The ACIT, Circle-1, Bhavnagar V. Shri Kalpesh R. Kalathia, Bhavnagar

ITA 31/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8999 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 06-01-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: M J SHAH
• Keywords: Income from undisclosed sources; Revised return
• Section: 143(3); 143(1); 263

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM ASSTT. CIT, CIRCLE-1, BHAVNAGAR V/S . SHRI KALPESH R. KALATHIA, PLOT NO.2576, SWASHRAY, DIAMOND CHOWK, BHAVNAGAR, PAN NO.ADGPK 1462 K (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI GOVIND SINGHAL, SR.DR RESPONDENT BY:- SHRI M. J. SHAH, AR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER . THIS AN APPEAL FILED BY THE REVENUE RAISING FOLLOW ING GROUND :- 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DELETIN G THE ADDITION OF RS.6,38,445/- MADE BY THE AO ON ACCOUNT OF ALLEG ED INCOME FROM UNDISCLOSED SOURCES, TREATING THE SAME AS INCO ME FROM DISCLOSED AGRICULTURE INCOME. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT L D. CIT(A) HAS DELETED THE ADDITION OF RS.6,38,445/- MADE BY AO BY HOLDING THAT ASSESSEE WAS TO PROVE THAT IT HAD EARNED THE ALLEGED INCOME TO THE ABOVE EXTENT. ACCORDINGLY THE SAME WAS TREATED AS INCOME FROM OTH ER SOURCES. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE AO IN THE RETURN OF INCOME THAT ASSESSEE ITA NO.31/AHD/2006 ASST. YEAR :2001-02 2 CLAIMED AGRICULTURAL INCOME OF RS.6,88,445/- BUT DE BITED AGRICULTURAL EXPENSES OF RS.8,995/-. IN THE REVISED RETURN, AGRI CULTURAL INCOME WAS DECLARED AT RS.6,68,271/- AND AGRICULTURAL EXPENSES WERE SHOWN AT RS.19,726/- THE DETAILS OF AGRICULTURE EXPENDITURE SHOWN BY THE ASSESSEE WERE AS UNDER :- AO NOTED THAT EVEN THESE PETTY EXPENSES ON AGRICULT URAL OPERATION INCLUDED TELEPHONE EXPENSES, STATIONERY EXPENSES ET C. THERE WAS NOTHING TO SHOW HOW THESE EXPENSES RELATED TO AGRICULTURAL OPERATION. IT WAS EXPLAINED TO THE AO THAT ASSESSEE HAD THREE ACRES O F AGRICULTURAL LAND AND ALSO SOME LAND IS BEING CULTIVATED BY BHAGYA BUT NO DETAILS OF SUCH SHARING WAS FURNISHED TO THE AO. IN THIS REGARD OBS ERVATIONS OF AO ARE WORTH MENTIONING : 13. VIDE THIS OFFICE LETTER DT, 07,03,03 THE ASSES SEE WAS ASKED TO PRODUCE BHAGYA FOR VERIFICATION. HOWEVER, THE ASSESSEE FAIL ED TO PRODUCE THE BHAGYA TILL DATE. DURING THE YEAR AS PER FORM NO. 7 /12 FILED BY THE ASSESSES ON ACCOUNT OF WHEAT, GROUNDNUT, COTTON, FR UIT TREE AND KATHOL AND ACCOUNT BALANCE (RS.) DIESEL OIL EXPENSE 5,590.90 (DR) ELECTRIC EXPENSE 730.00 (DR) F.Y.M.FERTILIZER 4,785/-.50 (DR) LABOUR EXPENSE 2,840.00 (DR) MISC. EXPENSE 868.00 (DR) PETROL OIL EXPENSES 1,301.60 (DR) SEEDS OIL EXPENSE 1,000.00 (DR) STATIONERY & PRINTING EXPENSE 22.00 (DR) TELEPHONE EXPENSE 2,218.00 (DR) TRACTOR REPAIRING AND MAIN.EXPENSE 370.00 (DR) 3 ASSESSEE HAS PRODUCED COPY OF SALES BILLS OF VARIOU S AGRICULTURAL PRODUCES SOLD AND EARNED INCOME OF RS. 6,68,445/- B EING 2/3RD SHARE OF HIS OWN AND L/3RD SHARE OF BHAGYA IS ADDED THE TOTA L AGRICULTURAL INCOME COMES TO (RS. 66,8445/- + RS 3,34,223/-) RS, 10,02, 668/-, THE INCOME SHOWN BY THE ASSESSEE IS NET AGRICULTURAL INCOME. T O EARN THIS MUCH AGRICULTURAL INCOME AT LEAST THE ASSESSEE SHOULD BE INCURRED 30 TO 40% EXPENSES, IF THE SAME IS ADDED THE GROSS AGRICULTUR AL INCOME COMES TO RS. 10,02,668/- + RS. 3,00,800/- = RS. 13,03,468/- THIS IS QUITE A MAGICAL FIGURE OF AGRICULTURAL INCOME EARNED FROM ONLY 3 AC RES OF LAND :. 4. AFTER ANALYZING VARIOUS FACTORS THE AO GAVE FOLL OWING FINDINGS :- [A] IN VILLAGE SIDSAR WATER IN WELL IS SALTY ARID DUE TO SALTY WATER IMPACT IN AGRICULTURAL CROPS IS VERY LESS AND LEVEL OF WATER GOES DOWN. [B] ELECTRICITY AVAILABLE BUT SUPPLY OF POWER IS ONLY 5 TO 6 HOURS IN A DAY. [C] NO CROPS OF KATHOL AND BHAGAYAT IN SLDSAR VILLAGE. [D] THE INCOME SHOWN BEFORE EXPENSES I.E. 30 T O 40% EXPENSES COMES IN AGRICULTURE. [E] AGRICULTURE CROPS AT SIDSAR MOSTLY DEPENDS UPON MONSOON SEASON, NO GOOD MONSOON SEASON SINCE LAST 4 TO 5 YEARS. [F] INSPECTOR DEPUTED FOR OBTAINING INFORMATION FRORNTALATI-CUM-MANTRI OF SLDSAR GRAM PANCHAYAT AND TALATL CUM MANTRL HAS FUR NISHED THE INFORMATION IN WRITING VIDE HIS LETTER DT 24,03.200 4 IN CONNECTION WITH AGRICULTURAL CROPS AT VILLAGE SIDSAR DURING F.YS L9 99-2000 AND 2000-01. THE DETAILS GIVEN IS REPRODUCED HEREUNDER, TALAT; H AS GIVEN DETAILS ON THE BASIS OF 'PANCH ROJKARM' . FINALLY HE ALLOWED AGRICULTURAL INCOME AT RS.50,000 /- ON ESTIMATE BASIS. 5. LD. CIT(A) ANALYSED THE DECLARATION AND ACCEPTAN CE OF AGRICULTURAL INCOME FROM ASST. YEAR 1993-94 TO 2004-05 AS UNDER :- 4 ON THIS BASIS HE ACCEPTED THE ENTIRE AGRICULTURAL I NCOME AND DELETED THE ADDITION. 6. INITIALLY THE APPEAL FILED BY THE REVENUE WAS DI SMISSED ON ACCOUNT OF LOW REVENUE EFFECT VIDE TRIBUNALS ORDER DATED 1 8.02.2009. SUBSEQUENTLY, WHEN THE DEPARTMENT POINTED OUT THAT REVENUE EFFECT IS MORE THAN RS.2 LACS THE ORDER OF THE TRIBUNAL WAS R ECALLED VIDE ORDER DATED 18.12.2009. ACCORDINGLY THE CASE WAS FIXED AN D THE PARTIES WERE HEARD. 7. SINCE NO NEW FACTS ARE PRODUCED BY THE PARTIES W E CONFINE OUT DECISION ON THE DATA AVAILABLE IN THE ORDER OF AO A ND THAT OF LD. CIT(A). NO DOUBT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE IN ASST. YEAR AGRICULTURE INCOME SHOWN IN THE RETURN OF INCOME DEPARTMENT ACCEPTED AGRICULTURE U/S. 1993-94 2,50,000 143(1) 1994-95 2,51,450 143(1) 1995-96 3,96,850 143(1) 1996-97 3,05,941 143(1) 1997-98 2,26,344 143(1) 1998-99 3,22,597 143(1) 1999-2000 1,98,445 143(1) 2000-01 5,32,297 143(3) ESTIMATED AGRICULTURE INCOME OF RS.1,40,000/- AND BALANCE WAS TREATED AS UNDISCLOSED INCOME 2001-02 6,51,893/- 143(3) ESTIMATED AGRICULTURAL INCOME OF RS.50,000/- AND BALANCE WAS TREATED AS UNDISCLOSED INCOME 2002-03 3,76,222 143(1) 2003-04 6,51,893 143(1) 2004-05 5,23,425 143(1) 5 SUPPORT OF AGRICULTURAL EXPENSES AS WELL AS RECEIPT S ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE BUT IT IS ALSO A FACT THAT REV ENUE HAS BEEN ACCEPTING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FO R SO LONG. NO ATTEMPT HAS BEEN MADE TO UNDO ANY OF THOSE ASSESSMENTS PREV IOUS TO THIS YEAR OR SUBSEQUENT TO THIS YEAR. EVEN THOUGH ASSESSMENTS AR E ACCEPTED UNDER SECTION 143(1), THE REVENUE IS NOT BARRED FROM COLL ECTING MATERIAL AND TAKING ACTION TO ASSESS THE ESCAPED INCOME OR TO TA KE ACTION U/S 263 OR OTHER WISE, IF IT THOUGHT THAT AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IS EXCESSIVE OR NON-AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IS BEING DECLARED AS AGRICULTURAL INCOME AND THEREBY TAXES A RE EVADED. THE ESTIMATE MADE BY THE AO IS OF AGRICULTURAL INCOME A T RS.50,000/- IS QUITE LOW IF WE COMPARE TO WHAT HAS BEEN ACCEPTED BY THE REVENUE IN THE PAST. IN ASSESSMENT YEARS FROM ASST. YEAR 1993-94 TO 1999 -2000 INCOME HAS BEEN DECLARED FROM RS.1,98,445/- APPROX. TO RS.3,96 ,850/-. TOTAL AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR SE VEN YEARS COMES TO RS.19,51,627/-. THE AVERAGE FOR SEVEN YEARS COMES T O RS.2,78,803/- OR SAY RS.2,80,000/-. HOWEVER, IN SOME YEARS THE REVEN UE HAS ACCEPTED HIGHER AGRICULTURE INCOME EVEN TO THE EXTENT OF RS. 3,96,850/-. TAKING A CONSISTENT VIEW WE ACCEPT AGRICULTURAL INCOME TO TH E EXTENT OF RS.3,50,000/- IN PLACE OF RS.50,000/- TAKEN BY AO.. THUS ASSESSEE WOULD GET FURTHER RELIEF OF RS.3,00,000/- OUT OF ADDITION OF RS.6,38,445/-. THE DIFFERENCE IS RESTORED AS ADDITION. APPEAL OF THE R EVENUE IS PARTLY ALLOWED. 6 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED. SD/- SD/- (MAHAVIR SINGH) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED :12/2/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ORDER PRONOUNCED IN OPEN COURT ON 12/2/2010