Shri Jorubha Jilubha Jadeja, Village Zankhar Post Vidinar Taluka Lalpur, Dist Jamnagar V. The DCIT, Circle-2(2), Jamnagar, Jamnagar

ITA 3/RJT/2022

AI Insights

The case involves Jorubha Jilubha Jadeja, a senior citizen engaged in agricultural activities, who appealed against the assessment order for the Assessment Year 2017-18. The primary contention was regarding the additions made to his income under sections 68 and 69C of the Income Tax Act, 1961. The Assessing Officer had added Rs. 4,02,239/- as unexplained cash credit and Rs. 3,87,935/- as unexplained expenses. The Commissioner of Income Tax (Appeals) partly allowed the appeal, sustaining the addition under section 68 but deleting the addition under section 69C. The Tribunal, after considering the facts and previous assessments, decided in favor of the assessee by deleting the addition under section 68 but upheld the addition under section 69C.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138174 (ITAT-RAJKOT)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-11-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 09-01-2022
• Other Referred Cases: Godabhai Bachubhai & Others vs. Officer on Special Duty (Jamin Sampadan)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68; 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Jorubha Jilubha Jadeja Village Zankhar, Post Vadinartaluka Lalpur Jamnagar-361010 (Gujarat) PAN No: AHGPJ4555Q (Appellant) Vs The DCIT, Circle-2(2), Jamnagar (Respondent) Assessee Represented: Shri Sagar Shah, A.R. Revenue Represented: Shri B.D. Gupta, Sr.D.R. Date of hearing : 16-11-2022 Date of pronouncement : 06-01-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee against the Appellate order dated 06.12.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2017-18. ITA No. 03/Rjt/2022 Assessment Year: 2017-18 I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 2 2. The brief facts of the case is that the assessee is a Senior Citizen deriving income from the machinery hiring services, Income from House Property, Income from other sources and Agricultural Income. For the Assessment Year 2017-18, the assessee filed his Return of Income declaring total income at Rs. 2,48,820/- and agricultural income of Rs. 16,95,356/-. The return was selected for scrutiny assessment for the reason “Large agricultural income shown in the return and large cash deposit during demonetization period”. 2.2. The assessee owns 96 bighas of land and carrying out agricultural activity with the help of those person who work on sharing basis and take the share of produced as their investment for seeds and labours/efforts. The assessee also submitted Form No. 7/12 extract and 8A on 09.03.2019 to prove that the assessee is the owner of 96 bighas of agricultural land. The assessee also submitted a recent judgment passed by Civil Court Jamnagar, in the case of Godabhai Bachubhai & Others vs. Officer on Special Duty (Jamin Sampadan) wherein it is stated that fertility of the agricultural land which will fetch income per bigha is Rs. 45,000/-. Applying the judicial precedent, when the assessee land holding of 96 bighas is capable of earning agricultural income of Rs. 43,20,000/-. However the assessee earned only Rs. 16,95,356/- from the above agricultural land and the assessee produced bills and vouchers to the extent of Rs. 12,93,117/-. The assessee also produced certificate from Talati Mantri on the letter head of the Gram Panchayat, stating that the assessee has cultivated the crops I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 3 such as Cluster Beans (Guar) and Cumin. The assessee further relied upon assessee’s own case for the previous assessment year 2016-17 wherein similar issue was raised and based on the explanation offered by the assessee, no addition was made by the Assessing Officer vide assessment order dated 08.12.2018. 2.3. The Ld. Assessing Officer has not accepted the above explanations offered by the assessee and held that to earn agricultural income a person requires to spend Seeds Expenses, Irrigation Expenses, Labour Expenses and Other miscellaneous, which will be about 30% of the income returned by the assessee. Therefore a sum of Rs. 3,87,935/- is added as the unexplained expenses u/s. 69C of the Act. Further the assessee’s claim of Civil Court Judgment in the case of Godabhai Bachubhai & Others are relating to the payment for compensation of acquisition of land by GIDC. The farmers have filed case for enhancement of compensation amount from GIDC. Thus the above judgment is not related to the income generated by the farmers. Further the assessee has shown the gross receipt of agriculture income in the Return of Income without considering expenses incurred to earn the above agriculture income. Therefore 30% of expenses and gross receipt of agriculture income is added as the unexplained expenses u/s. 69C of the Act. Further the assessee submitted bills of sale of agriculture amounting to Rs. 12,93,117/- only. Thus the assessee failed to produce the sale bills of crops for the balance amount of Rs. 4,02,239/-. In the absence of the proof/evidence of sale of crops of Rs. 4,02,239/-, the same is added back as the income of I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 4 the assessee as unexplained cash credit u/s. 68 of the Act. Thus determined the total income of the assessee as Rs. 10,38,996/- and demanded tax thereon. 3. Aggrieved against the assessment order, the assessee filed an apepal before the Commissioner of Income Tax (Appeals). The appeal was migrated to NFAC and the assessee filed his submission before the NFAC Centre. After considering the submissions, the Ld. CIT(A)-NFAC partly allowed assessee’s appeal as follows: 4.1 I have carefully considered the assessment order, grounds of appeal, statement of facts and submission of the appellant. Upon perusal of the submissions filed, the appellant showed land records which he owned in favour of its plea raised in grounds of appeal which was considered and found not to be satisfactory evidence to establish the claim of the appellant for earning agricultural income in previous year amounting to Rs.16,95,356/- as the appellant has filed evidence of agricultural sale bills of Rs.12,93,117/- only. The appellant relied on various judicial decisions which are perused and found not to be applicable in the case of the appellant since the facts of the appellant are totally different from the facts as cited in the case laws. Therefore, the appeal of the appellant is dismissed on the grounds of appeal raised for addition of Rs. 4,02,239/- under section 68 of the Act. 4.2. The appellant raised grounds of appeal on the issue of addition of Rs. 3,87,935/- made u/s. 69C of the Act on account of notional expenditure for earning agricultural income. Upon perusal of the facts of case and assessment order, it is observed that the A.O. brought no evidence on record with respect to addition made being unexplained expenditure in earning agricultural income. Therefore, the addition of Rs. 3,87,935/- being unexplained expenses u/s. 69C cannot be sustained and the appeal is allowed on these grounds. 4. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: The grounds of appeal mentioned herein below are without prejudice to one another. (1) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in law as well as on facts I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 5 in passing the order as inspite of the specific request of the assessee the appellate order has been passed without affording any opportunity of being heard. (2) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in law as well as on facts in passing the order as the order passed is non-speaking order and without going into the detailed facts of the case placed on record and without dealing it in the appellate order as to why the same is not accepted and thus the order appeal against is passed is a non-speaking order and without dealing with the evidences placed on record and thus the order is bad in law as well as on facts and required to be quashed. (3) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in law as well as on facts in upholding the addition of Rs. 4,02,239/- u/s. 68 of the I.T. Act, 1961 without going into the details facts and evidences placed on record and thus, the order is bad in law as well as on facts in confirming the addition to that extent. (4) Based on facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts while not observing the rule of judicial consistency while deciding the case of the appellant. Thus, the order passed is biased and against the law and required to be quashed. (5) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts while ignoring the judicial precedent of the Jurisdictional Civil Court relied upon by the appellant which squarely applies to the fact of the appellant while considering the income earned from the agricultural operations. (6) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts in not considering the Form No. 7/12 extract and 8A filed on 09.03.2019, from which it is clearly evident that the appellant owns approximately 96 bighas of Agricultural land being the prime evidence in supporting the agricultural income of Rs. 16,95,356/- claimed and this facts has been ignored and merely disbelieved the agriculture income only based on the facts that bills are not placed on record to that extent and thus based on that aspect only the addition is confirmed. (7) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 6 Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts, the appellant has submitted the bills of the sales of agricultural product for an amount of Rs. 10,95,356/- and the written representation of the Talati Mantri on the letter head of Gram Panchayat stating that the appellant has cultivated the crops such as Cluster Beans (Guar) and Cumin and therefore, it is clear that the appellant has provided all the documentary evidences in relation to the information the agricultural income earned by him. Hence, the amount of alleged difference added is required to be deleted to the extent Rs. 4,02,239/- as there is nothing placed on record by the department against this evidence. (8) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts in making and confirming an addition of Rs.4,02,238/- under section 68 of the Act is purely based on surmises & conjectures required to be deleted. (9) Based on the facts and circumstances of the case, the Commissioner of Income Tax (Appeals), NFAC, Delhi as well as the Deputy Commissioner of Income Tax Officer, Circle-2(2) Jamnagar, has erred in law as well as on facts in invoking the provision of section 68 of the Act considering the facts and circumstance placed on record. 4.1. Ld. A.R. Mr. Sagar Shah appearing for the assessee submitted that Ld. NFAC uphold the addition of rs. 4,02,239/- without going into the details of facts and evidences placed on record. Though the Assessing Officer stated that the Civil Court Judgment is on land acquisition case of Acquiring agricultural land by GIDC, but in that judgment, the fertility capacity of the agricultural lands is determined as Rs. 45,000/- per bighas, applying the same ratio and assessee’s holding of 96 bighas of and which work out to Rs. 43,20,000/- but whereas the assessee had earned only Rs. 16,95,356/-. Based on the old age factor of the assessee as well as doing the agricultural activities with the help of labourers to whom the income portion was offered as consideration, as against their efforts/labour in assessee’s agricultural land by producing the I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 7 Cluster Beans and Cumin. Further the assessee could not produce bills of sale of agriculture produce for the balance amount of Rs. 4,02,239/-. It is impossible to maintain entire bills on sale of agriculture produce, since most of the people involved in the agriculture sector are illiterate and it is not feasible to have record of very small amount of transaction carried out between small vendors. However the assessee maintained the records most of the transactions carried out during the year on the agriculture produce and sold during the assessment year 2017-18. Further the assessee maintained proper books of account and received money transactions through cheque payments which is reflected in the bank statement of the assessee. Only small vendors cases, the assessee could not produce the copies of the invoices. In assessee’s own case for the Assessment Year 2016-17, assessment order u/s. 143(3) was made on 08.12.2018, wherein on the same set of facts, the assessing officer is satisfied with the extent of land held by the assessee and accepted the returned income of Rs. 3,62,290/- and agricultural income of Rs. 12,95,541/- returned by the assessee. Therefore the additions proposed is not proper, and Rule of consistency in judicial proceedings is not followed by the A.O. therefore pleaded to delete the addition. 5. Per contra, the Ld. Sr. D.R. Shri B.D. Gupta appearing for the Revenue supported the order of the Lower Authorities and pleaded to uphold the same. I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 8 6. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee and other documents. It is not in dispute the assessee’s income from agriculture of Rs. 16,95,356/- as against which the assessee could able to produce sale bills to the extent of Rs. 12,93,117/- as pleaded by the assessee being as aged factor and Senior Citizen is involved in the agriculture activities not by himself but with the help of agricultural labourers, who look after assessee’s agricultural land and carried out agriculture activities on behalf of the assessee. The assessee also produced necessary documents namely Form No. 7/12 and 8A extracts which clearly states the assessee is owner of 96 bighas of agricultural land. On similar set of facts for the earlier assessment year 2016-17, the Assessing Officer passed the assessment order u/s. 143(3) dated 08.12.2018 accepting the returned agricultural income of Rs. 12,93,117/- without making any disallowances. Further the assessing officer has not justified in simply making the addition u/s. 68 of the Act. In our considered opinion, the Assessing Officer has disbelieved the statement of the assessee and the nature of trend in the agriculture sector wherein proper sale records could not be maintained by the small time agriculturist. For all these reasons, the addition made by the A.O. u/s. 68 of Rs. 4,02,239/- is not sustainable in law and therefore the same is liable to be deleted. Thus the grounds raised by the Assessee is hereby allowed. I.T.A No. 03/Rjt/2022 A.Y. 2017-18 Page No Jorubha Jilubha Jadeja vs. DCIT 9 7. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 06 -01-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 06/01/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, राजकोट