ALSO CLAIM OF EXPENSES I PAYMENT MADE TO PERSONS NAMED BY HIM LIES ON HIM. B) AO. HE SENT THE DETAILS FOR VERIFICATION TO CONCERNED PARTIES AND EITHER THEY DENIED IT COMPLETELY TO THE EXTENT THAT ONE OF THEM CLAIMED THAT SIGNATURE WERE NOT HIS AND HE KNOWS NO 'MUNNA SINGH' WHO WILL SIGN ON HIS BEHALF. THIS IS SERIOUS MATTER AS IT AMOUNTS TO FALSIFICATION OF ACCOUNT AND IMPERSONATION. C) IN CASE OF OTHERS THEY WERE NOT FOUND AT THE GIVEN ADDRESS. HENCE, EVEN ONE TRANSACTION COULD NOT BE CONFIRMED. SIMILARLY AO. HAS POINTED OUT THAT SO CALLED LEASE DEED IS NOTHING BUT A PHOTOCOPY OF LETTER ALLEGEDLY SIGNED BY MR. VIDYACHARAN 12 ITA NO. 248/NAG/2012. SHUKLA. AS PO INTED OUT BY AO. IT DOES NOT GIVE DETAILS OF LAND GIVEN ON LEASE AND TAKE MANY DETAILS AS BROUGHT OUT BY AO. MOREOVER, 'ORIGINAL IS MISSING' AND WHY IT IS NOT PRODUCE BEFORE AO. OR BEFORE ME IS INCOMPREHENSIBLE. HENCE, IN VIEW OF COMPLETE FAILURE OF APPELL ANT TO PROVE CLAIM OF AGRICULTURAL INCOME, ADDITION IS UPHELD. 4.1 SINCE THE ADDITION W AS CONFIRMED BY LEARNED CIT(APPEALS), THEREFORE, THE ASSESSEE IS NOW FURTHER IN APPEAL BEFORE THIS TRIBUNAL. 5. FROM THE SIDE OF THE APPELLANT LEARNED A.R. MR. C.J. T HAKAR APPEARED. HIS FIRST PLANK OF ARGUMENT WAS THAT THE OPPORTUNITY OF CROSS EXAMINATION OF ALL THOSE PARTIES HAVE NOT BEEN GRANTED BY THE REVENUE AUTHORITIES. HE HAS ALSO PLEADED THAT AFTER THE LAPSE OF SO MANY YEARS SOME OF THE PARTIES MIGHT HAVE LEFT T HE PLACE OF THE BUSINESS, THEREFORE, THE POSTAL AUTHORITIES WERE NOT ABLE TO SERVE THE NOTICES OF THE AO. THE LEARNED A.R. HAS ALSO PLACED RELIANCE ON THOSE EVIDENCES WHICH WERE FILED BEFORE THE TRIBUNAL IN THE PAST PROCEEDINGS. HOWEVER, LEARNED A.R. HAS URGED THAT AFTER THE LAPSE OF SO MANY YEARS AND CONSIDERING THE HISTORY OF PAST LITIGATION IT IS NOT PRACTICALLY POSSIBLE TO PRODUCE ALL THOSE EVIDENCES AS DEMANDED BY THE REVENUE AUTHORITIES. THEREFORE, IN THE INTEREST OF JUSTICE A REASONABLE AMOUNT OF AGRICULTURAL INCOME CAN BE TAXED BY THIS TRIBUNAL WHICH SHALL BE ACCEPTED BY THE ASSESSEE W ITHOUT FURTHER CONTESTING IN APPEAL. 6. FROM THE SIDE OF THE REVENUE, LEARNED D.R. MR. NARENDRA KANE HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY PLEADED THAT NOW THE ASSESSEE MUST NOT COMPLAIN THE LACK OF OPPORTUNITY OF HEARING BECAUS E THE RECORDS OF THE CASE HAVE CLEARLY DEMONSTRATED THAT AMPLE OPPORTUNIT IES W ERE GRANTED , WHICH SOME TIMES NOT AVAILED A ND SOME TIMES AVAILED BY THE ASSESSEE. FROM THE SIDE OF THE REVENUE FULL COOPERATION WAS EXTENDED TO THE ASSESSEE BUT THE ASSESSEE WAS NOT HAVING CONVINCING, GENUINE EVIDENCES, HENCE DELIBERATELY AVOIDED THE OPPORTUNITY OF HEARING. LEARNED D.R. HAS ALSO PLEADED THAT THE ASSESSEE IN THE PAST MISERABL Y FAILED TO ESTABLISH THE EARNING OF AGRICULTURAL 13 ITA NO. 248/NAG/2012. INCOME, THEREFORE, THE ENTIRE AMOUNT WAS CORRECTLY TAXED U/S 68 IN THE HANDS OF THE ASSESSEE. 7. HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE PERUSED THE VOLUMINOUS COMPILATION FILED IN THE LIGHT OF FEW CASE LAWS CITED. AS MENTIONED IN THE BEGINNING ITSELF THE APPELLANT IS IN APPEAL BEFORE THIS TRIBUNAL SECOND TIME. THEREFORE, THE MATTER IS VERY OLD PERTAINING TO THE ASSESSMENT YEAR 2003 - 04 I.E. AROUND 13 YEARS OLD. AFTER THE LAPSE OF SO MANY YEARS THE FIRST PLEA OF THE LEARNED A.R. MR. C.J. THAKAR TO AGAIN RESTORE THE MATTER BACK TO THE AO SO TH AT THE ASSESSEE CAN GET AN OPPORTUNITY TO CROSS EXAMINE CERTAIN WITNESSES IS HEREBY RULED OUT BECAUSE OF THE SIMPLE REASON THAT AFTER THE LAPSE OF SO MANY YEARS NO FRUITFUL PURPOSE SHALL BE SERVED. EVEN IN THE FIRST ROUND OF APPEAL THE ASSESSEE HAD INFORME D THAT ONE OF THE PARTY HAD ALREADY LEFT THE PREMISES, THEREFORE, THE SUMMONS COULD NOT BE SERVED BY THE AO. WE ARE NOT INCLINED TO ACCEPT THIS REQUEST BECAUSE THIS VERY REQUEST OF THE APPELLANT OF CROSS EXAMINATION WAS EARLIER DENIED AND THE F IRST A PPE LLATE A UTHORITY HA D RIGHTLY OBSERVED THAT THE WRITTEN CONFIRMATIONS OF THOSE PARTIES HAVE BEEN FURNISHED BY THE ASSESSEE, THEREFORE, THOSE PARTIES WERE THE WITNESSES OF THE ASSESSEE. THE FI R ST ONUS WAS ON THE ASSESSEE TO PRODUCE THEM BEFORE THE AO. WHEN THE ASSESSEE HAD FAILED TO PRODUCE THOSE WITNESSES THEN ONLY THE AO HAD ISSUED THE SUMMONS AND EXAMINED THOSE PARTIES. THEIR STATEMENTS OR THEIR LETTERS WERE HANDED OVER TO THE ASSESSEE. AT THAT TIME THE ASSESSEE HAS NOT PROCURED ANY WRITTEN REBUTTAL FROM THOSE PARTIES. THEREFORE, IT IS NOT JUSTIFIABLE AS WELL AS NOT AS PER LAW FOR THE APPELLANT TO MAKE SUCH A REQUEST OF CROSS EXAMINATION WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE HEREBY REJECTED. 7.1 RATHER WE ARE OF THE CONSIDERED OPINION THAT INS TEAD OF LENGTHING THE LITIGATION , THIS APPEAL SHOULD NOW BE FINALLY SET AT REST AT LEAST BEFORE THIS FORUM BY DECIDING ON MERITS IN THE LIGHT OF THE EVIDENCES NOW AVAILABLE ON RECORD. WE HAVE EXPRESSED THIS INTENTION IN THE OPEN COURT AS WELL . T HE PARTIES HAVE GIVEN 14 ITA NO. 248/NAG/2012. THEIR CONSENT THAT TO CUT THE LITIGATION SHORT ; SINCE THE MATTER IS VERY OLD ; THE ISSUE OF AGRICULTURE INCOME THUS REQUIRED TO BE DECIDED ON THE BASIS OF THE EVIDENCES AVAILABLE ON RECORD. WE ENDEAVOUR ACCORDINGLY IN THE FOLLOWING PARAGRAPHS . 8. AS FAR AS THE LAND IN QUESTION IS CONCERNED, THE FACTS OF THE CASE HAVE REVEALED THAT ABOUT 55 ACRES OF LAND WAS ENTERED IN REVENUE RECORDS IN THE NAME OF M/S AL WYN COOPER & CO. AS PER 7/12 EXTRACT. OUR ATTENTION HAS BEEN DRAWN ON A LETTER DATED 22 - 12 - 2010 ISSUED BY SHRI V.C. SHUKLA WHEREIN HE HAS AFFIRMED THAT HE HAD GIVEN HIS AGRICULTURAL LAND TO M/S BANSI DAIRY P. LTD., THE APPELLANT, ON LEASE FOR AGRICULTURE PURPOSE IN THE FI NANCIAL YEAR 2002 - 03 AND RECEIVED THE LEASE AMOUNT OF RS.4 LAKHS IN THE NAME OF M/S ALWYN COOPER. THE AO WANTED THE ASSESSEE TO PRODUCE THE LEASE AGREEMENT, HOWEVER, THE ASSESSEE IN A REPLY DATED 27 - 03 - 2006 HAS INFORMED THE AO THAT AS PER MADHYA PRADESH G OVERNMENT AGRICULTURAL L AND LAWS A LEASE DEED OF AN AGRICULTURAL LAND WAS NOT GENERALLY EXECUTED IN WRITING BECAUSE SUCH LEASE TANTAMOUNT TO AUTOMATIC TRANSFER OF LAND IN THE NAME OF THE LESSEE. BECAUSE OF THAT APPREHENSION THE OWNER OF THE LAND HAD NOT E XECUTED A FORMAL LEASE DEED IN WRITING WHILE GIVING 55 ACRES OF LAND FOR AGRICULTURE PURPOSES TO THE ASSESSEE. 8.1 ON CAREFUL EXAMINATION OF THE EVIDENCES AND THE WRITTEN SUBMISSIONS PLACED BEFORE US FORMING PART OF THE COMPILATIONS, WE HAVE OBSERVED THAT SOME OF THEM ARE IN FAVOUR OF THE ASSESSEE AND MOST OF THEM ARE IN FAVOUR OF THE REVENUE DEPARTMENT. ON ONE HAND THE PLEA OF THE ASSESSEE IS THAT THE ACCOUNTS HAVE BEEN DULY AUDITED WHEREIN THE TRUE AND CORRECT AGRICULTURAL INCOME WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS UNDISPUTEDLY PRODUCED THE AGRICULTURAL INCOME ACCOUNT AS WELL AS THE AGRICULTURAL EXPENSES ACCOUNT. IN THIS REGARD ONE OF THE DIRECTOR OF THE ASSESSEE COMPANY, NAMELY, SHRI TANUJ PANDE WAS ALSO SUMMONED AND HIS STATEMEN T WAS RECORDED. IN HIS STATEMENT HE HAS INFORMED THAT THE AGRICULTURAL ACTIVITIES WERE CARRIED OUT ON THE LEASED LAND 15 ITA NO. 248/NAG/2012. OF SHRI V.C. SHUKLA MEASURING 55 ACRES DURING THE YEAR 2002 - 03. THE AGRICULTURAL INCOME ACCOUNT HAS SEVERAL HEADS SUCH AS SALE OF VEGETABL E, SALE OF POTATO, AMOUNT RECEIVED ON SALE OF SUGARCANE ETC. THE SAID ACCOUNT HAD ALSO REFLECTED THE QUARTERLY PAYMENT OF RS.1 LAKH IN THE NAME OF ALWYN COOPER AS A LEASE RENT. THE TOTAL RECEIPTS SHOWN IN THE SAID AGRICULTURAL INCOME ACCOUNT AMOUNTED TO RS.39,88,590/ - . THE APPELLANT HAS ALSO PLACED THE ACCOUNT OF AGRICULTURAL EXPENSES SUCH AS PAYMENT TO LABOUR, PURCHASE OF FERTILIZER, MANDI CHARGES, TRACTOR EXPENSES ETC. TOTAL RS.11,41,675/ - . 9. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE 7/12 EXTRACT P LACED ON RECORD. AS PER THE KISH T BANDI KHATONI, THE NAME OF THE OWNER IS M/S ALWYN COOPER P. LTD. AND THE AREA AS INFORMED TO US WAS ABOUT 55 ACRES OF LAND. THE ASSESSEE HAS ALSO PLACED ON RECORD FORM P - II I.E. KHASRA TO DEMONSTRATE THAT TAMATAR (TOMATO) , SURYAMUKHI, DHAN, VEGETABLE AND OTHER CROPS WERE GROWN ON THE LAND IN QUESTION. THE ASSESSEE HAS ALSO TRIED TO DEMONSTRATE THAT THE AGRICULTURE PRODUCE WAS SOLD IN THE MARKET, HOWEVER, ONLY HAND WRITTEN CASH RECEIPTS WERE PLACED ON RECORD. THERE ARE SEVER AL DEBIT NOTES PREPARED BY THE ASSESSEE IN CASH FOR LABOUR EXPENSES OR OTHER AGRICULTURE EXPENSES. THEREFORE, THE CASE OF THE ASSESSEE IS THAT ON THE BASIS OF THOSE EVIDENCES THE AGRICULTURAL INCOME SHOULD HAVE BEEN ACCEPTED BY THE REVENUE DEPARTMENT. 9.1 ON THE OTHER HAND, THE CASE OF THE AO WAS THAT ON INVESTIGATION IT WAS FOUND THAT THE CLAIM OF THE ASSESSE OF AGRICULTURE OPERATION W A S NOT GENUINE. IN THIS REGARD THE AO HAS MENTIONED THREE NAMES, NAMELY, ABDUL MAJID KHAN, M/S JETHWA KR U SHI FARM AND M/S KAILASH KR U SHI FARM. ALL THREE OF THEM WERE IN RESPECT OF PURCHASE OF SUGARCANE FROM THE ASSESSEE. THEY HAVE DENIED ANY SUCH TRANSACTION WHICH WAS CLAIMED BY THE ASSESSEE. LEARNED CIT(APPE A LS) HAS ALSO DISCUSSED THOSE VERY EVIDENCES OR STATEMENTS WHICH WER E RELIED UPON BY THE AO WHILE TAXING THE IMPUGNED AGRICULTURAL INCOME. ACCORDING TO THE LEARNED CIT(APPEALS) THERE WAS DISCREPANCY IN THE STATEMENT OF THE DIRECTOR WHO HAS 16 ITA NO. 248/NAG/2012. INFORMED THAT THE C ROPS GROWN WERE PADDY, TOMATO, CAULI FLOWER BUT THE ASSESSEE HAS PLACED ON RECORD THE EVIDENCE OF SALE OF SUGARCANE AND POTATO. LEARNED CIT(APPEALS) WAS OF THE VIEW THAT THOSE CERTIFICATES OR CONFIRMATIONS WERE FABRICATED BY THE ASSESSEE, SPECIALLY WHEN THOSE PARTIES HAVE DENIED THE IMPUGNED CONFIRMATION. THE ASSESSEE H AS ALSO PLACED BILLS OF OTHER CROPS SUCH AS POTATO AND VEGETABLE ETC. BUT THOSE WERE ALSO HELD BY THE REVENUE AUTHORITIES AS BOGUS EVIDENCE. 10. FROM THE ABOVE DISCUSSION AND AS PER THE CLAIMS AND COUNTER CLAIMS IT IS EVIDENT THAT SOME OF THE POINTS ARE IN FAVOUR OF THE ASSESSEE AND SOME OF THEM ARE IN FAVOUR OF THE REVENUE. T HEREFORE, WE HAVE NOTICED THAT THE AO HAD PRIMARILY REJECTED THE EVIDENCE IN CONNECTION OF THE SUGARCANE PRODUCED BUT HE HAS NOT DISCUSSED THE RECEIPTS OF OTHER PRODUCE AS MENTIONED I N THE AGRICULTURAL INCOME ACCOUNT. ON THE OTHER HAND, WE HAVE ALSO NOTICED THAT THERE WERE SO MANY LAPSES ON THE PART OF THE ASSESSEE. THE ASSESSEE HAD FAILED TO CORROBORATE ITS CLAIM OF AGRICULTURAL INCOME. THE EVIDENCES WHICH WERE PRODUCED WERE FOUND TO BE NOT GENUINE ON INVESTIGATION. IN SUCH SITUATION THE BURDEN WAS ON THE ASSESSEE TO REBUT THE ALLEGATION OF THE REVENUE DEPARTMENT TO THE HILT. THE ASSESSEE HAD NOT TAKEN ANY OTHER ARGUMENT OR ALTERNATE PLEA BUT KEPT ON ASKING THE OPPORTUNITY OF CROSS EXA MINATION OF THOSE PERSONS WHO HAVE DENIED THE PURCHASE OF SUGARCANE FROM THE ASSESSEE. APART FROM THOSE EVIDENCES THE APPELLANT COULD HAVE PLACED ON RECORD THE EVIDENCES PERTAINING TO THE SAID OTHER AGRICULTURE CROPS GROWN ON THE LAND IN QUESTION. AS OF NO W, THE GR EAT HURDLE IS THE LAPSE OF ABOUT 13 YEARS DUE TO WHICH THE PROBABILITY IS THAT NO GAINFUL PURPOSE SHALL BE SERVED IF AN ATTEMPT IS AGAIN MADE TO INVESTIGATE THE CORRECTNESS OF THE CLAIM. 10.1 IN A SITUATION AS WE HAVE DISCUSSED HEREIN ABOVE, SPEC IALLY WHEN THE LEARNED A.R. MR. C.J. THAKAR HAS GRANTED HIS CONCESSION TO DECIDE THE QUESTION OF EARNING OF AGRICULTURAL INCOME FROM 55 ACRES OF LAND, WE ARE OF THE OPINION 17 ITA NO. 248/NAG/2012. THAT ONLY ON THE BASIS OF THE DOCTRIN PREPONDERANCE OF PROBABILITIES THIS ISSUE OF ESTIMATION OF AGRICULTURAL INCOME WHICH IS PENDING SINCE LONG CAN BE RESOLVED. IN ONE OF ITS SUBMISSION BEFORE THE CIT(APPEALS) IT WAS PLEADED BY THE ASSESSEE THAT, QUOTE, THUS LOOKING FROM ANY ANGLE WHATEVER NO ADDITION BEYOND RS.28,46,915/ - CAN BE MA DE AS UNEXPLAINED CASH CREDIT U/S 68. UNQUOTE. THEREFORE, THE APPELLANT HAS ALSO CONCEDED THAT THE NET AMOUNT COULD BE HELD AS UNEXPLAINED CASH CREDIT U/S 68 OF I.T. ACT. TAKING CLUE FROM THIS CONCESSION AS MADE BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES, WE HEREBY HOLD THAT NET ADDITION U/S 68 TO THE EXTENT OF RS. 30,00,000 / - SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. WE HAVE TAKEN THIS VIEW AFTER CONSIDERING THE ENTIRETY OF THE EVIDENCES COLLECTED OR RELIED UPON BY BOTH THE SIDES. THE BASIC FACT REMAINED UNCHANGED THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND AS PER THE 7/12 REVENUE RECORDS AND THE AO HAS NOT ALLEGED THAT THE AGRICULTURAL INCOME WAS ALSO SHOWN BY THE OWNER, NAMELY M/S ALWYN COOPER . THOSE REVENUE RECORDS HAVE ALSO MENTIONED THE CROPS GROWN ON THE LAND IN QUESTION. THEREFORE, WE DEEM IT APPROPRIATE AS ALSO TO STOP THE LITIGATION AND CONSIDERING THE UNDERTAKING GIVEN BY LEARNED A.R. ; RESTRICT THE NET ADDITION UPTO RS. 30,00,000 / - . TH E GROUND IN QUESTION IS HEREBY PARTLY ALLOWED. 11. GROUND NOS. 4, 5 AND 6.: 4. LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS.15,33,248/ - ON MACHINERIES INSTALLED AND USED FOR PRODUCTION OF BRANDED MILK, THE SALE WHERE OF AMOUNTED TO RS. 16.95 CRORES. SUCH MILK COULD NOT HAVE BEEN PRODUCED WITHOUT THE INSTALLATION OF MACHINERY. 5. LEARNED CIT(A) ERRED IN ASSUMING THAT THE PURCHASE OF MACHINERIES WAS NOT PROVED. THE CONFIRMATION OF CONCERNED PARTIES WHO INSTALLED THE MACHINE RY AND PAYMENT THEREOF BY BANK DRAFT FOLLOWED BY PRODUCTION OF RS.16.95 CRORES WORTH BRANDED MILK PROVED THE PURCHASE AND INSTALLATION OF MACHINERY AND USE THEREOF. MERELY BECAUSE THE CONFIRMATION LETTERS COULD NOT BE SERVED BY A.O. TO THE SAID PARTIES CAN NOT BE A GROUND FOR HOLDING THAT MACHINERIES WERE NOT PURCHASED. 18 ITA NO. 248/NAG/2012. 6. ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO PRODUCE THE PARTIES AND/OR LEAD OTHER EVIDENCE TO PROVE ITS CASE AFTER THE A.O. FAILED TO SERVE THE CONFIRMATION LETTER TO THE CONCERNED PARTIES AN D ASSESSEE WAS INFORMED ABOUT IT. THIS HAS RESULTED IN DENIAL OF PRINCIPLES OF NATURAL JUSTICE AND HENCE THE ORDERS OF LOWER AUTHORITIES ARE VITIATED. 11.1 THESE THREE GROUNDS REVOLVE AROUND THE CLAIM OF DEPRECIATION ON MACHINERIES INSTALLED. THE OBSERVATION OF THE AO WAS THAT THERE WERE DISCREPANCIES IN THE PURCHASE BILLS FILED BY THE ASSESSEE. THE PURCHASES WERE NOT SUPPORTED BY CORRECT BILLS CONTAINING ORD ER NO., DESPATCH NO., DELIVERY CHALLAN AND TRANSPORTATION DETAILS. THE AO HAS ALSO MADE AN OBSERVATION THAT THE PURCHASE BILLS PERTAINED TO EARLIER YEARS. THE EXISTENCE OF THE PARTY COULD ALSO NOT BEEN ESTABLISHED BY FILING THE CONFIRMATION . HOWEVER, T HE A SSESSEE HAS FURNISHED THREE CONFIRMATION LETTERS, THE DETAILS AS PER ASSESSMENT ORDER WERE AS UNDER : 1) CONFIRMATION LETTER DT. 12.11.2010 FROM M/S MICRON ENGINEERING GROUP. UNIT NO. 63 1 ST FLOOR BHANDUP INDUSTRIAL ESTATE. PANALAL MILLS COMPOUND, LBS MARG, B HANDUM, MUMBAI 4000078 FOR THE SUPPLY OF PLANT AND MACHINERY AS PER THEIR BILL DT. 17.04.2001 FOR RS.15,06,000/ - . 2) CONFIRMATION LETTER FROM M/S ZEUZER INDIA SURVEY NO. 12/13, SHANTI NAGAR, LANDEWADI, PUNE CONFIRMING SALE OF MACHINERY TO THE ASSESSEE (ANNEXU RE - 2) 3) CONFIRMATION LETTER FROM M/S M.G. FABRICATORS AND ENGINEERING, GANESH NIWAS, NEHRU NAGAR, PIMPRI, PUNE 411018 CONFIRMING SALE OF PLANT AND MACHINERY TO THE ASSESSEE (ANNEXURE - 3). 12. THE AO HAS ISSUED SUMMONS TO THOSE PARTIES, HOWEVER, RETURNED WITH THE REMARK LEFT OR NOT KNOWN. THE AO HAS MENTIONED THAT IT WAS SURPRISING THAT THE CONFIRMATIONS FROM THOSE PARTIES HAVE BEEN FILED BY THE ASSESSEE ABOUT A WEEK BEFORE BUT COULD NOT BE FOUND BY THE POSTAL AUTHORITIES AT THE ADDRESSES GIVEN. THE AO HAS CONCLUDED THAT THE PURCHASE OF MACHINERY REMAINED 19 ITA NO. 248/NAG/2012. UNSUBSTANTIATED, THEREFORE, ALLEGED ADDITION IN FIXED ASSETS WAS NOT GENUINE WHICH RESULTED INTO DISALLOWANCE OF DEPRECIATION. 13. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY THE ASSE SSEE HAS SUBMITTED THAT PLANT AND MACHINERY AMOUNTING TO RS.62,12,990/ - WAS PURCHASED AND DEPRECIATION OF RS.15,53,248/ - WAS CLAIMED. THE ASSESSEE HAS PLACED RELIANCE ON THE PURCHASE BILLS OF THE THREE PARTIES AND SUBMITTED AS UNDER : THE NEXT ISSUE IS REGARDING DISALLOWANCE OF DEPRECATION OF RS.15,53,248/ - . THE ASSESSEE PUT TO USE THE FOLLOWING PLANT AND MACHINERIES DURING THE YEAR FOR PRODUCTION OF DIFFERENT VARIETIES OF BRANDED MILK OUT OF RAW MILK. THE BRANDED MILK PRODUCED DURING THE YEAR UNDER DIFF ERENT BRANDS WAS (I) SHAHED DUDH (II) GOMTI DUDH AND (III) ENERGY DUDH. THE TOTAL SALES OF MILK AMOUNTED TO RS.16.95 CRORES WHICH YIELDED SUBSTANTIAL PROFIT. THE PLANT AND MACHINERIES WERE PURCHASES AND INSTALLED TOWARDS THE END OF EARLIER PREVIOUS YEAR AN D WERE ACTIVELY PUT TO USE DURING THE YEAR AND HENCE DEPRECIATION THEREON WAS CLAIMED DURING THE YEAR. THE PURCHASED OF PLANT AND MACHINERY WAS COMPREHENSIVE I.E. INCLUDING INSTALLATION CHARGES. 13.1 THE FIRST APPELLATE AUTHORITY WAS NOT CONVINCED AND H ELD THAT THE CONFIRMATIONS FURNISHED WERE NOT FOUND TO BE TRUE AS THE PARTIES WERE NOT AVAILABLE, HENCE THE GENUINENESS OF THE PURCHASES COULD NOT BE ESTABLISHED. ACTION OF THE AO WAS CONFIRME D . 14. THE EXPLANATION OF THE ASSESSEE WAS AS UNDER : II: DEPRECIATION DISALLOWED AT RS.15,53,248/ - AT 25% ON ADDITION OF PLANT AND MACHINERY. ASSESSEE IS DOING BUSINESS OF PRODUCING BRANDED MILK (VIZ. SHAHED DUDH, GOMTI DUDH AND ENERGY DUDH). ASSESSEE PURCHASED AND INSTALLED FOLLOWING PLANT AND MACHINERIES. 1) SUPPLY, INSTALLATION AND MICROS COMMISSIONING OF 5 KL CAPACITY ENGINEERING 20 ITA NO. 248/NAG/2012. HOMOGENISER GROUP, MUMBAI RS.15,08,000/ - (BILL ON P. 17 OF PAPERBOOK DT.04.03.2013). 2) SUPPLY AND INSTALLATION OF PASTURING ZEUZER INDIA, MACHINE, CREAM SEPARATOR, BOILER, PUNE. RS.25,95,000/ - MILK PUMP WITH FILLINGS, DUMPTANK & FLOW CONTROL VALVE (BILL ON P.23 OF PAPERBOOK DT. 04.03.2013) 3) MILK TANK CAPACITY 15,000 LTS. M.G. FABRICATORS MILK TANK CAPACITY 10,000 LT. & ENGINEERING RS.21,09,990/ - MILK TANK CAPACITY 5,000 LTS. PUNE. (BILL ON P.20 OF PAPERBOOK DT. 04.0 3.2013). -------------------- RS. 62,12,990/ - --------------------- WITH THE INSTALLATION OF THESE PLANT AND MACHINERIES THE ASSESSEE'S TURNOVER INCREASED FROM RS. 10,81,89,508 / - IN A.Y.2002 - 03 TO RS.16,44,30,163/ - DURING THE YEAR IN QUESTION I.E. A.Y.2003 - 04. AS SESSEE IN THE ASSESSMENT PROCEEDINGS, AS REQUIRED, FILED CONFIRMATION LETTERS OF CL) MICRON E NGINEERING GROUP, OFFICE UNIT N 0.63, 1 ST FLOOR, BHANDUP INDUSTRIAL ESTATE, PANNALAL MILL COMPOUND LBS MARG, BHANDUP, MUMBAI - 40007 8 . WORKS A - 393 WAGLE IND. ESTA TE. C.P. TALAO, RAMNAGAR ROAD NO.2S, THANE - 400064. (2) ZEUZER INDIA SURVEY NO.12/13, SHANTINAGAR LANDEWADI, BHOSARI, PUNE - 41L039 AND (3) M.G. FABRICATORS & ENGINEERING - MFG. OF S.S. DAIRY EQUIPMENTS ETC. GANESH NIVAS , NEHRUNAGAR, PIMPLI, PUNE - 411018 . IN RESPECT OF THE BILLS FILED BY THE ASSESSEE, A.O. ON PAGE 6 OF ASSTT. ORDER STATED THAT SAID BILLS DO NOT CONTAIN THE REQUISITE DETAILS OF PURCHASE ORDER NUMBER, DISPATCH NUMBER, CHALLAN NUMBER, TRANSPORTATION DETAILS ETC. HOWEVER REFERRING TO THE IN VOICE OF MICRON AT P.L7 OF PAPERBOOK DT.04.03.2013 IT WILL BE SEEN THAT IT CONTAINS ALL REQUISITE DETAILS INVOICE NUMBER, DATE, CHALLAN NO., DATE, DISPATCH THROUGH SAINATH ROADWAYS, L.R. NUMBER, VEHICLE NUMBER ETC. AND FURTHER THE BILL INCLUDED SUPPLY, INSTALLATION AND COMMISSIONING OF 5 KL CAPACITY HOMOGENISER. BILL ALSO CONTAINS THE DETAILS M.S. SALESTAX NUMBER, CENTRAL SALESTAX NUMBER, TELEPHONE NUMBER, TELEX NUMBER ETC. SIMILARLY THE BILL OF ZEUZER INDIA AT P.23 OF PAPERBOOK DT.04.03.2013 CONTAINS THE DETAILS OF INVOICE NUMBER, DATE ETC. IT WILL ALSO BE SEEN THAT THE PRICE INCLUDED INSTALLATION CHARGES, THEIR SALES TAX NUMBER ETC. SIMILARLY THE BILL OF M.G. FABRICATOR & ENGINEERING AT PAGE 20 OF PAPER BOOK DT.04.03.2012 CONTAINED NECESSARY DETAI LS. PLANT AND MACHINERIES WERE INSTALLED IN EARLIER YEAR BUT THEY BECAME FULLY OPERATIONAL DURING THE YEAR AND HENCE THE DEPRECIATION THEREON WAS CLAIMED DURING THE YEAR. IN SUBSEQUENT YEAR I.E. A.Y.2004 - 05 DEPRECIATION ON THE SAME HAS BEEN CLAIMED AND ALLOWED BY THE REVENUE IN 143(1) ASSESSMENT. 21 ITA NO. 248/NAG/2012. ASSESSEE, AS STATED ABOVE ALSO FILED THEIR CONFIRMATION LETTERS CONFIRMING THEIR BILLS AND SUPPLY AND INSTALLATION OF PLANT AND MACHINERIES. THEY ARE ON PAGES 19 (MICRON), PAGE 25 (ZEUZER) AND PAGE 22 ( M.O. FABRICATOR) OF PAPERBOOK DT.04.03.2013. A.O. SENT THOSE CONFIRMATION LETTERS BY POST TO THOSE PARTIES. A.O. STATES THAT POSTAL AUTHORITIES RETURNED THE LETTER SENT TO MICRON WITH REMARK 'LEFT' AND LETTER SENT TO MLS. ZEUZER INDIA ALSO WITH REMARK 'LEFT ADDRESS NOT KNOWN' AND ABOUT M.O. FABRICATORS THERE ARE NO COMMENTS OR REMARK BY A.O. WHEN THE A.O. POINTED OUT THESE FACTS TO THE ASSESSEE, ASSESSEE IMMEDIATELY BY HIS LETTER DT.27.12.2010 TO THE A.O. A T PAGE 1 AND 2 PAPERBOOK DT.04.03.2013 POINTED OUT THAT THE PERSONS CONCERNED ARE BIG INCOMETAX AND SALESTAX ASSES SEES AND ARE HAVING THEIR PLACE OF BUSINESS AT THE ADDRESS GIVEN IN THEIR BILLS AND CONFIRMATION LETTERS AND HENCE IT WAS NOT KNOW HOW THE POSTAL AUTHORITIES ALLEGEDLY RETURN THOSE LETTERS WITH REMARK LIKE 'LEFT' 'NOT KNOWN' ETC. THE ASSESSEE SUBMITTED THAT THE ALLEGED REMARKS BY POSTAL AUTHORITIES WERE NOT TRUE AND WERE NOT ACCEPTABLE TO THE ASSESSEE AND HENCE IT WAS DEMANDED THAT THE CO NCERNED POSTMAN OR OFFICIAL WITH RELEVANT RECORD WILL HAVE TO BE EXAMINED TO DISPROVE THEIR REMARKS WHICH WERE NOT ACCEPTABLE TO THE ASSESSEE. HOWEVER THE A.O. DID NOT ACCEDE TO THE REQUEST OF THE ASSESSEE TO EITHER SUMMON THE CONCERNED POST OFFICIAL WI TH RECORD FOR HIS CROSS - EXAMINATION BY THE ASSESSEE OR HIMSELF REVERIFY THE FACTS. IT WAS REITERATED THAT THE PURCHASE OF PLANT AND MACHINERIES WAS GENUINE. DEPARTMENT HAS ITSELF ALLOWED DEPRECIATION ON THE SAME IN FOLLOWING YEARS AND FURTHER THERE IS NO DENIAL BY THE CONCERNED SUPPLIERS ABOUT THE BILLS, OR CONFIRMATION LETTER OR THE FACT OF SUPPLY THEREOF. THOSE MACHINERIES EXIST EVEN TODAY AND CAN BE PHYSICALLY VERIFIED. IT IS ALSO SUBMITTED THAT THE ASSESSEE'S REQUEST TO EXAMINE/CROSS - EXAMINE CON CERNED POSTAL AUTHORITIES WITH RECORDS WAS WRONGLY DENIED RESULTING IN DENIAL OF NATURAL JUSTICE. ASSESSEE RELIES ON THE ABOVE REFERRED CASE LAWS VIZ. 1989 SCR SUPPL. (1) 755 = 1990 SCC (1) 68 AND (1963) 49 ITR P.334 (ALL). IN VIEW OF THE ABOVE REFERRED FACTS AND MATERIAL LEARNED LOWER AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING DEPRECIATION OF RS.15,53,248 ON THE SAID PLANT AND MACHI8NERIES OF RS.62,12,990/ - . THE SAME NEEDS TO BE ALLOWED. 15. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. NAR ENDRA KANE APPEARED AND VEHEMENTLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND PLEADED THAT THE GENUINENESS OF THE INSTALLATION OF MACHINERY COULD NOT BE ESTABLISHED BY THE ASSESSEE, THEREFORE, THE CLAIM OF DEPRECIATION WAS NOTHING BUT A BOGUS CLAI M. 16. ON THIS ISSUE WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. THE ANOMALIES WHICH WERE POINTED OUT BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) WERE MAINLY IN RESPECT OF THE CONFIRMATION LETTERS ISSUED BY THE PARTIES FROM WHOM THE MACHINERIES WE RE CLAIMED TO HAVE BEEN PURCHASED, HOWEVER, THE NOTICES ISSUED TO THOSE PARTIES BY THE AO WERE RETURNED BACK FROM THE POSTAL 22 ITA NO. 248/NAG/2012. AUTHORITIES UNSERVED. IT HAS ALSO BEEN NOTED BY THE AO THAT THE PURCHASES WERE MADE IN THE LAST YEAR BUT THE DEPRECIATION FOR THE F IRST TIME WAS CLAIMED IN THE YEAR UNDER CONSIDERATION. WE HAVE CAREFULLY CONSIDERED THE OBJECTIONS OF THE REVENUE DEPARTMENT. 16.1 THE CONFIRMATION LETTER ISSUED BY M/S MICRON ENGINEERING WAS DATED 12 - 11 - 2010 IN RESPECT OF SUPPLY OF PLANT AND MACHINERY AS PER BILL DATED 17 TH APRIL, 2001 FOR A SUM OF RS.15,08,8000/ - . A COPY OF THE BILL IS ON PAGE 80 OF THE PAPER BOOK WHICH WAS ADMITTEDLY FILED BEFORE THE REVENUE AUTHORITIES. ON PERUSAL OF THE SAID INVOICE DATED 17 TH APRIL, 2001 THE ADDRESS MENTIONED WAS UNIT NO. 63, 1 ST FLOOR, BHANDUP INDUSTRIAL ESTATE, PANNALAL MILL COMPOUND, LBS MARG, BHANDUP, MUMBAI - 400078. APART FROM THIS ADDRESS THE INVOICE HAS ALSO MENTIONED ADDRESS OF WO R KS : A - 393, WAGLE INDL. ESTATE C.P. T ALAO, RAM NAGAR , ROAD NO.28, THANE - 400 064 . THIS BILL HAS MENTIONED DESPATCH THROUGH SAINATH ROADWAYS HAVING L.R. NO. 880 L.R. DATED 17 TH APRIL, 2001, VEHICLE NO. KA - 04 A - 1897. THIS BILL H A S MENTIONED SUPPLY AND INSTALLATION OF 5 KL C APACITY H OMOGENISER ON E UNIT WITH PRESSURE G A UGE DESCRIBING MODEL NO., CAPACITY OF MOTOR ETC. THE INVOICE HAS ALSO MENTIONED TAX CHARGED AT THE RATE OF 4% ON THE SALE AMOUNT. THERE WAS A MENTION OF M.S.T./CST NO. INTERESTINGLY THE REVENUE AUTHORITIES HAVE FURNISHED THE COVE R O F THE LETTER ISSUED TO MICRON ENGINEERING ON WHICH THE ADDRESS MENTIONED WAS PROPRIETOR, MICROS ENGINEERING GROUP, UNIT NO. 63, 1 ST FLOOR, BHANDUL INDL. ESTATE, (NOT LEGIBLE) MILL COMPOUND, (NEXT LINES NOT LEGIBLE), MUMBAI - 400078. APPARENTLY THE ADD RES S WAS NOT LEGIBLE AND INCORRECT. ON THE BASIS OF THE LETTERS ISSUED ON THE ADDRESS THROUGH SPEED POST, A VEHEMENT ARGUMENT HAS BEEN RAISED BEFORE US BY LEARNED A .R. MR. C.J. THAKAR THAT THE POSTAL AUTHORITIES WERE NOT IN A POSITION TO CORRECTLY READ THE ADDRESS DUE TO WHICH THE LETTER COULD NOT BE SERVED. OTHERWISE THERE WAS NO REASON FOR NOT DELIVERING THE LETTER TO THE SAID PARTY. FURTHER IT HAS ALSO BEEN PLEADE D THAT THE GENUINENESS OF THE TRANSACTION 23 ITA NO. 248/NAG/2012. COULD ALSO BE VERIFIED FROM OTHER TAX AUTHORITIES SUCH AS SALES TAX DEPARTMENT OR EXCISE DEPARTMENT SPECIALLY WHEN THE REQUISITE REGISTRATION NOS. HAVE BEEN MENTIONED ON THE INVOICES. OUR ATTENTION HAS ALSO BEEN DR AWN ON THE LEDGER ACCOUNT OF M/S MICRON ENGINEERING TO DEMONSTRATE THAT THE PAYMENTS HAVE BEEN MADE THROUGH THE DEMAND DRAFT AGAINST THE OUTSTANDING BALANCE OF THE LAST FINANCIAL YEAR CARRIED DOWN THIS YEAR. WE HAVE ALSO PERUSED THE SCHEDULE OF PLANT AND MACHINERY AND T H E DEPRECI ATION CHART ON PAGE 160 AND THE BALANCE SHEET ETC. 16. 2 THEREFORE, IN RESPECT OF THE MACHINERY PURCHASED FROM M/S MICRON ENGINEERING ; OUR VIEW IS THAT IN A SITUATION WHEN THE INVOICE HAD CONTAINED THE COMPLETE DESCRIPTION OF THE M ACHINERIES AS WELL AS THE DETAILS OF THE DESPATCH AND THAT THE GENUINENESS OF THE PAYMENTS MADE THROUGH DEMAND DRAFT H A VE NOT BEEN DOUBTED BY THE REVENUE DEPARTMENT AND THAT THE ALLEGATION OF NON DELIVERY OF NOTICE OF THE REVENUE DEPARTMENT WAS DOUBTFUL A ND THAT THE COST OF THE MACHINERY WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS IN THE PAST YEAR AND THERE WAS NO OBJECTION IN THAT YE A R AND THAT THE USE OF THE MACHINERY IN THE PRODUCTION OF THE MILK HAS NOT BEEN DOUBTED, WE HEREBY HOLD THAT THE REJECTION O F CLAIM OF DEPRECIATION WAS MERELY ON PRESUMPTION. THE REVENUE AUTHORITIES COULD HAVE INVESTIGATED THOROUGHLY WHEN AN ANOTHER CHANCE WAS GRANTED , SPECIALLY WHEN THE PRIMARY ONUS OF FURNISHING OF BASIC INFORMATION SUCH AS LETTER OF CONFIRMATION, INVOICES AN D DETAILS OF THE PAYMENTS ALONG WITH THE USE OF MACHINERY IN RUNNING THE BUSINESS OF THE ASSESSEE HAVE BEEN FURNISHED BY THE APPELLANT. WE, THEREFORE, DIRECT THAT THE DEPRECIATION ON THE MACHINERY WHICH WAS PURCHASED FROM M/S MICRON ENGINEERING SHOULD BE A LLOWED. 17. THE NEXT CONFIRMATION WAS FURNISHED FROM M/S ZEUZER INDIA WHICH WAS REJECTED BY THE AO. A LETTER DATED 08 - 11 - 2010 WAS FURNISHED BEFORE THE AO CONFIRMING THE PURCHASE OF MACHINERY BY BANSI DAIRY P. LTD. VIDE A BILL DATED 12 - 10 - 2001 (INVOICE NO. 49/212/2001 AMOUNTING TO RS.25,95,000/ - . OUR 24 ITA NO. 248/NAG/2012. ATTENTION HAS BEEN DRAWN ON THE SAID INVOICE WHICH IS PLACED IN THE PAPER BOOK ON PAGE 76 DATED 12 - 10 - 2001 BEARING INVOICE NO. 49/ ZR/2001 FOR A SUM OF RS.25,95,000 AND THE DESCRIPTION OF THE MACHINERY WAS P ASTEURIZING M ACHINE, C RME S EPARATOR , B OILER, D UMP TANK ETC. THE AO HAS RAISED AN OBJECTION THAT IN THE SAID INVOICE THERE WAS NO PURCHASE ORDER NO., PARTICULARS OF DESPATCH OR DELIVERY CHALLAN AND THE DETAILS OF THE CONSIGNEE. THE IMPUGNED INVOICE HAS AL SO NOT MENTIONED WHETHER ANY TAX WAS PAID ON THE SUPPLY OF THE MACHINERY. WE HAVE ALSO EXAMINED THE NOTICE ISSUED THROUGH SPEED POST WHEREIN THE ADDRESS WAS WRITTEN AS THE PROPRIETOR, ZEUZER INDIA, SURVEY NAGAR, LANDEWADI, BHOSARI, POONA - 411039 . THE ADDR ESS WAS INCORRECT LY WRITTEN BECAUSE THE CORRECT ADDRESS AS PER THE INVOICE WAS ZEUZER INDIA, SURVEY NO. 12/13, SHA NTI NAGAR, LANDEWADI, BHOSARI, PUNE - 411039.. IN THE INVOICE TELEPHONE NOS. ETC. HAVE ALSO BEEN MENTIONED ALONG WITH THE BST/CST NO. ALTHOUGH IT IS VISIBLE THAT THE ADDRESS AT WHICH THE NOTICE WAS ISSUED BY THE AO WAS INCORRECT BUT STILL THE INVOICE PLACED ON RECORD STATED TO BE ISSUED BY THE SAID PARTY GIVES A PRIMA FACIE IMPRESSION THAT IT WAS FULL OF DOUBTS RATHER APPEARS TO BE NOT GENUINE. THE FIRST DOUB T IS IN RESPECT OF THE ADDRESS OF THE ASSESSEE MENTIONED BY THE SAID PARTY ON THE INVOICE . T HE ADDRESS WRITTEN AS BANSI DAIRY P VT . LTD., NEAR S.T. CYCLE STAND, RAM BAGH ROAD, GANESH PETH, NAGPUR - 440018. AS AGAINST THAT , THE ADDRESS IN THE OFF ICE RECORD AS MENTIONED BY THE ASSESSEE ITSELF IS BANSI DAIRY P VT . LTD., NEAR S.T. STAND, WARD NO. 7, NAGPUR. THEREFORE, THE IMPUGNED INVOICE IS DOUBTFUL MENTIONING WRONG ADDRESS OF THE ASSESSEE TO WHOM THE MACHINERY WAS CLAIMED TO HAVE BEEN SUPPLIED. BE THAT AS IT WAS, THE INVOICE DID NOT CONTAIN THE PURCHASE ORDER NO., DETAILS OF FREIGHT, NAME OF THE CONSIGNEE, DESPATCH NO. ALONG WITH DELIVERY CHALLANS. THE INVOICE DID NOT CONTAIN WHETHER ANY TAX WAS PAID ON THE SUPPLY OF MACHINERY WHICH WAS AMOUNTIN G TO RS.25,95,000/ - . APART FROM THE ABOVE DOUBTS, ON EXAMINATION OF THE LEDGER ACCOUNT OF ZEUZER INDIA FOR THE ACCOUNTING PERIOD 01 - 04 - 2002 TO 31 - 03 - 2003 IT WAS REFLECTED THAT THERE WAS AN OPENING BALANCE OF RS.25,95,000/ - AND THE 25 ITA NO. 248/NAG/2012. PAYMENT OF RS.20 LAKH WAS MADE THROUGH UMIYA URBAN COOPERATIVE BANK LTD. THERE WAS NO DETAIL OF THE BANK THROUGH WHICH REST OF THE AMOUNT OF RS.5,95,000/ - WAS PAID AND THE ONLY NARRATION WAS TO CASH BEING DD PAID. WHEN THE REVENUE DEPARTMENT WAS DOUBTING THE TRANSACTION THEN TH E ASSESSEE WAS UNDER OBLIGATION TO PLACE ON RECORD THE DETAILS OF THE TRANSACTION M A DE THROUGH BANK TO ESTABLISH THE GENUINENESS OF PAYMENT. IT IS WORTH TO MENTION THAT THE APPELLANT AS WELL HAD BEEN GIVEN AMPLE OPPORTUNITY TO COLLECT THE EVIDENCES TO CORR OBORATE THE GENUINENESS OF THE PURCHASE OF THE MACHINERY BUT THE ASSESSEE HAD MADE NO ATTEMPT TO IMPROVE ITS CASE. WE ARE OF THE VIEW THAT IN A SITUATION WHEN THE INVOICE ITSELF WAS FULL OF DOUBTS AS NARRATED HEREIN ABOVE WHICH WAS THE MAIN EVIDENCE IN SUP PORT OF THE PURCHASE OF THE MACHINERY, THEN WE HAVE NO OPTION BUT TO AFFIRM THE DOUBTS RAISED BY THE REVENUE DEPARTMENT AND DISMISS THE CLAIM OF THE DEPRECIATION IN RESPECT OF THE SAID MACHINERY. 18. THE THIRD PARTY WAS M/S M.G. FABRICATORS AND ENGINEERING AND THE CONFIRMATION WAS DATED 11 - 11 - 2010 WHEREIN IT WAS MENTIONED THAT VIDE A BILL DATED 22 - 12 - 2001 VIDE BILL NO. 1442 THE ASSESSEE HAD PURCHASED A MACHINERY FOR A SUM OF RS.21,09,990/ - . THE INVOICE OF M/S M.G. FABRICATORS AND ENGINEERING IS PLACED ON PA GE 78 OF PAPER BOOK. THE ADDRESS MENTIONED ON THE PAPER BOOK IS S.S. DAIRY EQUIPMENTS ETC., GANESH NIVAS, NEHRUNAGAR, PIMPRI, PUNE - 411 018. THE DATE OF INVOICE IS 22 - 12 - 2001 BEARING INVOICE NO. 1442. THE PARTICULARS OF THE MACHINERY WAS TWO MILK TANK, WIT H A CAPACITY OF 15000 LTRS., THEN ANOTHER MILK TANK HAVING CAPACITY OF 1000 LTRS. A ND MILK TANK OF 5000 LTRS. OTHER DESCRIPTION WAS THAT THE TANKS WERE HAVING INNER SHEELS SS 304 2MM AND OUTER SHEEL MS 3 - MM. ON THE AMOUNT OF RS.18,30,000 SALES TAX OF RS. 2,79,990/ - WAS ALSO CHARGED, THEREFORE, A TOTAL BILL OF RS.21,09,990/ - WAS RAISED. AS PER THE LEDGER ACCOUNT THE PAYMENTS HAVE BEEN MADE THROUGH DEMAND DRAFT. OUR ATTENTION HAS BEEN DRAWN ON THE LETTERS ISSUED TO THE SAID PARTY AND AS PER THE ADDRESS MENT IONED ON THE SPEED POST LETTER IT IS VEHEMENTLY ALLEGED THAT 26 ITA NO. 248/NAG/2012. THE ADDRESSES WERE NOT LEGIBLE AS WELL AS INCORRECT. THEREFORE, A SERIOUS DOUBT HAD BEEN RAISED BY LEARNED A.R. THAT BECAUSE OF THE WRONG ADDRESS THE SUMMONS ISSUED BY THE AO COULD NOT BE SERVED BY THE POSTAL AUTHORITY. HOWEVER, THE LEARNED A.R. HAS VEHEMENTLY PLEADED THAT WHEN THE REVENUE DEPARTMENT WAS GIVEN AN ANOTHER OPPORTUNITY AS PER THE DIRECTIONS OF THE TRIBUNAL THEN FURTHER INVESTIGATION COULD HAVE BEEN MADE INSTEAD OF RELYING UPON THAT V ERY EVIDENCE, I.E. NON DELIVERY OF SUMMONS. ON EXAMINATION OF THE DETAILS OF THE MACHINERY PURCHASED AND THE DEPRECIATION CHART, ONE THING IS NOT IN DOUBT THAT THE SUPPLIER HAD CHARGED SALES - TAX BY DULY MENTIONING CST NO. ETC. THE REVENUE DEPARTMENT COULD HAVE EXAMINED THE CORRECTNESS OF THE PAYMENTS OF THE SALES - TAX FROM THE SALES TAX DEPARTMENT. THE EVIDENCES ON RECORD HAVE INDICATED THAT THE PRIMARY ONUS OF FURNISHING OF BASIC EVIDENCES HAVE BEEN FILED BY THE ASSESSEE AND IF THE REVENUE DEPARTMENT WANTED TO CONTRADICT THOSE EVIDENCES THEN THE ALLEGATION SHOULD HAVE BEEN DULY CORROBORATED. WE, THEREFORE, HOLD THAT CONSIDERING THE PRIMARY EVIDENCES ON RECORD AS FURNISHED BY THE ASSESSEE, THE CLAIM OF DEPRECIATION ON THE MACHINERY IN QUESTION DESERVES TO BE ALLOWED. 19. AS A RESULT, IT IS HEREBY CONCLUDED THAT THE DISALLOWANCE AS MADE BY THE AO IS HEREBY DIRECTED TO BE RESTRICTED AS HELD IN FOREGOING PARAGRAPHS. AS A RESULT, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 20. GROUND NO. 7: LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES TO THE EXTENT OF RS.8,87,966/ - . THE EXPENSES CLAIMED DURING THE YEAR AT RS.33,74,872/ - AS AGAINST LAST YEARS EXPENSE OF RS.36,93,024/ - WAS MOST FAIR AND REASONABLE ESPECIALLY WHEN THE TURNOVE R DURING THE YEAR WAS MORE AS COMPARED TO LAST YEAR. 27 ITA NO. 248/NAG/2012. FACTS OF THE CASE HAVE REVEALED THAT THE ASSESSEE HAD CLAIMED ADMINISTRATIVE EXPENSES AT RS.33,74,572/ - . THE ADMINISTRATIVE EXPENSES WERE IN THE NATURE OF PRINTING, STATIONERY, TELEPHONE, OFFICE EXPENSES, TRAVELLING, ADVERTISEMENT ETC. THE AO HAS NOTICED THAT THE ASSESSEE HAD NOT PROVIDED THE SUPPORTING EVIDENCE, THEREFORE, AN ESTIMATED DISALLOWANCE OF ABOUT 25% OF RS.8,87,966/ - WAS MADE. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUT HORITY , LEARNED CIT(APPEALS) HAS HELD THAT INSPITE OF THE DIRECTIONS NO FRESH EVIDENCE IN SUPPORT OF THE EXPENDITURE CLAIMED WAS FURNISHED BY THE ASSESSEE. AS PER THE LEARNED CIT(APPEALS) THE ASSESSEE HAS NOT FURNISHED BILLS AND VOUCHERS, HENCE THE ONUS WA S NOT DISCHARGED. ON THE OTHER HAND, FROM THE SIDE OF THE APPELLANT, LEARNED A.R. MR. C.J. THAKAR HAS PLEADED THAT THE TURNOVER FOR THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2003 - 04 WAS AT RS.16,94,92,663/ - AS COMPARED TO THE TURNOVER FOR ASSESSMEN T YEAR 2002 - 03 OF RS. 11,31,63,473/ - . THE ADMINISTRATIVE EXPENSES FOR THE YEAR UNDER CONSIDERATION WERE RS.33,74,872/ - AS COMPARED TO THE ADMINISTRATIVE EXPENSES OF RS.36,93,021/ - . ON THE BASIS OF THESE FIGURES THE ARGUMENT OF LEARNED A.R. IS THAT ALTHOUGH THE TURNOVER HAD GONE UP BUT THE ADMINISTRATIVE EXPENSES HAD GONE DOWN, THEREFORE, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE EXPENSES THAT TO ON ESTIMATE BASIS. 21. AFTER CONSIDERING THE ARGUMENTS OF LEARNED A.R. WE ARE OF THE VIEW THAT ON ONE HAND AN ESTIMATION OF DISALLOWANCE IS TO BE AVOIDED BUT ON THE OTHER HAND THE ASSESSEE IS ALSO UNDER STRICT OBLIGATION TO FILE CORROBORATIVE EVIDENCE IN SUPPORT OF THE GENUINENESS OF THE EXPENSES CLAIMED. IN THIS CASE ALTHOUGH AN ANOTHER ROUND OF OPPORTUNITY WAS G IVEN TO THE ASSESSEE BUT THE EVIDENCES AS DEMANDED BY THE AO WERE NOT FURNI SHED . A S WELL AS CONSIDERING THE CONCESSION OF LEARNED A.R. TO RESTRICT THE ADDITION TO A REASONABLE ESTIMATE AND T O CUT THE PROCEEDINGS SHORT , WE HEREBY HOLD THAT A SUM OF RS.4 LAKHS CAN BE DISALLOWED 28 ITA NO. 248/NAG/2012. ON THE GROUND THAT THE ASSESSEE HAD FAILED TO FULLY SUBSTANTIATE THE CLAIM OF EXPENDITURE. THIS GROUND IS, THEREFORE, PARTLY ALLOWED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 31 ST MAY, 2016. COPY FORWARDED TO : 1. M/S BANSI DAIRY PVT. LTD. NEAR NEW S.T. STAND, WARD NO. 7, NAGPUR - 440018. 2. D.C.I.T., CIRCLE - 4, NAGPUR. 3. COMMISSIONER OF INCOME - TAX - ,NAGPUR. 4. CIT(APPEALS) - I I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.