R Nagesh Gowda , Bangalore V. The Income Tax Officer Ward-3(2)(2), Bangalore

ITA 3294/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7160 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KIRAN
• Assessee Lawyers: G.N BHAT
• Keywords: Opportunity of being heard; Opportunity of cross examination
• Section: 69; 69B; 69A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B, SMC BEFORE SHRI N.V VASUDEVAN, VICE PRESIDENT ITA NO.3294/BANG/2018 ASSESSMENT YEAR : 2015-16 SRI R NAGESH GOWDA, NO.991, 2 ND MAIN, 38 TH CROSS, VIJAYANAGAR, BEGALURU. PAN AHCPR 6989R. VS. THE INCOME-TAX OFFICER, WARD 3(2)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI G.N BHAT, C.A RESPONDENT BY : SHRI D KIRAN, JCIT DATE OF HEARING : 26.12.2018 DATE OF PRONOUNCEMENT : 11.01.2019 O R D E R PER SHRI N.V VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINS T THE ORDER DATED 12/10/2018 OF COMMISSIONER OF INCOME-TAX (APPEALS) 3 RELATING TO ASST. YEAR 2015-16. 2. THE ASSESSEE IS AN INDIVIDUAL. FOR ASST. YEAR 2015-16, THE ASSESEE FIELD RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.NIL. THE ASSESSEE IN THE RETURN OF INCOME HAD SHOWN AGRICULT URAL INCOME TO THE TUNE OF RS.54,46,450/-. TO VERIFY TO CLAIM OF THE ASSESSEE REGARDING AGRICULTURAL INCOME, THE CASE WAS SELECTED FOR SCRU TINY UNDER CASS. ITA NO.3294/B/18 2 4. IN THE PROCEEDINGS BEFORE THE AO, THE ASSE SSEE FILED EVIDENCE TO SHOW THAT HE WAS HOLDING AGRICULTURAL LAND OF AN EX TENT OF 15 ACRES AT SURVEY NO.184, 185, 186 AND 190 AT KALENAHALLI, DAN DIGANAHALLI HOBLI, CHANNARAYAPPATNA TALUK, HASSAN DISTRICT. THE ASSES SEE CLAIMED THAT HE HAD CULTIVATED COCONUT PLANTATION IN 7 ACRES, BA NANA PLANTATION IN 3 ACRES AND GINGER CROP IN 5 ACRES. THE CLAIM OF THE ASSESSEE WAS THAT THE LANDS WERE WELL FED WITH WATER FROM BORE WELL A ND HEMAVATHY RIVER IRRIGATION CANNAL. THE ASSESSEE CLAIMED THAT HE WA S SUPERVISING THE AGRICULTURAL ACTIVITIES BY EMPLOYING LABOURERS FOR CARRYING OUT AGRICULTURAL OPERATIONS. THE ASSESSEE CLAIMED THAT BANANA AND COCONUT HAVE BEEN SOLD LOCALLY TO BUYERS AT THE FAR M AND THAT GINGER WAS ALSO SOLD TO FARMERS AT THE FARM. GROSS AGRIC ULTURAL INCOME DERIVED BY THE ASSESSEE WAS RS.60,40,000/- AND AFTER INCURR ING AN EXPENDITURE OF RS.5,93,550/-, THE ASSESSEE CLAIMED TO HAVE RECE IVED NET AGRICULTURAL INCOME OF RS.54,46,450/-. THE ASSESSEE ALSO CLAIME D THAT IT HAD NOT SOLD THE AGRICULTURAL PRODUCE TO ANY TRADER OR THRO UGH APMC MARKET AND THEREFORE NO SALE BILL OR VOUCHERS WERE AVAILABLE W ITH HIM. 5. THE FOLLOWING WERE THE ITEMS OF EXPENDITU RE CLAIMED BY THE ASSESSEE. 1. TEMPORARY LABOUR FOR GINGER AND BANANA 1,20,000 (800 MAN DAYS LABOUR * 150 PER DAY) 2. PERMANENT LABOUR FOR SUPERVISION AND MAINTENANCE 1,80,000 3. FERTILE SOIL PURCHASE 70,000 4. MANURE, FERTILIZERS, COMPOSTS, ORGANIC MANURE, MEDICINES 1,50,000 5. EQUIPMENTS HIRE FOR TILLING, SOWING AND CUTTING 40,000 ITA NO.3294/B/18 3 6. BOREWELL MAINTENANCE 25,000 7. MISC EXPENSES 8,550 TOTAL 5,93,550 6. THE BREAKUP OF SALE VALUE OF THE VARIOUS PR ODUCE GROWN BY THE ASSESEE AS FOLLOWS:- 7. THE AO MADE ENQUIRIES FROM THE VILLAGE ACCOUN TANT AND IN RESPONSE TO THE REQUEST OF THE AO, THE V.A FORWARDED COPIES OF RTC OF LAND OWNED BY THE ASSESSEE WHICH WAS AS FOLLOWS:- 8. THE CONCLUSION OF THE AO ON THE BASIS OF THE ABOVE WAS THAT ASSESSEE DID NOT GROW BANANA DURING THE PREVIOUS YE AR RELEVANT TO ASST. YEAR 2015-16. THE AO ALSO ISSUED A DIRECTION TO TH E ITO WARD-I , HASSAN ITA NO.3294/B/18 4 TO MAKE NECESSARY ENQUIRIES AND FURNISH REPORT ON T HE EXTENT OF LAND OWNED BY THE ASSESSEE AND THE CORPS CLAIMED TO HAVE BEEN GROWN BY THE ASSESSEE. THE ITO, WARD-1, HASSAN GOT THE LAND INS PECTED BY AN INSPECTOR. THE INSPECTORS ENQUIRY REPORT SHOWED THAT THE ASSESSEE OWNED FOLLOWING EXTENT OF LAND AND HAD GROWN FOLLOW ING CORPS IN THE LAND OWNED BY HIM. THE LAND OWNER CARRIES OUT AGRICULTURAL ACTIVITIES IN 14 ACRES OUT OF HIS OWN LAND OF 15 ACRES. AND IT IS BE LIEVED THAT HE HAS PURCHASED ONE MORE AGRICULTURAL LAND OF 6 ACRES WHICH IS YET TO BE REGISTERED. HE CARRIED OUT AGRICULTURAL PROCESS IN 25 ACRES OF LAND WHICH HE H AS TAKEN ON LEASE. 9. THE AO ISSUED SHOW CAUSE NOTICE DATED 20/12/2017 CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AGRICULTUR AL INCOME SHOWN BY THE ASSESSEE SHOULD NOT BE DISBELIEVED TO THE EXTEN T OF RS.32,30,500/- AND THE SAID SUM OF RS.32,30,500/- SHOULD NOT BE BR OUGHT TO TAX AS INCOME FROM OTHER SOURCE. IN RESPONSE THERE TO, T HE ASSESSEE ADDRESSED ITA NO.3294/B/18 5 A LETTER TO THE AO DATED 27/12/2017 IN WHICH THE AS SESSES SUBMITTED CROP CERTIFICATE ISSUED BY THE V.A.O, IN WHICH THE V.A.O . CONFIRMED THAT THE FOLLOWING WERE CROPS GROWN:- APPLICANT, R NAGESH GOWDA BIN K RAMASAMY, AGED ABOUT 45 YEARS, RESIDING AT # 991, 2 ND MAIN ROAD, 3 CROSS, VIJAYANAGAR, BANGALORE - 40, HAS GROWN THE F OLLOWING CROPS AT THE FOLLOWING SURVEY NO'S RESIDING AT A KA LENAHALLI VILLAGE, DANDIGANAGHALLI HOBLI, CHANNRAYAPATNA TALU K. IT IS CONFIRMED THAT, THE APPLICANT HAD GROWN THE ABOVE MENTIONED CROPS. 10. THE ASSESSEE THEREFORE SUBMITTED THAT THE RTC E XTRACT PRODUCED BY THE V.A.O. IN RESPONSE TO THE NOTICE OF THE AO W AS NOT CORRECT. THE ASSESSE ALSO SUBMITTED THAT THE REPORT OF THE INSPE CTOR SHOULD NOT BE BELIEVED AS THE INSPECTION BY THE INSPECTOR WAS AT A PERIOD MUCH LATTER IN POINT OF TIME THAN THE PERIOD RELATING TO THE PREVI OUS YEAR RELEVANT TO AY 2015-16. 11. THE AO ALSO DISPUTED THE PRICE AT WHICH COCONU T AS WELL AS GINGER WERE CLAIMED TO HAVE BEEN SOLD BY THE ASSESSEE. TH E AO OBTAINED RATES OF GINGER AS PER THE APMC DATA CHANARAYAPATANA DUR ING THE PREVIOUS YEAR AND CAME TO THE CONCLUSION THAT THE RATE PER K G OF GINGERS WAS ONLY RS.20 PER KG. HE DID NOT AGREE WITH THE RATES OF COCONUT AS GIVEN BY THE ASSESSEE AT RS.20 PER COCONUT AND ACCEPTED THE PRI CE OF ONLY RS.12 PER ITA NO.3294/B/18 6 COCONUT. BY DOING SO, THE AO ARRIVED AT THE INCOME FROM SALE OF COCONUT AT RS.7,92,000/- AS FOLLOWS:- THE ASSESSEE HAS CLAIMED TO HAVE EARNED RS.13,20,000/- FROM SALE OF COCONUTS. HE HAS WORKED OUT THE INCOME BASED ON AVERAGE YIELD OF 220 COCONU TS FOR 300 PLANTS AT THE RATE OF RS20/- PER COCONUT TH E REASONS GIVEN BY THE ASSESSEE FOR THE HIGH PRICES CLAIMED BY HIM IS NOT CONVINCING. THE RATE OF RS201 - PER COCONUT IS RETAIL PRICE AND NOT WHAT A GROWER CAN E XPECT FROM HIS FARM AS THE AGRICULTURAL PRODUCE HAVE TO B E ROUTED THROUGH VARIOUS AGENTS BEFORE IT REACHES THE CUSTOMER, THE AVERAGE PRICE AN AGRICULTURIST CAN EX PECT IS MUCH LOWER. THEREFORE, THE AVERAGE PRICE OF R12/ - PER COCONUT APPEARS TO BE APPROPRIATE. THE INCOME FROM COCONUT AFTER ADOPTING RS.12/- PER NUT IS COMPUTED AT RS.7,92,000/- (220 X 300 X 12). THE EXCESS INCOME DECLARED OF RS.5,28,000/- IS TREATED AS INCOME FROM OTHER SOURCES.' 12. SIMILARLY THE AO ARRIVED AT THE INCOME FROM GIN GER AS FOLLOWS:- FROM THE ABOVE DATA IT CAN BE SEEN THAT THE MAXIMUM PRICE OF GINGER WAS RS.2000/- PER QUINTAL O N 21/6/2014. THE RATE PER KG WORKS OUT TO RS.20/-. AF TER CONSIDERING THE ASSESSEE'S CLAIM THAT YIELD OF GING ER WAS RS.97500 KGS., THE INCOME WORKS OUT TO RS.19,50,000 /-. THE EXCESS INCOME CLAIMED BY THE ASSESSEE OF RS.9,75,000/- IS TREATED AS INCOME FROM OTHER SOURC ES. IN THE LIGHT OF THE ABOVE DISCUSSIONS, THE INCOME FROM AGRICULTURE CLAIMED BY THE ASSESSEE IS FOUND T O BE EXCESSIVE AND THE GROSS TOTAL AGRICULTURAL INCOME OF THE ASSESSEE IS RE -WORKED AS UNDER: ITA NO.3294/B/18 7 13. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO. AGGR IEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS FAILED PRESENT APPEAL BEFORE THE TRIBUNAL. 14. I HAVE HEARD THE RIVAL SUBMISSIONS. THE ISSUES THAT ARISE FOR CONSIDERATION ARE WITH REGARD TO THE QUANTUM OF AGR ICULTURAL INCOME EARNED BY THE ASSESSEE AND AS TO WHETHER THE ASSES SEE GROWN BANANA CROP DURING THE RELEVANT PROVISION YEAR. THERE AP PEARS TO BE CONTRADICTORY CERTIFICATES OF V.A.O. ON THE KIND OF CROP GROWN BY THE ASSESSEE ON THE LAND OWNED BY THE ASSESSEE. WHILE IN THE CERTIFICATE PRODUCED BY THE ASSESSEE, BANANA CROP IS STATED TO HAVE BEEN GROWN BY THE ASSESSEE, WHILE IN THE CERTIFICATE GIVEN TO THE AO, BANANA CROP IS NOT FOUND TO HAVE BEEN GROWN BY THE ASSESSEE. IN THE S UBMISSIONS BEFORE THE CIT(A), THE ASSESSEE HAD REQUESTED FOR AN OPPORTUNI TY OF CROSS EXAMINING THE INSPECTOR WITH REGARD TO THE BASIS ON WHICH HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT GROWN BANANA CROP. SUCH AN OPPORTUNITY WAS NEITHER GIVEN BY THE AO NOR THE CIT(A). APART FROM THE ABOVE, THE ASSESSEE HAS FILED AN AFFIDAVIT BEFORE THE TRIBUNAL , COPIES OF WHICH IS PLACED AT PAGE 40 TO 42 OF ASSESSEES PAPER BOOK. IN THE SAID AFFIDAVIT, THE ASSESSEE HAS GIVEN A DETAILS OF THE PERSONS TO WHOM HE HAS SOLD HIS AGRICULTURAL PRODUCE AS FOLLOWS:- ITA NO.3294/B/18 8 4. I HAVE SOLD THE AGRICULTURAL PRODUCE GROWN IN M Y LAND TO THE BUYERS WHO APPROACH ME AT MY FARM. EVEN WHEN THE CROPS ARE READY FOR HARVEST, THEY APPROACH ME F OR BUYING THE CROPS AT A PARTICULAR RATE DEPENDING UPO N THE NATURE OF CROP, WEIGHT, QUALITY, MARKET RATE ETC., THE BUYERS ENGAGE LABOURERS FOR HARVESTING. THEY BEAR T HE EXPENSES OF LOADING AND UNLOADING. THEY TRANSPORT T HE PRODUCE AT THEIR OWN COST. I WILL BE PAID CASH BEFO RE HARVESTING. I HAVE NOT TAKEN MY PRODUCE TO ANY OF T HE APMC YARD. I, THEREFORE, DO NOT HAVE ANY RECORD FOR HAVING SOLD AND REALISING THE SALE PROCEEDS FOR THE AGRICULTURAL PRODUCE. 5. I PRODUCED ABOUT 42,000 KGS., OF BANANA FROM 300 0 BANANA PLANTS AND SOLD THE SAME AT RS.40/- PER KG., TO ONE SRI PRAKASH KUMAR, ALPHONSO NAGAR, CHANNARAYAPATNA. 6. I PRODUCED ABOUT 66,000 PIECES OF COCONUT FROM 2 20 COCONUT TREES AND SOLD THE SAME AT RS.20/- PER PIEC E TO ONE SRI SHANKAR, HONNASHETTYHALLI, CHANNARAYAPATNA TALUK. 7. I PRODUCED ABOUT 97,500 KGS., OF GINGER AND SOLD THE SAME AT THE RATE OF RS.30 PER KG., TO ONE SRI M URALI, A KATENAHALLI, CHANNARAYAPATNA TALUK AND ONE SRI AJIT H GOWDA, SASALUPURA, CHANNARAYANAPATNA TALUK. 15. IT IS ALSO BEEN PLEADED BEFORE ME THAT EVEN ASS UMING THAT THE AGRICULTURAL INCOME DECLARED BY AN ASSESSEE IS DISB ELIEVED NO ADDITION COULD BE MADE U/S 69 OR 69A OR 69B OF THE ACT UNLES S THE AGRICULTURAL INCOME IS CLAIMED AS A SOURCE FOR EXPLAINING ANY IN VESTMENTS. IN THIS REGARD, THE LD COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1) KAMAL KISHORE CHANDAK VS. ITO, 103 TTJ 843 (200 6) 2) PANNALAL HOLANI VS. ITO, ITA (2009) 123 TTJ 142 3) KC CHOUDARY VS. ITO, (1984) 03 CCH 115 4) RAO RAVI KUMAR VS. DCIT, (2013) 35 CCH 386 ITA NO.3294/B/18 9 16. THE LD DR PLACED STRONG RELIANCE ON THE ORDERS OF THE REVENUE AUTHORITIES. 17. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I AM OF THE VIEW THAT ALL THE ASPECTS POINTED OUT BY THE LD COUNSEL FOR THE ASSESSEE REQUIRES FRESH EXAMINATION BY THE AO BEFORE COMING TO THE CONCLUSI ON THAT THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE TO THE EXTENT DISBELIEVED HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SO URCES. THE FIRST ASPECT WHICH NEEDS TO BE ASCERTAINED IS THE AGRICUL TURAL HOLDING AND NATURE OF CROPS GROWN BY THE ASSESSEE. FOR THIS PU RPOSE, THE CONTRADICTORY CERTIFICATES ISSUED BY THE V.A NEEDS TO BE CLARIFIED BY EXAMINING THE V.A., IF THE AO SO DESIRES. THE INSP ECTOR HAS ALSO TO BE EXAMINED ON HIS REPORT BECAUSE THE INSPECTION WAS D ONE AT A LATER POINT OF TIME AND THE BASIS ON WHICH INSPECTOR CAME TO THE C ONCLUSION REGARDING THE CROPS GROWN BY THE ASSESSEE HAS TO BE EXPLAINED AND IN THIS REGARD ASSESSEE SHOULD BE AFFORDED AN OPPORTUNITY OF CROSS EXAMINATION. THE ASSESSEE SHOULD ALSO BE PERMITTED TO PROVE THE SALE VALUE OF HIS PRODUCE AND IN THIS REGARD, THE ASSESSEE SHOULD BE PERMITTE D TO PRODUCE THE AFFIDAVITS FROM THE PURCHASES OF AGRICULTURAL PRODU CES. THE AO ON CLARIFICATION ON ALL THE ABOVE ASPECTS SHOULD TAKE A VIEW ON THE QUANTUM OF AGRICULTURAL INCOME DECLARED BY THE ASSESSEE. THER EAFTER, THE AO IS ALSO REQUIRED TO EXAMINE WHETHER AN ADDITION TO THE EXTE NT OF SHORT FALL, IF ANY, IN THE QUANTUM OF AGRICULTURAL INCOME SHOULD BE MAD E TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE DEEMING PROVISIONS OF THE ACT, IN THE LIGHT OF DECISIONS OF TRIBUNAL CITED BEFORE ME. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ASS ESSEE. APPEAL OF THE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.3294/B/18 10 18. IN THE RESULT, APPEAL OF THE ASSESSEES IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2019 . SD/- (N.V VASUDEVAN) VICE PRESIDENT BANGALORE DATED : 11/1/2019 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE. ITA NO.3294/B/18 11 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S . . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..