Mr.Kallappaiah Nagaraja , Bangalore V. Deputy Commissioner of Income tax Circle-5(2)(1), Bangalore

ITA 2510/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9925 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Depreciation; Opportunity of being heard
• Section: 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO . 2510 /BANG/201 8 ASSESSMENT YEAR : 20 1 5 - 1 6 SHRI KALLAPPAIAH NAGARAJA, # 77/1, 1 ST FLOOR, KAVERI NILAYA, GANDHI BAZAR MAIN ROAD, BASAVANAGUDI, BANGALORE 560 004. PAN: AEDPN9281P VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMASUBRAMANIAN, CA RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 0 4 . 1 2 .2018 DATE OF PRONOUNCEMENT : 07 . 1 2 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT (A)-5, BANGALORE DATED 29.06.2018 FOR ASSES SMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS) IS PREJUDICIAL TO THE INTERESTS OF THE AP PELLANT, IS HAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMST ANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF R S. 20,98,898 ON THE GROUND THAT NO EXPENDITURE WAS CLAIMED AGAINST THE AGRICULTURAL INCOME WHICH IS PERVERSE AND CONTRARY TO THE MATERIALS AVAILABLE ON RECORD. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIO N OF RS. 20,98,898 EVEN THOUGH THE ADDITION WAS MADE PURELY ON AN ADHOC BASIS WITHOUT ANY MATERIALS TO SUPPORT THE AD DITION. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO O NE ANOTHER, THE APPELLANT CRAVES THE LEAVE OF THE HON'BLE INCOME TA X APPELLATE TRIBUNAL, BANGALORE TO ADD, DELETE, AMEND OR MODIFY OTHERWISE ALL OR ANY OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TI ME OF HEARING THIS APPEAL. 3. PARA NO. 5 OF THE ORDER OF CIT(A) CONTAINS THE F ACTS AND THE ISSUE IN DISPUTE ALONG WITH THE ASSESSEES ARGUMENTS AND THE DECISIO N OF CIT(A) AND HENCE, ITA NO. 2510/BANG/2018 PAGE 2 OF 4 THIS PARA FROM THE ORDER OF CIT(A) IS REPRODUCED HE REINBELOW FOR READY REFERENCE. 5. I HAVE CONSIDERED THE ABOVE GROUNDS OF APPEAL, S TATEMENT OF FACTS AND WRITTEN SUBMISSIONS FILED BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT FROM THE RETURN FILED BY THE ASSESSEE IT WAS OBSERVED TH AT THE ASSESSEE WAS IN RECEIPT OF INCOME FROM HOUSE PROPERTY, BUSINESS AND INCOME FROM OTHER SOURCES, APART FROM NET AGRICULTURE INCOME OF RS. 41,97,778/-. DURING THE COURSE OF HEARING., THE ASSESSEE WAS ASK ED TO SUBMIT THE PROOF OF AGRICULTURAL INCOME OF RS. 41,97,798/- ALO NG WITH DOCUMENTARY PROOF TO SUBSTANTIATE THE CLAIM. THE AS SESSEE SUBMITTED THAT HE WAS IN POSSESSION OF ABOUT 41.28 ACRES OF A GRICULTURE LAND AT VARIOUS PLACE IN THENGINAGOPPA VILLAGE, ALAGERI VIL LAGE AND GEJJENAHALLI VILLAGE AND SUBMITTED THE DETAILS OF L AND AND COPIES OF RTC TO SUBSTANTIATE THE CLAIM. THE REPLY AND THE DO CUMENTS SUBMITTED BY THE ASSESSEE WAS VERIFIED AND WAS ACCEPTED TO TH E EXTENT OF 50% OF THE AGRICULTURAL INCOME CLAIMED. HENCE, THE BALANCE 50% OF THE AGRICULTURAL INCOME OF RS. 41,97,978/- AMOUNTING TO RS. 20,98,898/- WAS DISALLOWED AND ADDED BACK TO RETURNED INCOME IN ABSENCE OF SUFFICIENT SUPPORTING DOCUMENTS. THE ASSESSMENT CON CLUDED AFTER ADDITION OF RS. 20,98,898/-. DURING THE APPELLATE P ROCEEDINGS THE APPELLANT SUBMITTED THAT HE OWNED AGRICULTURAL LAND HAVING STANDING CROP OF ARECANUT TREES OF 20-30 YEARS OLD. THE AREC ANUT COLLECTED FROM TREES ARE STORED AND THE PROCESSED AT FARM LEV EL AND ALSO PROCESSED AND STORED IN SOCIETY AT SHIMOGA FOR MORE THAN ONE YEAR WHICH WAS A PRACTICE IN HIS NATIVE PLACE. FURTHER S UBMITTED THAT ON HIS INSTRUCTIONS THE STORED ARECANUT WERE SOLD BY THE S OCIETY ON HIS BEHALF WHEN THE RATE WAS HIGH AND MADE THE PAYMENT. FOR TH E YEAR 2014-15 THE APPELLANT SOLD 4862 KG'S FOR RS. 16,79,0321/- A ND 10,702 KGS FOR RS. 40,83,508/-. THE COPIES OF THE LEDGER EXTRACT F OR SALE OF ARECANUT FURNISHED BEFORE ME HAVE BEEN PERUSED. THE APPELLAN T FURTHER SUBMITTED THAT THERE ARE COCONUT TREES ALSO AND COC ONUT WERE SOLD IN LOCAL MARKET AND THE AMOUNT WAS COLLECTED THROUGH C ASH. THE APPELLANT HAD SUBMITTED COPY OF LAND RECORDS, SALE BILL OF AGRICULTURAL PRODUCE BEFORE THE ASSESSING OFFICER. FURTHER NO MA TERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO THE E FFECT THAT AGRICULTURAL PRODUCE ON THE LAND WERE NOT SOLD BY T HE ASSESSEE OR THAT THE PRODUCE HAS NOT BEEN SOLD IN ANY SOCIETIES. THE REFORE, IT CANNOT BE PRESUMED THAT THE APPELLANT HAS NOT CULTIVATED ANY CROP. HOWEVER, THE AGRICULTURAL INCOME STATED TO BE DERIVED FROM THAT EXTENT OF LAND BY ANY STRETCH OF IMAGINATION IS NOT POSSIBLE. THE APP ELLANT HAS SHOWN THE SALE PROCEEDS OF AGRICULTURAL PRODUCE AS RECEIV ED IN CASH AND THOUGH THE COPIES OF THE RECEIPTS OF THE SOCIETIES PRODUCED BEFORE ASSESSING OFFICER THE APPELLANT HAD NOT SHOWN ANY E XPENDITURE INCURRED AGAINST SUCH HUGE RECEIPTS OF AGRICULTURAL INCOME AND THEREFORE THE ASSESSING OFFICER HAD REASON TO BELIE VE THAT THE APPELLANT HAS SHOWN AGRICULTURAL INCOME AT THE HIGH ER SIDE. THE APPELLANT NOW CONTESTING THAT THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD DISBELIEVING OF 50% OF THE A GRICULTURAL INCOME ITA NO. 2510/BANG/2018 PAGE 3 OF 4 CANNOT BE ACCEPTED AND THEREFORE THE GROUNDS OF APP EAL ARE NOT ALLOWED. 4. IN COURSE OF HEARING BEFORE ME, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT AS PER PAGE NO. 20 OF PAPER BOOK IS THE STATEMENT O F INCOME FOR THE PRESENT YEAR SUBMITTED BY THE ASSESSEE BEFORE AO AND CIT(A) AND AS PER THE SAME, AS AGAINST GROSS INCOME ON ACCOUNT OF SALE OF VARIO US AGRICULTURAL ITEMS SUCH AS ARECANUTS, COCONUTS, SAPOTA, MANGO AND JAKE OF RS. 63,84,113/-, NET PROFIT SHOWN BY THE ASSESSEE IS ONLY RS. 41,97, 798/- AND THEREFORE, IT IS APPARENT THAT THE ASSESSEE HAS SHOWN VARIOUS EXPEND ITURE TO THE EXTENT OF RS. 21,86,315/- ON ACCOUNT OF FERTILIZERS & CHEMICA LS, LABOUR CHARGES, INTEREST ON AGR. LOANS, INTEREST ON VEHICLE LOANS, TRAVELLING & CONVEYANCE, VEHICLE MAINTENANCE, TRANSPORTATION CHARGES, BANK C HARGES AND DEPRECIATION. HE SUBMITTED THAT IN VIEW OF THESE F ACTS, THIS IS NOT CORRECT ON THE PART OF AUTHORITIES BELOW TO SAY THAT THE ASSES SEE HAS NOT SHOWN ANY EXPENDITURE INCURRED AGAINST SUCH HUGE RECEIPTS FRO M AGRICULTURAL INCOME. AT THIS JUNCTURE, A QUERY WAS MADE BY THE BENCH AS TO HOW THE AGRICULTURAL PRODUCE WERE TRANSPORTED TO THE POINT OF SALE. IN R EPLY, IT WAS SUBMITTED THAT THE SAME WAS TRANSPORTED BY OWN VEHICLES AS WELL AS BY OUTSIDE VEHICLES AND IN SUPPORT OF THIS, HE SUBMITTED THAT AS PER ST ATEMENT OF INCOME AVAILABLE ON PAGE NO. 20 OF PAPER BOOK, VARIOUS EXP ENSES ARE INCURRED ON ACCOUNT OF VEHICLE MAINTENANCE AND TRANSPORTATION C HARGES ALONG WITH DEPRECIATION OF VEHICLES AND INTEREST ON VEHICLE LO ANS. THE LD. DR OF REVENUE SUBMITTED THAT IT HAS BEEN SUBMITTED BEFORE THE AUT HORITIES BELOW THAT THE ARECANUTS COLLECTED FROM THE TREES ARE STORED AND A RE PROCESSED AT SHIMOGA FOR MORE THAN ONE YEAR WHICH WAS A PRACTICE IN NATI VE PLACE OF THE ASSESSEE. HE SUBMITTED THAT AS PER THE STATEMENT O F INCOME SUBMITTED BY ASSESSEE ON PAGE NO. 20 OF PAPER BOOK, THERE IS NEI THER ANY OPENING STOCK NOR ANY CLOSING STOCK. HE SUBMITTED THAT UNDER THE SE FACTS, THE ORDER OF CIT (A) SHOULD BE CONFIRMED. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT IN PARA NO. 5 OF THE ORDER OF CIT(A) AS REPRODUCED ABOVE, THIS IS THE FINDING OF CIT(A) THAT THE ASSESSEE HAS NOT SHOWN ANY EXPENDITURE INCURRED AGA INST SUCH HUGE RECEIPTS OF INCOME BUT THIS APPEARS TO BE INCORRECT IN VIEW OF THE STATEMENT OF INCOME AVAILABLE ON PAGE NO. 20 OF PAPER BOOK FO R THE PRESENT YEAR. AT THE SAME TIME, COMPLETE DETAILS REGARDING MODE OF T RANSPORTATION AND COMPARISON CHART OF SALES IN THE PRESENT YEAR AND I N EARLIER YEARS HAS TO BE LOOKED INTO. REGARDING THE COMPARISON CHART, IT WA S SUBMITTED BY LD. AR OF ASSESSEE THAT AS PER PAGE NO. 32 OF PAPER BOOK BEIN G PARA NO. 10 OF THE SUBMISSIONS MADE BEFORE CIT (A), COMPARISON CHART W AS SUBMITTED SHOWING SALES IN ASSESSMENT YEAR 2011-12 AT RS. 9.17 LAKHS, ASSESSMENT YEAR 2012-13 RS. 4.90 LAKHS, ASSESSMENT YEAR 2013-14 R S. 32.36 LAKHS AND ASSESSMENT YEAR 2014-15 RS. 22.70 LAKHS AS AGAINST THE SALE IN THE PRESENT YEAR OF RS. 63.84 LAKHS. WHEN THE BENCH PO INTED OUT THAT THE CLAIM OF THE SALES IN THE PRESENT YEAR IS VERY MUCH EXCES SIVE COMPARED TO THE ITA NO. 2510/BANG/2018 PAGE 4 OF 4 EARLIER YEARS, IT WAS SUBMITTED BY LD. AR OF ASSESS EE THAT THERE IS INCREASE IN SELLING RATE IN THE PRESENT YEAR. AT THIS JUNCT URE, THE BENCH WANTED TO KNOW REGARDING THE QUANTITY OF SALES IN THE PRESENT YEAR AND THESE FOUR YEARS FOR WHICH SALES DETAILS ARE AVAILABLE ON PAGE NO. 32 OF THE PAPER BOOK. IN REPLY, HE SUBMITTED THAT QUANTITY DETAILS ARE NO T READILY AVAILABLE. HE SUBMITTED THAT THE MATTER MAY BE RESTORED BACK TO T HE FILE OF AO/CIT(A) FOR FRESH DECISION AND IF THIS IS DONE, THEN ALL THE RE QUIRED DETAILS WILL BE SUBMITTED BY THE ASSESSEE. 6. I ALSO FIND THAT THE QUANTUM OF SALE PROCEEDS SH OWN BY THE ASSESSEE IN THE PRESENT YEAR IS NOT COMPARABLE WITH EARLIER YEARS. IT IS SEEN THAT THE SAME IS VERY MUCH ON HIGHER SIDE IN THE PRESENT YEAR OF RS. 63.84 LAKHS AS AGAINST MAXIMUM OF RS. 32.36 LAKHS IN ASSESSMENT YEAR 2013- 14. IT IS FURTHER LESS IN THE REMAINING THREE YEARS I.E. IN ASSESSMENT YEA R 2014-15 RS. 22.70 LAKHS, ASSESSMENT YEAR 2012-13 RS. 4.90 LAKHS AND A SSESSMENT YEAR 2011-12 RS. 9.17 LAKHS. THERE MAY BE INCREASE IN S ELLING PRICES BUT THE SAME HAS TO BE ESTABLISHED AND THE QUANTITY OF GOOD S PRODUCED AND SOLD HAS ALSO TO BE COMPARED. HENCE, I FEEL IT PROPER T O RESTORE THE MATTER BACK TO THE FILE OF CIT(A) FOR FRESH DECISION IN THE LIG HT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BO TH SIDES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 07 TH DECEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.