Shri Jayesh R.Thakkar, Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 3088/AHD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8957 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO. 3088/AHD/2011 ASST. YEAR: 2007-08 SHRI JAYESH R. THAKKAR, 902, 9 TH FLOOR, GALAV CHAMBERS, SAYAJIGUNJ, VADODARA. VS. ITO, WARD-2(1), BARODA. APPELLANT RESPONDENT PAN AAYPT 7057L APPELLANT BY SHRI M. K. PATEL, AR RESPONDENT BY SHRI PARVEEN KUMAR, SR.DR DATE OF HEARING: 14/03/2017 DATE OF PRONOUNCEMENT: 16/03/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) II, BARODA, DATED 01.09.2011 VIDE APPEAL NO.CAB/II-277/09/10, A RISING OUT OF ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SH ORT THE ACT) FRAMED ON 30.12.2009 BY ITO, WD-2(1), BARODA. FOLLOWING GR OUNDS HAVE BEEN RAISED BY ASSESSEE:- ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. ASSESSING OFFICER ERRED IN TREATING AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II ERRED IN CONFIRMING THE TREATMENT OF AGRICULTURA L RENT INCOME OF RS.9,64,000/- AS INCOME FROM OTHER SOURCES AND ADDI NG THE SAME TO THE TOTAL INCOME OF THE APPELLANT 2. THE APPELLANT CRAVES LEAVE TO AMEND, TO ALTER, TO ADD OR TO DELETE THE GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM AGRIC ULTURAL RENT AND SHARE TRADING. RETURN OF INCOME WAS FILED ON 30.03. 2008 DECLARING NIL INCOME. CASE WAS PICKED UP FOR SCRUTINY ASSESSM ENT AND NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SE RVED UPON THE ASSESSEE CALLING FOR VARIOUS INFORMATION AND IN RES PONSE THERETO LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ATTENDED AND MADE SUBMISSIONS ON HIS BEHALF. WHILE FRAMING THE ASSESS MENT ORDER LD. ASSESSING OFFICER EMBARKED UPON TWO ISSUES (I) REN T FROM AGRICULTURAL LAND OF RS.9.64 LACS PERTAINING TO FIN ANCIAL YEAR 2004-05 AND 2005-06 @ RS.4.86 LACS RECEIVED FROM MR. HASMUK H C. PATEL AND (II) UNEXPLAINED CASH CREDIT OF RS.66,000/-. 3. AS REGARDS THE FIRST ISSUE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE IMPUGNED AMOUNT OF RS.9.64 LACS TO BE TREA TED AS INCOME FROM OTHER SOURCES AS THE INCOME PERTAINED TO PREVI OUS YEAR AS WELL AS THE INABILITY OF THE ASSESSEE TO PROVIDE ANY EXP LANATION TO PROVE THE CREDITWORTHINESS OF MR. HASMUKH C. PATEL WHO PA ID RENT FOR AGRICULTURAL LAND AT RS.9.64 LACS. ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 3 3.1 AS REGARDS THE UNEXPLAINED CASH CREDIT OF RS.66 ,000/- THE SAME WAS TREATED AS INCOME AS ASSESSEE COULD NOT SUBMIT ANY SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF THE LOAN AMOUN T. ACCORDINGLY INCOME OF ASSESSEE WAS ASSED AT LOSS OF RS.2,47,129 /- AS ASSESSEE WAS HAVING BUSINESS LOSS OF RS.16,96,836/-. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CO MMISSIONER OF INCOME TAX(A) AND PARTLY SUCCEEDED AS THE IMPUGNED ADDITION OF RS.66,000/- WAS DELETED AND THAT OF AGRICULTURAL RE NT AS INCOME FROM OTHER SOURCES AT RS.9.64 LACS WAS CONFIRMED. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A) CONFIRMING THE TREATMENT OF AGRICULTURAL RENT INCOME OF RS.9.6 4 LACS AS INCOME FROM OTHER SOURCES. LD. AUTHORISED REPRESENTATIVE S UBMITTED THAT ASSESSEE HOLDS AGRICULTURAL LAND MEASURING APPROX.1 1.5 HECTARES AT VILLAGE ASOJ (5.56.45 HECTORS), MANJUSOR VILLAGE ( 2.95.42 HECTORS) AND SAYAJIPURA VILLAGE (3.28.75 HECTORS). IT WAS FURTHE R SUBMITTED THAT THESE AGRICULTURAL LANDS WERE GIVEN ON RENT TO MR. HASMUKH C. PATEL FOR CULTIVATION IN WRITTEN AGREEMENT PERTAINING TO FINANCIAL YEAR 2004- 05 AND 2005-06 @ RS.4.84 LACS PER YEAR. FURTHER AS THERE EXISTS UNCERTAINTY OF INCOME EARNED FROM AGRICULTURAL SOU RCES AND NO REALISTIC ASSUMPTION CAN BE MADE FOR AGRICULTURAL I NCOME, SINCE PAST MANY YEARS IT IS ASSESSEES POLICY TO INCLUDE AGRIC ULTURAL INCOME IN HIS INCOME-TAX RETURN ON ACTUAL RECEIPT BASIS I.E. CASH SYSTEM. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT DA TE-WISE RENT INCOME DETAILS, AGRICULTURAL LAND OWNERSHIP AND AGR EEMENT WITH ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 4 CULTIVATOR OF LAND WERE SUBMITTED AT THE TIME OF AS SESSMENT PROCEEDINGS ALONG WITH AGRICULTURAL RENT INCOME AND LEDGER ACCOUNT CONFIRMED BY MR. HASMUKH C. PATEL. 6. LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THERE IS NO DISPUTE ON THE PART OF REVENUE THAT ASSESSEE OWNS A GRICULTURAL LAND MEASURING 11.5 HECTORS AT VILLAGES NEAR BARODA AND IS CONSISTENTLY SHOWING AGRICULTURAL INCOME. FURTHER IT IS ALSO AN IMPORTANT FACT THAT LD. ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF AGR ICULTURAL INCOME OF RS.4.86 LACS PERTAINING TO ASST. YEAR 2007-08 RECEI VED FROM SHRI ANILBHAI BABUBHAI PATEL AT RS.4.86 LACS. IT IS THER EFORE, SUBMITTED THAT THE AGRICULTURAL INCOME OF RS.9.64 LACS IS GENUINE AND SHOULD NOT HAVE BEEN TREATED AS INCOME FROM OTHER SOURCES. 7. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AU THORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE. SOLITARY GRIEVANCE OF THE ASSESSEE I S AGAINST LD. COMMISSIONER OF INCOME TAX(A)S ORDER CONFIRMING AC TION OF LD. ASSESSING OFFICER TREATING THE AGRICULTURAL RENT IN COME OF RS.9.64 LACS AS INCOME FROM OTHER SOURCES. WE OBSERVE THAT ASSES SEE HOLDS AGRICULTURAL LAND APPROX.11.5 HECTORS AT VILLAGES N EAR BARODA AND IS CONSISTENTLY SHOWING AGRICULTURAL INCOME IN HIS RET URN OF INCOME. THIS FACT GETS SUPPORTED BY THE COPY OF INCOME-TAX RETUR N FILED FOR ASST. YEAR 2003-04 SHOWING AGRICULTURAL INCOME AT RS.1,12 ,500/- AND ALSO FOR ASST. YEAR 2008-09 SHOWING AGRICULTURAL INCOME AT RS.7.23 LACS. ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 5 WE FURTHER OBSERVE THAT ASSESSEES OWNERSHIP OF AGR ICULTURAL LAND IS NOT IN DISPUTE AND THE SAME IS VERIFIABLE FROM THE EXTRACT OF 7/12 FORMS SHOWING OWNERSHIP OF LAND ANNEXED AT PAGES 14 TO 28 OF THE PAPER BOOK. FURTHER THE ISSUE FRAMED BY LD. ASSESSI NG OFFICER WAS THAT ASSESSEE HAS SHOWN AGRICULTURAL INCOME PERTAIN ING TO FINANCIAL YEAR 2004-05 AND 2005-06 AT RS.4.82 LACS PER YEAR RECEIVED FROM MR. HASMUKH C. PATEL AND SHOWN AS INCOME IN THE YEA R UNDER APPEAL I.E.F.Y. 2006-07. LD. ASSESSING OFFICER RAISED NO D OUBT ON THE AGRICULTURAL INCOME RECEIVED AT RS.4.86 LACS FROM A NILBHAI BABUBHAI PATEL PERTAINING TO FINANCIAL YEAR 2006-07 I.E. ASS T. YEAR 2007-08. LD. ASSESSING OFFICER RAISED DOUBT ON THE GENUINENE SS OF THE IMPUGNED AMOUNT OF RS.9.64 LACS AS THE PAYMENT WAS RECEIVED IN THE YEAR UNDER APPEAL AND FURTHER ASSESSEE COULD NOT PL ACE EVIDENCE TO THE SATISFACTION OF LD. ASSESSING OFFICER IN WHICH TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF MR. HASUMUKH C. PATEL. 9. WE FIND IT PERTINENT TO OBSERVE THAT ASSESSEE HA S PLACED ON RECORD A COPY OF AGREEMENT WITH MR. HASMUKH C. PATE L AT PAGES 29 TO 32 OF THE PAPER BOOK AND FURTHER TO SUPPORT THE CREDITWORTHINESS HAS PLACED ON RECORD THE COPY OF JOINT BANK ACCOUNT HELD BY MR. HASMUKH C. PATEL AT PAGE 35 OF THE PAPER BOOK SHOWI NG CASH WITHDRAWALS WHICH WERE LINKED WITH THE AMOUNT PAID TO ASSESSEE. ASSESSEE HAS FURTHER PLACED ON RECORD THE DETAILS O F AGRICULTURAL PRODUCE SALE AND COPIES OF SALE BILLS OF AGRICULTUR AL PRODUCES, PURCHASE BILLS FROM M/S SARASWATI RICE/PULSE MILLS TO PROVE THAT THERE ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 6 WAS A REGULAR AGRICULTURAL PRODUCE ON THE AGRICULTU RAL LAND GIVEN ON RENT TO MR. HASMUKH C. PATEL AND THE SALE CONSIDERA TION OF ITS AGRICULTURAL PRODUCE WAS GIVEN TO THE ASSESSEE AGAI NST THE AGREED RENT FOR THE AGRICULTURAL LAND. IN THESE GIVEN FACT S WHEREIN UNDISPUTEDLY REVENUE HAS AGREED TO THE FACT THAT AS SESSEE HAS POSSESSED AGRICULTURAL LAND AND EARNED AGRICULTURAL INCOME CONSISTENTLY IN PAST AS WELL AS IN SUBSEQUENT YEARS ASSESSEE HAS SUFFICIENTLY PLACED MATERIAL TO SUBSTANTIATE THE BA SIS OF AGRICULTURAL INCOME PERTAINING TO RELEVANT FINANCIAL YEAR 2004-0 5 AND 2005-06 RECEIVED DURING THE YEAR AT RS.9.64 LACS. IT WILL N OT MAKE MUCH DIFFERENCE ABOUT THE ISSUE OF SHOWING OF INCOME ON CASH SYSTEM OR MERCANTILE SYSTEM OF ACCOUNTING AS THE IMPUGNED INC OME WAS OF EXEMPT NATURE BEING EARNED FROM AGRICULTURAL LAND. HOWEVER, IT IS ALSO A FACT THAT THE SOURCE OF INCOME OF RS.9.64 LA CS SHOWN BY THE ASSESSEE WHEREIN THE WITHDRAWAL FROM BANK ACCOUNT W AS MADE BY THE TENANT MR. HASMUKH C. PATEL SOMEWHERE IN JANUAR Y, 2005 AND IT WAS PAID TO ASSESSEE DURING FINANCIAL YEAR 2006-07 AND PURCHASE BILLS FOR SALE OF AGRICULTURE PRODUCE MATCHES ALMOS T THE AMOUNT OF CONSIDERATION OF AGRICULTURE LAND RENT RAISES CERT AIN DOUBTS. 9.1 WE, THEREFORE, IN THE TOTALITY OF FACTS AND TAK ING A HOLISTIC APPROACH ARE OF THE CONSIDERED VIEW THAT ASSESSEE HAS EARNED INCOME FROM AGRICULTURAL LAND RECEIVED FROM HASMUKH C. PATEL BUT IN VIEW OF THE HALF-HEARTED FACTS, WE FIND IT JUSTIFIE D TO BIFURCATE THE IMPUGNED AMOUNT OF RS.9.64 INTO TWO PARTS OUT OF WH ICH RS.6 LACS SHOULD BE TREATED AS AGRICULTURAL RENTAL INCOME AND THE REMAINING ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 7 AMOUNT OF RS.3.64 LACS AS INCOME FROM OTHER SOURCES . ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 10. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 16/03/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 3088/AHD/2011 ASST. YEAR 2007-08 8 1. DATE OF DICTATION: 15/03/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 15/03/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17/3/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: