The ITO, Ward-6)3), Surat V. Shri Prashant Balasaheb Javalekar, Surat

ITA 2526/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89614 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S B VAIDYA
• Keywords: Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 69C; 143(3)

Judgement Text

, A, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.2526/AHD/2011 [ASSTT.YEAR : 2007-2008] ITO, WARD-6(3) SURAT. /VS. SHRI PRASHANT BALASAHEB JAVALEKAR B-102, GIDC CENTRAL PARK PANDESARA, SURAT 394 210 PAN: AFJPJ 8178 G ( / APPELLANT) ( / RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : SHRI S.B. VAIDYA DATE OF HEARING : 4 TH JUNE, 2015 DATE OF PRONOUNCEMENT : 19 TH JUNE, 2015 O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (A)-IV, SURAT DATED 28.6.2011 FOR THE ASSTT.YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12, 42,571/- MADE BY THE AO AS PER THE PROVISION OF SECTION 69C OF THE I.T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CI T-IV, SURAT MAY BE SET ASIDE AND THAT OF THE AO RESTORED ITA NO.2526/AHD/2011 -2- 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE CA SE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS F RAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). BY FRAMING THE ASSESSMENT, THE AO MADE ADDITION OF RS.12,42,57 1/- UNDER SECTION 69C OF THE ACT. AGAINST THIS, THE ASSESSEE FILED APPEAL B EFORE THE LD.CIT(A), WHO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. 4. THE ONLY EFFECTIVE GROUND OF THE APPEAL OF THE R EVENUE IS AGAINST DELETION OF ADDITION OF RS.12,42,571/- MADE BY THE AO. THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED THAT LOOKING TO THE FACTS A ND THE PAST RECORDS, IT IS HIGHLY IMPROBABLE THAT THE ASSESSEE COULD HAVE EARNED AGRI CULTURAL INCOME MORE THAN RS.1,50,000/-, AND THEREFORE, THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS.12,42,571/- AS DEEMED INCOME UNDER SECTION 69C O F THE ACT. HE FURTHER SUBMITTED THAT NO PROOF OF EXPENDITURE WITH REGARD TO AGRICULTURE PRODUCE WAS FILED AND THE ASSESSEE HAS INFLATED THE AGRICULTURA L INCOME SINCE NO TAX IS REQUIRED TO BE PAID ON SUCH INCOME. HE SUBMITTED T HAT THE AGREEMENT BETWEEN THE ASSESSEE, AND ONE SHRI SURESH JAVALKAR FOR SHAR ING OF AGRICULTURE ACTIVITIES AND SHARING OF PRODUCE WAS A SHAM AGREEMENT. 5. ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASS ESSEE SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT ALL THE DETAILS AN D EVIDENCES WERE FURNISHED BEFORE THE AO, AND THE AO WAS NOT JUSTIFIED IN MAKI NG THE ADDITION. 6. WE HAVE CONSIDERED SUBMISSIONS OF BOTH THE PART IES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD.CIT(A) DE LETED THE ADDITION BY OBSERVING AS UNDER: ITA NO.2526/AHD/2011 -3- 5. I HAVE GONE THROUGH THE FACTS OF THE CASE, THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT AS WELL AS THE DECISIO NS QUOTED. THE APPELLANT. HAS PRODUCED ALL POSSIBLE EVIDENCES WITH REGARD TO AGRICULTURAL INCOME - LAND HOLDING, RENT AGREEMENT, STORAGE AND SALE OF AGRICULTURAL PRODUCE AND CERTIFICATE FROM GRAMPANCH AYAT REGARDING CULTIVATION. THE APPELLANT HAS ALSO PRODUCED THE LE ASE HOLDER BEFORE THE A.O. AND THE LEASE HOLDER ACCEPTED IN HIS STATEMENT THE TERMS OF THE LEASE AGREEMENT AND THE FACT THAT DRY GRAPES ACCRUING TO THE SHARE OF THE ASSESSEE WAS SENT TO BHAGVATI COLD STORAGE AS PER D IRECTIONS. THE A.O. HAS ACCEPTED THE FACTUM OF AGRICULTURAL ACTIVITIES AND THE EXISTENCE OF AGREEMENT FOR PRODUCE SHARING. HE HAS HOWEVER DISBE LIEVED THE QUANTUM OF PRODUCE AND INCOME BASED ON REPORT OF MR. SANEEP SHAH AND INVESTMENTS MADE BY THE LEASE HOLDER. THE REPORT OF MR. SANEEP SHAH WAS NOT MADE AVAILABLE TO THE APPELLANT NOT WAS THIS RE PORT DISCUSSED DURING ASSESSMENT PROCEEDINGS. THE OBJECTION OF THE APPELL ANT AGAINST THE REPORT BEING MADE THE BASIS OF ESTIMATION IS THEREFORE VAL ID. THE OBJECTION OF THE APPELLANT AGAINST THE A.O. CONSIDERING GROSS RECEIP TS OF THE LEASE HOLDER (RS.3809198/-) AS AGAINST NET INCOME EARNED BY HIM IS EQUALLY VALID AS THE LEASE HOLDER HAS TO MAKE EXPENSES ON AGRICULTUR AL ACTIVITIES. FURTHER, IN CONSIDERING THE INVESTMENTS OF THE LEASE HOLDER, THE A.O. HAS NOT CONSIDERED VALUE OF VEHICLE AND HOUSE OWNED BY HIM FOR WHICH EVIDENCES WERE SUBMITTED BEFORE HIM. IN ANY CASE, MAKING THE INVESTMENTS OF THE LEASE HOLDER AS BASIS FOR ESTIMATE OF AGRICULTURAL INCOME OF THE LAND OWNER IS FAR - FETCHED WHEN DIRECT EVIDENCES ARE PR ODUCED AND NOT PROVED BOGUS. IN VIEW OF THE PRODUCTION OF DIRECT EVIDENCE S RELATING TO QUANTUM OF AGRICULTURAL INCOME, THE ACTION OF THE A.O. IN T REATING PART OF THE AGRICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOUR CES U/S. 69C CANNOT BE UPHELD. THE ADDITION OF RS.1242571/-TREATING AGR ICULTURAL INCOME AS INCOME FROM UNDISCLOSED SOURCES IS THEREFORE DELETE D. 7. THE AO DOUBTED THE VERACITY OF AGREEMENT ON THE GROUND THAT RATIO OF SHARING AGRICULTURAL INCOME APPEARED TO BE UNREASON ABLE AND UNREALISTIC. AS PER AO, EXPENSES INCURRED ON AGRICULTURAL OPERATION WOU LD BE EVEN HIGHER THAN THE AGRICULTURAL INCOME RECEIVED BY THE LESSEE. WE FIN D FORCE INTO THE CONTENTION OF THE AO. THE ASSESSEE HAS NOT REFLECTED THE TRUE PI CTURE OF AFFAIRS, HOWEVER, THE AO HAS NOT MADE INQUIRY WITH REGARD TO EXPENSES INC URRED BY THE LESSEE. ON THE CONTRARY, HE PROCEEDED TO MAKE ADDITION ON THE BASI S OF CONJECTURES AND SURMISES. AFTER CONSIDERING TOTALITY OF THE FACTS, AND IN VIEW OF THE FACT THAT IN NORMAL COURSE, IF THE EXPENSES ARE BORNE BY THE LES SEE, THEN SHARE OF AGRICULTURAL ITA NO.2526/AHD/2011 -4- PRODUCE REMAINS 50% EACH OF LESSOR AND LESSEE. THE REFORE, WE RESTRICT THE AGRICULTURE INCOME TO 50% OF RS.13,92,571/-, SINCE THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT THE QUANTUM OF AGRICULTURAL INCOME IS NOT POSSIBLE. HENCE, THE ADDITION MADE BY THE AO IS RESTRICTED TO RS.6,96,285/-. ACCORDINGLY, THE IMPUGNED ORDER IS HEREBY MODIFIED IN THE TERMS INDICATED HEREINABOVE. THIS GROUND OF REVENUES APPEAL IS PARTLY ALLOWED. 8. THE GROUND NO.2 AND 3 OF THE APPEAL ARE GENERAL IN NATURE, NEED NO SEPARATE ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( G . D . AGARWAL ) VICE-PRESIDENT ( KUL BHARAT ) JUDICIAL MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD