Smt. Arunaben Dineshbhai Patel, Valsad V. Income Tax Officer, Ward-1, , Valsad

ITA 325/SRT/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0997 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: RAJESH M UPADHYAY ITP
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Principle of natural justice; Tangible material; Reassessment proceedings; Borrowed satisfaction
• Section: 143(1); 143(2); 48; 13; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ ITA NOS.324, 329, 333, 341/SRT/2017 ( [ [ / ASSESSMENT YEARS: (2008-09 TO 2011-12) (VIRTUAL COURT HEARING) SMT. SITABEN G.PATEL, MAHALAXMI BUNGLOWS, BHARA FALIA, DUNGRI 396 375. DIST.VALSAD. V S. THE INCOME TAX OFFICER, WARD-4, VALSAD. ./ ./PAN/GIR NO.: AZUPP 3816 E (ASSESSEE) (RESPONDENT) ./ ITA NOS.325, 330, 337 & 339/SRT/2017 ( [ [ / ASSESSMENT YEARS: (2008-09 TO 2011-12) SMT.ARUNABEN D.PATEL, MAHALAXMI BUNGLOWS, BHARA FALIA, DUNGRI 396 375, DIST.VALSAD. V S. THE INCOME TAX OFFICER, WARD-1, VALSAD. ./ ./PAN/GIR NO.: AZSPP 5620 J (ASSESSEE) (RESPONDENT) ./ ITA NOS.332 & 334/SRT/2017 ( [ [ / ASSESSMENT YEARS: (2009-10 & 2010-11) LATE DINESHCHANDRA GAJANANBHAI PATEL L/H VIKASBHAI D.PATEL, MAHALAXMI BUNGLOWS, BHARA FALIA, DUNGRI 396 375, DIST.VALSAD. V S. THE INCOME TAX OFFICER, WARD-5, VALSAD. ./ ./PAN/GIR NO.: AZSPP 5621 K (ASSESSEE) (RESPONDENT) PAGE | 2 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS ./ ITA NOS.326, 328, 338 & 336/SRT/2017 ( [ [ / ASSESSMENT YEARS: (2008-09 TO 2011-12) SMT.TEJALBEN BHARATBHAI PATEL, MAHALAXMI BUNGLOWS, BHARA FALIA, DUNGRI 396 375, DIST.VALSAD. V S. THE INCOME TAX OFFICER, WARD-4, VALSAD. ./ ./PAN/GIR NO.: AZSPP 1515 C (ASSESSEE) (RESPONDENT) ./ ITA NOS.327, 331, 335 & 340/SRT/2017 ( [ [ / ASSESSMENT YEARS: (2008-09 TO 2011-12) BHARATBHAI G. PATEL, MAHALAXMI BUNGLOWS, BHARA FALIA, DUNGRI 396 375, DIST.VALSAD. V S. THE INCOME TAX OFFICER, WARD-1, VALSAD. ./ ./PAN/GIR NO.: ARQPP 3309 N (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI RAJESH M.UPADHYAY - ITP RESPONDENT BY : MS. ANUPAMA SINGLA SR.DR / DATE OF HEARING : 25/06/2021 / DATE OF PRONOUNCEMENT : 12/07/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED EIGHTEEN APPEALS FILED BY THE DIFFERENT ASSESSEES, PERTAINING TO DIFFERENT ASSESSMENT YEARS, ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LD.COMMISSIONER OF INCOME TAX(APPEALS( [LD.CIT(A)], WHICH IN TURN ARISE OUT OF SEPARATE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTIONS 144/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). PAGE | 3 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 2 . SINCE, THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON AND IDENTICAL; THEREFORE, THESE APPEALS HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, THE GROUNDS AS WELL AS THE FACTS NARRATED IN ITA NO.326/SRT/2017, FOR THE ASSESSMENT YEAR (A.Y.) 2008-09, HAVE BEEN TAKEN INTO CONSIDERATION FOR DECIDING THE ABOVE APPEALS EN MASSE . GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN LEAD CASE IN ITA NO.326/SRT/2017, ARE AS FOLLOWS: (1)LD CIT[A] VALSAD, HAS ERRED IN LAW AND ON FACTS TO UPHELD ACTION OF THE A.O. FOR REOPENING OF ASSESSMENT U/S 147 AND ISSUE OF NOTICE U/S 148 OF THE ACT. WITHOUT CONSIDERING THE FACT THAT THERE WAS NO ESCAPEMENT OF INCOME. (2) LD. CIT[A] VALSAD, HAS ERRED IN LAW AND ON FACTS TO CONFIRM ADDITION OF RS.1,15,860/- MADE BY THE A.O. U/S 68 OF THE ACT IN RESPECT OF AGRICULTURE INCOME SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME. 3. THE FACTS OF THE CASE WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: THE ASSESSEE BEFORE US IS AN INDIVIDUAL AND DERIVES INCOME FROM AGRICULTURAL ACTIVITIES. THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 19.01.2009, DECLARING TOTAL INCOME AT RS. 1,42,880/- AND AGRICULTURAL INCOME OF RS. 1,15,860/-. THE RETURN OF INCOME OF THE ASSESSEE WAS PROCESSED BY THE DEPARTMENT UNDER SECTION 143(1) OF THE INCOME TAX ACT, BY ACCEPTING THE RETURNED INCOME OF THE ASSESSEE. 4. LATER, THE ASSESSEE`S CASE WAS REOPENED AS PER THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, AFTER RECORDING REASONS OF ESCAPED INCOME. A NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED ON 27/03/2015 AND SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER ON PERUSAL OF THE DETAILS/INFORMATION AVAILABLE FROM THE RECORDS, ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE, ON 11/01/2016, ASKING THE ASSESSEE TO FURNISH THE BOOKS OF ACCOUNTS , 7/12, AND 8A OF THE AGRICULTURAL LAND OWNED BY ASSESSEE. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO FURNISH BILLS OF PURCHASES OF PESTICIDES, SEEDS, AND RECEIPTS FOR SALE OF AGRICULTURAL PRODUCE. PAGE | 4 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 5. HOWEVER, THE ASSESSEE COULD NOT FURNISH THE DOCUMENTS AND DETAILS BEFORE THE ASSESSING OFFICER, THEREFORE ASSESSING OFFICER MADE ADDITION TO THE TUNE OF RS.1,15,860/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 6. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS FILED VARIOUS DOCUMENTS LIKE LAND HOLDINGS AND AGRICULTURE INCOME IN THE FORM OF SALES OF AGRICULTURE PRODUCE LIKE MANGOES, VEGETABLES ETC. THAT IS, AR OF THE ASSESSEE, DURING THE APPELLATE PROCEEDINGS HAS FILED THE LAND HOLDING RECORDS IN THE FORM NO. 7/12, 8- A AND 6 ETC. TO SHOW THAT THE ASSESSEE HAD SUFFICIENT LAND HOLDINGS FOR EARNING AGRICULTURE INCOME. HOWEVER, LD CIT(A) REJECTED THESE DOCUMENTS AND HELD THAT ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTARY OR OTHER CREDIBLE EVIDENCES PERTAINING TO SUCH ESTIMATE OF AGRICULTURE INCOME. IT WAS STATED BY LD CIT(A) THAT ASSESSEE DID NOT HAVE BILLS FOR AGRICULTURE INCOME AND EXPENSES. THE LD CIT(A) HAS ALSO RELIED ON THE STATEMENT UNDER SECTION 131 OF THE ACT OF SHRI GAJANAND B. PATEL AND HAS CONFIRMED THE ADDITION MADE BY ASSESSING OFFICER. 7. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 8. SHRI RAJESH M.UPADHYAY, LEARNED COUNSEL FOR THE ASSESSEE, BEGINS BY POINTING OUT THAT REASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE IS BASED SOLELY ON THE INFORMATION RECEIVED FROM THE ADIT-INVESTIGATION WING. THE ASSESSING OFFICER DID NOT APPLY HIS MIND, WHILE RECORDING THE REASONS, HENCE THE REASONS WERE RECORDED UNDER SECTION 148 OF THE ACT BASED ON THE BORROWED SATISFACTION. SHRI UPADHYAY, POINTED OUT THAT WHEN THE ASSESSEE HAS DISCLOSED THE AGRICULTURAL INCOME IN THE RETURN OF INCOME AND IF THE ASSESSING OFFICER WANTED TO VERIFY IT, THE ASSESSING PAGE | 5 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS OFFICER OUGHT TO HAVE ISSUED NOTICE UNDER SECTION 143(2) (II) OF THE ACT WITHIN THE TIME LIMIT PERMISSIBLE UNDER THE LAW, HOWEVER, THE ASSESSING OFFICER HAS FAILED TO DO SO THEREFORE NOTICE ISSUED UNDER SECTION 148 IS NOT VALID IN THE EYE OF LAW. SHRI UPADHYAY, ALSO POINTED OUT THAT REOPENING IN THE ASSESSEE`S CASE IS BASED ON MERE SUSPICION, IN A MECHANICAL MANNER ON THE BASIS OF INFORMATION RECEIVED FROM THE ADIT-INVESTIGATION WING. SHRI UPADHYAY, FURTHER POINTED OUT THAT IN ASSESSEE`S CASE THE REASONS WERE RECORDED BASED ON THE STATEMENT OF SHRI GAJANAND BUDHABHAI PATEL WHO COULD NOT FURNISH THE DETAILS OF AGRICULTURAL INCOME BEFORE THE ADIT-INVESTIGATION. NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CONFRONT THE STATEMENT OF SHRI GAJANAND BUDHABHAI PATEL, WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THE LD COUNSEL ALSO CONTENDED THAT THE REASONS RECORDED DID NOT SPELL OUT THE BELIEF OF THE ASSESSING OFFICER THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, LD COUNSEL CHALLENGED THE REOPENING OF ASSESSMENT UNDER SECTION147/148 OF THE ACT, ON THREE COUNTS VIZ: FIRSTLY, THE ASSESSMENT IS REOPENED BASED ON SUSPICION, SECONDLY, THE INFORMATION WAS AVAILABLE BEFORE THE AO AT THE TIME OF FRAMING THE ASSESSMENT U/S 144/ 143 (3) OF THE ACT IN RESPECT OF ISSUE OF AGRICULTURAL INCOME, AS THE ASSESSEE HAS OFFERED THE AGRICULTURAL INCOME IN THE RETURN OF INCOME, THUS THERE IS NO TANGIBLE MATERIAL/NEW MATERIAL BEFORE THE ASSESSING OFFICER TO REOPEN THE PROCEEDINGS UNDER SECTION 147 OF THE ACT, THIRDLY, THE REOPENING IS BASED ON BORROWED SATISFACTION. HENCE, THE LD COUNSEL SUBMITTED BEFORE THE BENCH THAT THE PROCEEDING INITIATED UNDER SECTION 147/148 OF THE ACT IS BAD IN LAW, HENCE IT MAY BE QUASHED. 9. ON MERITS, SHRI UPADHYAY, SUBMITS BEFORE THE BENCH, THAT ALL THE FARMERS HAVE AGRICULTURAL INCOME IN THE RANGE OF RS.1,15,860/- TO 1,50,000/-. IT IS NOT FEASIBLE TO MAINTAIN BOOKS OF ACCOUNTS FOR SUCH A SMALL AGRICULTURAL INCOME. THE FARMER WHO IS EARNING AGRICULTURAL INCOME AT RS.1,15,860/- IS CONSIDERED A POOR FARMER. INDIAN FARMERS ARE BY AND LARGE ILLITERATE AND THEY DO NOT KNOW THE IMPORTANCE OF INCOME TAX PROCEEDINGS. THEREFORE, THEY DO NOT KEEP WITH THEM PURCHASE BILLS OF SEEDS FERTILIZERS AND LABOUR EXPENSES ETC. THE LABOUR, WHO WORKS IN AGRICULTURAL SECTOR PAGE | 6 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS ACCEPTS ONLY CASH PAYMENT. THEREFORE, FROM A SMALL FARMER, WHO IS EARNING AGRICULTURAL INCOME AT RS.1,15,860/-, AND WHO IS BELOW THE POVERTY LINE, CANNOT BE EXPECTED FROM HIM TO MAINTAIN BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. THEREFORE, AGRICULTURAL INCOME OF SUCH A FARMER MAY BE ESTIMATED WITH HELP OF LAND HOLDING, THAT IS, HOW MUCH LAND THE FARMER IS HOLDING AND HOW MUCH LAND HE IS TAKING ON RENT BASIS TO DO AGRICULTURAL ACTIVITIES. SHRI UPADHYAY, SUBMITS BEFORE THE BENCH, THE DETAILS OF LAND HOLDING AND LAND TAKEN ON RENT BASIS TO DO AGRICULTURAL ACTIVITIES, IN RESPECT OF ALL THE FARMERS AND PRAYED THE BENCH THAT EACH AND EVERY FARMER HAS JUSTIFIED THE AGRICULTURAL INCOME EARNED BY HIM THEREFORE ADDITION MADE BY THE ASSESSING OFFICER IN CASE OF ALL EIGHTEEN FARMERS MAY BE DELETED. 10. ON THE OTHER HAND, MS. ANUPAMA SINGLA SR.DR, VEHEMENTLY SUBMITS BEFORE THE BENCH THAT REASONS RECORDED BY THE ASSESSING OFFICER UNDER SECTION 147 OF THE ACT ARE VALID, AS THE ASSESSING OFFICER, ON THE BASIS OF THE INQUIRY REPORT BY THE INVESTIGATION WING, REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. THAT IS, ASSESSING OFFICER, AFTER GETTING THE INFORMATION FROM THE ADIT- INVESTIGATION WING, HAS APPLIED HIS MIND AND THEN ISSUED NOTICE ON THE ASSESSEE UNDER SECTION 148 OF THE ACT THEREFORE, REOPENING IS VALID. ON THE PERUSAL OF THE DETAILS, IT IS OBSERVED THAT THE ASSESSEE HAS NEVER RAISED ANY OBJECTION DURING THE ASSESSMENT PROCEEDINGS REGARDING THE REOPENING OF THE ASSESSMENT. THE ASSESSEE HAD NOT PARTICIPATED IN THE RE-ASSESSMENT PROCEEDINGS AT THE ASSESSMENT STAGE. THIS ISSUE OF REOPENING BEING BAD IN LAW WAS RAISED FOR THE FIRST TIME DURING THE APPELLATE PROCEEDINGS. THE OBJECTION RAISED BY THE ASSESSEE REGARDING THE ASSUMPTION OF JURISDICTION BY ASSESSING OFFICER BY ISSUANCE OF NOTICE U/S 148 OF THE ACT, IS DEVOID OF MERITS AND FACTS THEREFORE, THE REOPENING OF ASSESSMENT UNDER SECTION 147 IS VALID AND HENCE SHE PRAYED THE BENCH THAT ALL THE EIGHTEEN GROUP APPEALS MAY BE DISMISSED. 11. ON MERITS, MRS. ANUPAMA SINGLA, PLEADS THAT EVERY FARMER IS REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS AND THEY SHOULD KEEP BILLS OF PURCHASES OF PESTICIDES PAGE | 7 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS AND SEEDS, AND THEY SHOULD ALSO KEEP BILLS AND RECEIPTS FOR SALE OF AGRICULTURAL PRODUCE SO THAT THESE BOOKS OF ACCOUNTS, BILLS OF PESTICIDES AND SEEDS CAN BE PRODUCED BEFORE THE ASSESSING OFFICER TO SUBSTANTIATE THEIR CLAIM. SINCE, IN THE INSTANT CASE, ALL THE FARMERS FAILED TO MAINTAIN BOOKS OF ACCOUNTS AND FAILED TO PRODUCE BILLS OF PESTICIDES AND SEEDS ETC, BEFORE THE ASSESSING OFFICER THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER MAY BE SUSTAINED. 12. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL CONTENTION. WE HAVE PERUSED CASE FILE AS WELL AS PAPER BOOKS FURNISHED BY ASSESSEE WITH THE ABLE ASSISTANCE OF SHRI RAJESH M.UPADHYAY, REPRESENTING THE ASSESSEE AND MS. ANUPAMA SINGLA, LEARNED SR.(DR), REPRESENTING THE REVENUE. BEFORE THE BENCH, LD COUNSEL FOR THE ASSESSEE ARGUED BY TAKING TWO STAND TO DEFEND THE CASE OF THESE EIGHTEEN SMALL FARMERS, VIZ: (I) REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT IS BAD IN LAW THEREFORE, THE REASSESSMENT PROCEEDINGS INITIATED AGAINST THESE EIGHTEEN FARMERS SHOULD BE QUASHED, AND (II) ALL THE FARMERS HAVE PRODUCED EVIDENCE OF LAND HOLDING AND LAND TAKEN ON RENT, TO DO AGRICULTURAL ACTIVITIES THEREFORE, ( BEING POOR AND SMALL FARMERS), THEY HAVE SUBSTANTIATED THEIR CLAIM OF EARNING AGRICULTURAL INCOME, HENCE ADDITION MAY BE DELETED. WE NOTE THAT A COMMON ISSUE IN ALL THE EIGHTEEN APPEALS IS THE CHALLENGE TO THE CORRECTNESS OF AGRICULTURAL INCOME EARNED BY FARMERS TAKING INTO ACCOUNT THEIR LAND HOLDINGS AND LAND TAKEN BY THEM ON RENT BASIS TO DO AGRICULTURAL ACTIVITIES. WE WILL BEGIN BY TAKING UP THIS SECOND STAND, ON MERIT, OF THE LD COUNSEL. THE SHORT QUESTION, AS LEARNED COUNSEL FOR THE ASSESSEE CONTENDS, THAT WE HAVE TO ADJUDICATE UPON IN THIS BUNCH OF APPEALS IS WHETHER A SMALL FARMER WHOSE EARNING BY WAY OF AGRICULTURAL ACTIVITIES IS TO THE TUNE OF RS.1,15,860/-, IS REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS, BILLS OF PESTICIDES, SEEDS, PAYMENT VOUCHERS TO LABOURS, BILLS FOR WATERING, CULTIVATING AND HARVESTING EXPENSES ETC, TO SUBSTANTIATE HIS AGRICULTURAL INCOME? PAGE | 8 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 13. WE HAVE EXAMINED THE ARGUMENTS, ON MERIT, ADVANCED ON BEHALF OF THE ASSESSEE, BY SHRI UPADHYAY, LEARNED COUNSEL, AND WE FIND THAT THERE IS A MERIT IN THE PROPOSITIONS CANVASSED BY LD COUNSEL. SHRI UPADHYAY, STATES THAT ALL THE FARMERS HAVE AGRICULTURAL INCOME IN THE RANGE OF RS.1,15,860/- TO 1,50,000/- THEREFORE, IT IS NOT FEASIBLE TO MAINTAIN BOOKS OF ACCOUNTS FOR SUCH A SMALL AGRICULTURAL INCOME. THE FARMER WHO IS EARNING AGRICULTURAL INCOME AT RS.1,15,860/- IS CONSIDERED A POOR FARMER AND BELOW THE POVERTY LINE. INDIAN FARMERS ARE BY AND LARGE ILLITERATE AND THEY DO NOT KNOW THE IMPORTANCE OF INCOME TAX PROCEEDINGS. THEREFORE, THEY DO NOT KEEP WITH THEM PURCHASE BILLS OF SEEDS, FERTILIZERS AND LABOUR EXPENSES ETC. THE LABOUR, WHO WORKS IN AGRICULTURAL SECTOR ACCEPTS ONLY CASH PAYMENT AND FARMER RECEIVES THE CASH FOR SALE OF HIS AGRICULTURAL PRODUCE. WE NOTE THAT IT IS A GENERAL PHENOMENON, THAT A SMALL FARMER, WHO IS EARNING AGRICULTURAL INCOME AT RS.1,15,860/-, WOULD NOT BE IN A POSITION TO RUN ACCOUNTS DEPARTMENT AND PAY SALARY TO THE ACCOUNTANT, THEREFORE IT CANNOT BE EXPECTED FROM A SMALL FARMER TO MAINTAIN BOOKS OF ACCOUNTS, BILLS AND VOUCHERS ETC. FOR EXAMPLE, IF WE CONSIDER, SAY, AN ACCOUNTANT SALARY RS. 10,000/- PER MONTH, TOTAL SALARY FOR A YEAR COMES TO RS.1,20,000/-, WHICH IS MORE THAT AGRICULTURAL INCOME OF RS.1,15,860/-. THEREFORE, IT IS NOT AFFORDABLE EXPENSE. IT IS ALSO A GENERAL PHENOMENON, THAT INDIAN FARMERS ARE BY AND LARGE ILLITERATE AND THEY DO NOT KNOW THE IMPORTANCE OF INCOME TAX PROCEEDINGS, THEREFORE, THEY DO NOT KEEP WITH THEM BILLS OF SEEDS, FERTILIZERS, VOUCHERS OF LABOUR EXPENSES, RECEIPTS FROM SALE OF AGRICULTURAL PRODUCE ETC. HOWEVER, THIS CONCEPT IS NOT APPLICABLE TO BIG FARMERS (WHOSE INCOME IS IN CRORES), THEY CAN AFFORD THE EXPENSES TO MAINTAIN ACCOUNTS DEPARTMENT, BILLS OF SEEDS, FERTILIZERS AND LABOUR EXPENSES ETC CAN BE MAINTAINED BY THEM, AS THE BIG FARMERS HAVE NECESSARY INFRASTRUCTURE FACILITIES AND LARGE REVENUE INCOME. THEREFORE, THE OPTION AVAILABLE TO ESTIMATE THE INCOME OF A SMALL FARMER, (WHOSE INCOME BY WAY OF AGRICULTURAL ACTIVITIES IS RS.1,15,860/-), IS TO EXAMINE THE SUFFICIENT LAND HOLDING BY HER. PAGE | 9 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 14. SHRI UPADHYAY, LEARNED COUNSEL, HAS FURNISHED BEFORE THE BENCH THE AGRICULTURAL LAND HOLDING BY THE ASSESSEE AND FAMILY MEMBERS, WHICH IS REPRODUCED BELOW: TEJALBEN BHARATBHAI PATEL & OTHERS AGRICULTURAL LAND HOLD BY ASSESSEE & THEIR FAMILY MEMBERS [A] OWN AGRICULTURAL LAND : SR. NO. VILLAGE S.NO./ BLOCK NO. AREA HT.- ACR.- SQMTS. CROP GROWN VALUE IN RS. REMARK 1 MO JE DUNGARI, DIST. VALSAD 1688 0-02-03 GRASS FOR CATTLE 10,000/- SELF USED BY OWN CATTLE 2 MO JE DUNGARI, DIST. VALSAD 1725 0-07-08 VEGETABLES/ PALAK, BHAJI 1,00,000/- SOLD TO HAWKERS FOR RETAIL SALE AT FARM 3 MO JE DUNGARI, DIST. VALSAD 1726 0-34-40 MANGO TREES NO. 45 AND IN OPEN LAND THEREAFTER VEGETABLE 1,75,000/- FOR MANGOES+ 1,25,000/- FOR VEGETABLES MANGOES ARE SOLD TO RETAILERS & VEGETABLES TO HAWKERS AT FARM 4 MO JE DUNGARI, DIST. VALSAD 1715 1/18/37 MANGO TREES NO. 80 AND SUGARCANE 3,00,000/- FOR MANGOES+ 50,000/- MANGOES ARE SOLD TO RETAILERS & SUGARCANE SOLD TO SUGAR FACTORY 5 MO JE DUNGARI, DIST. VALSAD 1760 0-55-65 MANGO TREES NO. 140 5,17,000/- MANGOES ARE SOLD TO RETAILERS AT FARM 6 MO JE DUNGARI, DIST. VALSAD 1760 0-55-65 MANGO TREE NO. 60+ VEGETABLES IN SUMMER+ PADDY IN MONSOON 2,20,000/- FOR MANGOES AND 3,00,000/- FOR VEGETABLES MANGOES ARE SOLD TO RETAILERS & VEGETABLES TO HAWKERS AT FARM PAGE | 10 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS [B] AGRICULTURAL LAND TAKEN ON GANOT: SR. NO. VILLAGE S.NO./ BLOCK NO. AREA HT.- ACR.- SQMTS. CROP GROWN 1 MOJE SONWADA DICT. VALSAD 634 0-46-36 PADDY, MANGOES, VEGETABLES AND SUGARCANE 2 MOJE SONWADA DICT. VALSAD 592/A 1-61-88 3 MOJE SONWADA DICT. VALSAD 592/B 0-36-42 4 MOJE SONWADA DICT. VALSAD 566 1-00-16 5 MOJE SONWADA DICT. VALSAD 569 0-93-07 6 MOJE SONWADA DICT. VALSAD 653 3-40-95 7 MOJE SONWADA DICT. VALSAD 677 0-32-37 [C] AGRICULTURAL LAND TAKEN ON GANOT: SR. NO. VILLAGE S.NO./ BLOCK NO. AREA HT.- ACR.- SQMTS. CROP GROWN 1 MOJE PANCHLAI, DIST. VALSAD OLD BLOCK NO. 70 PAIKI 1 (NEW NO. 18), AND PAIKI 2 1-13-34 RICE, VEGETABLES, SUGARCANE, ETC. 1-14-83 2 MOJE PANCHLAI, DIST. VALSAD BLOCK NO. 69 PAIKI 69/K 0-74-87 3 MOJE PANCHLAI, DIST. VALSAD SURVEY NO. 48 ( NEW NO. 123) 2-33-71 4 MOJE PANCHLAI, DIST. VALSAD BLOCK NO.74/1 (NEW NO. 24) 0-80-18 5 MOJE PANCHLAI, DIST. VALSAD BLOCK NO.74/3 ( NEW NO. 28) 0-80-18 6 MOJE PANCHLAI, DIST. VALSAD BLOCK NO.74/4 (NEW NO. 29) 0-80-18 PAGE | 11 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 15. WE HAVE GONE THROUGH THE LAND HOLDING PATTERN OF ASSESSEE AND FAMILY MEMBERS OF ASSESSEE, AS MENTIONED ABOVE, AND NOTED THAT THERE IS SUFFICIENT LAND HOLDING TO PROVE THE AGRICULTURAL INCOME OF RS.1,15,860/- IN CASE OF ASSESSEE AND OTHER FAMILY MEMBERS OF THE ASSESSEE. IN ADDITION TO OWN AGRICULTURAL LAND, ASSESSEES ARE DOING AGRICULTURAL ACTIVITIES ON THE LAND TAKEN ON RENT. THESE ABOVE FACTS WERE NEVER DISPUTED BY THE LD CIT(A). WE NOTE THAT ASSESSEE HAS CHALLENGED THE ADDITION OF AGRICULTURE INCOME OF RS. 1,15,860/- SHOWN IN THE RETURN OF INCOME AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. IN THE ASSESSMENT ORDER, THE AO NOTED THAT THE ASSESSEE DID NOT FILE ANY DETAILS TO SUBSTANTIATE AGRICULTURE INCOME OF RS. 1,15,860/- THEREFORE, ASSESSING OFFICER TREATED RS. 1,15,860/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. HOWEVER, WE NOTE THAT IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS FILED VARIOUS LAND HOLDING OF THE ASSESSEE AND HIS FAMILY MEMBERS AND AGRICULTURE INCOME IN THE FORM OF SALES OF AGRICULTURE PRODUCE LIKE MANGOES, VEGETABLES ETC. THE ASSESSEE HAS ALSO FILED BEFORE THE LD CIT(A), THE LAND HOLDING RECORDS IN THE FORM NO. 7/12, 8-A AND 6 ETC. TO SHOW THAT THE ASSESSEE AND HER FAMILY MEMBERS HAD SUFFICIENT LAND HOLDING FOR EARNING AGRICULTURE INCOME. THE LD CIT(A) DID NOT BRING ANY COGENT EVIDENCE ON RECORD TO SHOW THAT THESE HOLDING RECORDS IN THE FORM NO. 7/12, 8-A AND 6 ETC, ARE FALSE AND UNTRUE. WE NOTE THAT LD CIT(A) HAS CO-TERMINUS POWER AS THAT OF ASSESSING OFFICER, THAT IS, WHAT THE ASSESSING OFFICER CAN DO, CAN BE DONE BY LD CIT(A). DURING THE APPELLATE PROCEEDINGS, IN RESPONSE TO ABOVE ALLEGATION IN SHOW CAUSE NOTICE, THE ASSESSEE IN HIS REPLY SUBMITTED COPIES OF LAND HOLDING RECORDS IN THE FORM NO. 7/12, 8-A AND 6 ETC. THE ID CIT(A) HAS NOT REFUTED OR DISCREDITED THESE EVIDENCES. THE LD CIT(A) DOES NOT MENTION WHY HE IS NOT ACCEPTING THESE EVIDENCES. NOTE: 1 IN 2010 PURCHASED BY SITABEN- ONE OF THE FAMILY MEMBERS 2 BEFORE THAT THE SAME WAS CULTIVATED IN 6:4 RATIO 3 VALUE OF CROPS GROWN RS. 12,00,000/- PAGE | 12 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS THUS, LD CIT(A) HAS NOT MADE ANY ADVERSE FINDING IN RESPECT OF ANY OF THESE DOCUMENTS, EVEN THOUGH ALL THE DETAILS/DOCUMENTS OF LAND HOLDING RECORDS IN THE FORM NO. 7/12, 8-A AND 6 ETC WERE FURNISHED BY THE ASSESSEE BEFORE HIM. THE LD CIT(A) OUGHT TO HAVE EXAMINED ALL THESE DETAILS AND DOCUMENTS AND REFUTED / REJECTED THEM, WITH A COGENT ADVERSE FINDINGS AND DISCERNABLE LINE OF REASONING, IN ORDER TO ARRIVE AT A CONCLUSION AND TO SUSTAIN THE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT. ON THE CONTRARY, WE SEE THAT LD CIT(A) HAS JUST BRUSHED ASIDE THESE EVIDENCES WITHOUT EVEN A WORD ON WHY THEY ARE NOT ACCEPTABLE. IN CASE OF SITABEN GAJANANBHAI ( ONE OF THE FARMERS), THE ASSESSING OFFICER ALSO MADE ADDITION UNDER THE HEAD UNEXPLAINED INVESTMENT AND SIMILAR NATURE ADDITION UNDER THE HEAD UNEXPLAINED INVESTMENT WERE ALSO MADE BY THE ASSESSING OFFICER IN CASE OF DINESH CHANDRA D.PATEL ( ONE OF THE FARMERS), ALL THESE ADDITIONS WERE MADE BASED OF SURMISE AND CONJECTURE. IT IS A WELL SETTLED LAW THAT WHEN AN ASSESSEE HAS ALL THE POSSIBLE EVIDENCES IN SUPPORT OF ITS CLAIM, THEY CANNOT BE BRUSHED ASIDE BASED ON SURMISES. HENCE, TAKING INTO ACCOUNT THIS FACTUAL POSITION, WE DELETE THE ADDITION MADE IN THE HANDS OF ALL EIGHTEEN SMALL FARMERS. 16. WE NOTE THAT LD CIT(A) IN HIS FINDINGS, VIDE PARA 3.3 OF ORDER OF LD CIT(A), HELD AS FOLLOWS: .AFTER GOING THROUGH THE INQUIRY REPORT OF ADIT(INV.), VALSAD IN THE CASE OF GAJANAND B. PATEL AS WELL AS THE STATEMENT U/S. 131 OF THE ACT OF SHRI GAJANAND B. PATEL, I FIND THAT THE EVENTHOUGH THE DETAILS OF LAND HOLDINGS AND PARTIAL SALE BILLS OF SUGARCANE SALE WAS SUBMITTED BEFORE THE ADIT, TOTAL CONSOLIDATED AGRICULTURE INCOME OF GAJANAND B. PATEL AND HIS FAMILY MEMBERS WERE NOT PROPERLY EXPLAINABLE. THIS ABOVE NOTED FINDINGS OF LD CIT(A) CLEARLY SHOWS THAT ASSESSEE HAS SUBMITTED LAND HOLDING DETAILS BEFORE THE INCOME TAX AUTHORITIES. THE ASSESSEE HAS ALSO SUBMITTED PARTIAL SALE BILLS OF SUGARCANE SALE ETC. WE ALSO NOTE THAT LD CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THE STATEMENT UNDER SECTION 131 OF THE ACT OF SHRI GAJANAND B. PATEL. PAGE | 13 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS WE NOTE THAT OPPORTUNITY TO CROSS EXAMINE, THE STATEMENT UNDER SECTION 131 OF THE ACT OF SHRI GAJANAND B. PATEL, HAS NOT BEEN PROVIDED TO THE ASSESSEE, WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. WE NOTE THAT, THE CBDT'S CIRCULAR DATED 12- 03-2003 ON THIS ISSUE WHICH WAS RELIED UPON BY THE HON`BLE MADRAS HIGH COURT IN THE CASES OF M NARAYANAN & BROS VS ACIT [2011]13 TAXMANN.COM, AND CIT VS KHADER KHAN SON [2008] 300 ITR 157 AND THE GUJARAT HIGH COURT IN THE CASE OF CHETNABEN J SHAH VS ITO [ORDER DT.14-07-2016 IN TAX APPEAL NO.1437 OF 2007], WHEREIN THE CBDT HAS CLEARLY INSTRUCTED THAT THE AO SHOULD RELY ON CREDIBLE EVIDENCE AND THAT THE MATERIAL GATHERED IN SEARCH SHOULD FORM THE BASIS FOR FRAMING THE ASSESSMENT ORDER. WE NOTE THAT NOT ALLOWING THE ASSESSEE TO CROSS EXAMINE THE WITNESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESS WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY. WE NOTE THAT SAME VIEW EXPRESSED BY THE HON`BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISES 210 ITR 103 (CAL), WHEREIN IT WAS HELD THAT IT IS A TRITE LAW THAT CROSS EXAMINATION IS THE SINE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PARTY UNLESS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. THEREFORE, THE ADDITION SUSTAINED BY THE LD CIT(A) BASED ON THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA) IS NOT SUSTAINABLE IN LAW, AS THE LD CIT(A) DID NOT PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA), THEREFORE ADDITION RS. 1,15,860/- CANNOT BE SUSTAINED ONLY ON THE BASIS OF THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA). HENCE, ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD CIT(A) NEEDS TO BE DELETED. 17. CONCLUSION: SECTION 10(1) OF THE INCOME TAX ACT PROVIDES THAT AGRICULTURAL INCOME IS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THE RESULT IS THAT AGRICULTURAL INCOME IS NOT ONLY EXEMPT FROM TAX BUT, UNDER THE SCHEME OF INCOME TAX ACT, IS ALSO TO BE EXCLUDED IN COMPUTING THE TOTAL INCOME ON THE BASIS OF WHICH THE RATE APPLICABLE TO THE TAXABLE INCOME IS DETERMINED. HOWEVER, SINCE 1973 THE PAGE | 14 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS ANNUAL FINANCE ACT HAS SUPERSEDED THIS SCHEME BY PROVIDING FOR INCLUSION OF AGRICULTURAL INCOME IN THE TOTAL INCOME FOR THE LIMITED PURPOSE OF DETERMINING THE RATE APPLICABLE TO THE TAXABLE INCOME. THESE PROVISIONS ARE CONSTITUTIONAL. AGRICULTURAL INCOME HAS TO BE EXEMPTED FROM TAX UNDER THE INCOME TAX ACT BECAUSE PARLIAMENT HAS NO POWER UNDER THE CONSTITUTION TO LEVY TAX ON AGRICULTURAL INCOME. HOWEVER, PARLIAMENT HAS POWER TO LEVY TAX ON CAPITAL GAIN ARISING FROM TRANSFER OF AGRICULTURAL LAND. THE STATE LEGISLATURES ARE ENTITLED TO IMPOSE A TAX ON ANY OF THE CATEGORIES OF AGRICULTURAL INCOME WHICH ARE EXEMPTED FROM TAX UNDER INCOME TAX ACT. THUS, BASED ON THE LAND HOLDINGS AND LAND TAKEN ON RENT BASIS TO DO AGRICULTURAL ACTIVITIES, THE FARMERS HAVE JUSTIFIED THE AGRICULTURAL INCOME EARNED BY THEM BY FURNISHING EVIDENCES SUCH AS, LAND HOLDING RECORDS IN THE FORM NO. 7, 12, 8-A AND 6 ETC. BESIDES, ADDITION WAS SUSTAINED BY THE LD CIT(A) BASED ON THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA), WITHOUT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE, AS NOTED BY US IN PARA 16 OF THIS ORDER, WHEREIN WE NOTED THAT ADDITION RS. 1,15,860/- CANNOT BE SUSTAINED ONLY ON THE BASIS OF THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA). WE ALSO NOTE THAT LD CIT(A) HAS SUSTAINED THE ADDITION IN THE HANDS OF ALL THE EIGHTEEN FARMERS BASED ON THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA), WITHOUT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE THE SAID STATEMENT HENCE CONCLUSION REACHED BY THE LD CIT(A) BASED ON THE STATEMENT OF SHRI GAJANAND B. PATEL (SUPRA), IS NOT ACCEPTABLE. IN THE LIGHT OF THE DISCUSSIONS THAT WE HAVE PRECEDED AND FOR THE REASONS ALLUDED, WE ARE OF THE OPINION THAT ADDITION OF RS. 1,15,860/- SHOULD BE DELETED. THEREFORE, WE DELETE THE ADDITION OF RS. 1,15,860/-. 18.HOWEVER, BEFORE PARTING WITH THE MATTER, WE ALSO MAKE IT CLEAR THAT SINCE WE HAVE ADJUDICATED THE INSTANT APPEAL OF THE ASSESSEE, IN HER FAVOUR, ON MERITS, THEREFORE, WE DO NOT DEAL WITH THE ARGUMENTS OF THE LD COUNSEL AND LD DR ON THE TECHNICAL ISSUE OF REOPENING THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT. PAGE | 15 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 19. WE HAVE ADJUDICATED THESE EIGHTEEN APPEALS OF FARMERS, TAKING INTO ACCOUNT THE PECULIAR FACTS, AS NARRATED ABOVE, THEREFORE, WE STATE THAT INSTANT ADJUDICATION SHALL NOT BE TREATED AS A PRECEDENT IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR. 20. SIMILAR ISSUES TOWARDS WHETHER ASSESSEE HAS JUSTIFIED THE EARNING OF AGRICULTURAL INCOME BY PRODUCING LAND HOLDING RECORDS IN THE FORM NO. 7, 12, 8-A AND 6 ETC. HAVE BEEN RAISED BY THE DIFFERENT OTHER SEVENTEEN ASSESSEES (FARMERS) IN OTHER CAPTIONED APPEALS, AS NOTED ABOVE. THE FACTS AND ISSUES INVOLVED IN ALL THESE OTHER APPEALS OF ASSESSEES ARE ANALOGOUS TO ITA NO. 326/SRT/2017 FOR AY 2008-09, WHEREIN THE GROUNDS RAISED BY ASSESSEE IN THIS APPEAL HAVE BEEN DISCUSSED IN EARLIER PARAS IN GREAT LENGTH. ACCORDINGLY, OUR OBSERVATIONS MADE IN ITA NO. 326/SRT/2017 FOR AY 2008-09, SHALL APPLY MUTATIS MUTANDIS TO THE AFORESAID OTHER APPEALS OF ASSESSEES. FOR THE PARITY OF REASONS, WE ALLOW THE ABOVEMENTIONED APPEALS OF OTHER ASSESSEES IN TERMS OF DIRECTIONS NOTED IN ITA NO. 326/SRT/2017 FOR AY 2008-09. 22. IN THE RESULT, EIGHTEEN APPEALS ( IN ITA NOS.324,329,333,341,325,330,337,339,332,334,326,328,336,338,327,331,335,340 /SRT/2017) FILED BY ASSESSEES, ARE ALLOWED. ORDER IS PRONOUNCED ON 12/07/2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- SD SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE: 12 /07/2021 / SGR TRUE COPY COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT PAGE | 16 SMT.TEJALBEN BHARATBHAI PATEL AND OTHERS 18 APPEALS 6. GUARD FILE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT