Shri Vinod Purohit, Jodhpur V. DCIT, Central Circle-1, Jodhpur

ITA 358/JODH/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3509 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 68; 143(3); 142(1); 133(6); 143(1); 143(2); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 Vinod Purohit 112, Abhay Garh Scheme Opp Central School, Ratanada, Jodhpur [PAN: AGSPP 8664 M] (Appellant) Vs. DCIT, Central Circle-01, Jodhpur (Respondent) Appellant by Sh. Rajendra Jain (Adv.) & Smt. Raksha Birla (CA) Respondent by Ms Nidhi Nair, Sr. DR Date of Hearing 30.01.2024 Date of Pronouncement 07.03.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the Commissioner of Income Tax (Appeals) Jaipur-05 dated 31/08/2023 [here in after ‘CIT(A)’ ] for assessment year 2017-18 which in turn arise from the order dated 27.12.2019 passed under section 143(3) of the Income Tax Act, by DCIT, Central Circle-01, Jodhpur . I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 2 2. In this appeal, the assessee has raised following grounds: - “1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in upholding the order passed by ld. AO. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in relying on inadmissible evidence or material while upholding the addition made by the Ld. AO. 3. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in upholding the income from agriculture operation as unexplained cash credit u/s 68 of the Act particularly when the assessee has discharged his burden as per provisions of the law. 4. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in not considering the submission and documentary evidences in right perspective and judicious manner which resultant unnecessary harassment to the assessee. 5. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in sustaining addition of Rs. 64,49,063/- in respect of income from agriculture as income from unexplained cash credit u/s 68 of the Act. 6. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in shown disregarding to the authoritative pronouncement of Hon’ble Courts and Hon’ble Tribunals and a contemptuous act on his part. 7. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 8. The petitioner prays for justice & relief.” 3. Succinctly, the fact as culled out from the records is that the assessee is an individual and is engaged in the business of export of handicraft and other items and doing business of real estate. The assessee has declared the agriculture income in the e-filed return for the AY 2017-18. For the year under consideration assessee has filed the I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 3 ITR declaring total income at Rs.63,65,940/- on 01/11/2017 and the same was processed u/s 143(1) of the Income Tax Act, 1961.The case was selected for ‘Limited Scrutiny under CASS’. Accordingly, notice u/s 143(2) of the Income Tax Act, 1961 dated 17/08/2018 was issued and duly served through ITBA. Subsequently, notice u/s 142(1) of the Income Tax Act, 1961 along with questionnaire was also issued online on 25/06/2019. The case of assessee was selected for limited scrutiny and accordingly the ld. AO had issued the notice u/s 143(2) and notice u/s 142(1) along with query letter to the assessee. The ld. AO had passed the assessment order u/s 143(3) and assessed the total income of Rs. 1,28,15,003/- by making addition of Rs. 64,49,063/- by holding that the agriculture receipt declared by assessee as unexplained cash credit u/s 68 of the Act. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 5.2 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- 1. The appellant had shown agriculture receipt of Rs 64,49,063/-. The appellant had stated that this receipt was from sale of "Guar" of 1904.65 quintals cultivated in 601 bigha agriculture land. The appellant had claimed I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 4 that the Guar seeds was sold to M/s Rama Trading Company, H-16, Anaj mandi, Bhagat Kothi, Jodhpur. 2. Girdhawari records submitted by the appellant had shown Bajra cultivation on 400 Bigha land and Guar cultivation on 100 Bigha land during the year under consideration. The details are contradictory because appellant had shown cultivation of Guar only. 3. To verify the claim of the appellant, the AO had issued notice u/s 133(6) to M/s Rama Trading Co, Prop Mrs Rami Devi Bhattar. An inspector had done on-spot verification who gathered that M/s Rama trading Company had never operated or conducted business from the given address H-16, Anaj mandi, Bhagat Kothi, Jodhpur. On that address there was some other shop M/s Malvi Trading Co. Prop Sh Narayan Ram who was running his business since FY 2011-12. As per PAN data base the address of M/s Rama Trading Company was found as H-17, Anaj mandi, Bhagat Kothi, Jodhpur. This address was also fake as this premise was occupied by Sh Kishan Tiwari Prop Krishna Trading Company. From general inquiry, it was gathered that M/s Rama Trading Co, Prop Mrs Rami Devi Bhattar was not conducting any business from Krishi Upaj Mandi, Bhagat ki kothi, Jodhpur. Thus, AO had conducted field inquiry before reaching to conclusion that the agriculture receipt is not genuine. 4. As per the consignment bill for receipt of agriculture receipt under question, payment of 1% "Aadhat" was made by the appellant to M/s Rama Trading Company and by M/s Rama trading Company to the Krishi Upaj Mandi Samiti (Anaj), Bhagat ki kothi, Jodhpur. The appellant had also claimed that "Aadhat" is depends on the quality of goods and as the quality of seed sold by the appellant was very good therefore Aadhat was paid at @ 1%. To verify this fact, the AO had issued 133(6) notices to "The Secretary, Krishi Upaj Mandi Samiti, Bhagat ki kothi, Jodhpur" to provide the rate of Aadhat fixed by them on "Guar" seed purchased during the year by the Samiti. As per the reply received from the Secretary, it was informed that the rate of "Aadhat" for FY 2016-17 on trading of agriculture seed was fixed at 2% by the Directorate of Agriculture Marketing. It was further informed that as per their office records, there was no data of "Addhat" payment by M/s Rama Trading Company on purchase of Guar seed during FY 2016-17. The "Aaadhat" payment pertains to FY 2016-17 had been shown payable in appellant's books and till the passing of assessment order till 2019 the same had not paid. Further till passing this Appeal order also. the appellant had not furnished the evidence for payment of this "Aadhat". It is a payment which is to be made to the Government and being Govt. dues, the appellant cannot hold the same for so long. It is therefore very apparent that no purchase of Guar seed was made by M/s I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 5 Rama Trading Company from the appellant and the receipt received from the M/s Rama Trading Company is a fictitious transaction. 5 During the course of assessment proceeding, the AO had also conducted field inquiries on the agriculture farm of the appellant located at Village Tanot Basti Tehsil Baap, Jodhpur. The inspector of AO's office had done on-spot verification and gathered the following facts- 1. No fencing on the land. 2. No structure for Storage of seed crop, tools, other agriculture implements or for stay of labour to look after the farm 3. No tube well or any source of irrigation on land 4. Major portion of land was topographically uneven, wild grass & plants 5. Top layer for major portion of land was embedded with rocky stones and apparently showing that the land has not been tilled for a long time 6. Such dry and rocky land cannot be cultivated without use of machinery tractor etc. however no presence of such machinery on land. 7. On enquiring from neighbouring farmers they stated that they have not seen cultivation on the major portion of land past 4-5 years. The appellant is not able to submit any argument or any supportive evidence to negate the above facts gathered during on-spot verification neither at assessment stage nor at appeal stage. The AO had proved that the said land is dry and barren and cannot said to be fertile from any perspective. There are no natural sources of irrigation. There was no tube well or any source of artificial irrigation on the said land. The above pictures of land and evidences collected during assessment stage are clearly showing that there was no agriculture activity on the land. 6. The AO had also collected evidences from "Google Coordinates" of the said land. Based upon the location Coordinates, a historical imagery of the said land was prepared for FY 2016-17. On perusal of the same; no vegetation growth was visible on the said piece of land except some scrub vegetation and wild outgrowth. Further on perusal of historical imagery, there is no change in the landscape topography like land surface, soil texture, vegetation since 2015 till 2017, whereas in the pictures the adjacent farm is seen to be cultivated in September 2016 & February 2017. The images captured from the Google Erath historically imagery on different dates are self sufficient evidences to show that there has been no cultivation on the said land there is no agriculture activities on the land during F.Y 2016- 17. The appellant had failed to furnish any supporting documents and argument contrary to the findings of the AO at the appeal stage. I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 6 7. The Appellant had claimed that the Patwari has issued certificate with respect to Guar Growth. The Girdhawari report furnished by the appellant during assessment stage and the Girdhawari report obtained by the AO from Tehsildar Office through issuing notice u/s 133(6) are different. As per the copy of Girdhawari report furnished by the appellant the Guar cultivation is noted in 100 bigha and bajra in 400 bigha of land. Whereas the as per the Girdhawari obtained from Tehsildar office, Guar cultivation is noted in 150 bigha and bajra in 200 bigha. Thus there are two Girdhawari for the same land for the same time period. Therefore the Patwari report is not reliable and the argument taken by the appellant of having Patwari report is not tenable. 8. The appellant had claimed that the land is irrigated. The AO had collected information from Tehsildar office, Tehsil Baap that the land under question does not have any source of irrigation. Thus, the argument put forth by the appellant is contrary to the above facts and not tenable. 9. Further, The AO had also collected information from Tehsildar office, Tehsil Baap that 5 quintal Guar is grown in 2.5 bigha of land. The appellant had claimed for sale of 1904.65 quintal of Guar. Therefore by going this, it requires minimum 1000 bigha of land. As per the Girdhawari report Guar is shown to be grown in 150 bigha of land only. The appellant had failed to furnish any supporting documents and argument contrary to the above findings of the AO at the appeal stage. 10. The appellant had not furnished any details of expenditure of Rs 8 26 017/. incurred in cash on account of wages purchase of fertilizer seeds etc neither at assessment stage nor at appellate stage. 11. The appellant had claimed that the transaction of receipt is through banking channel. There are so many judgements of higher appellant authorities that merely payment received from banking channel does not make the transaction genuine. Therefore the argument put forth by the appellant is not acceptable. Considering the above findings and circumstances the addition made by the AO of Rs 64,49,063 u/s 68 r.w.s. 115BBE of the Income tax Act is hereby confirmed. All grounds of appeal are hereby dismissed.” 5. As the appeal of the assessee was dismissed by the ld. CIT(A). The assessee preferred the present appeal on the grounds as stated I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 7 here in above in para 2. To support the various grounds the ld. AR of the assessee has relied upon the written submission filed before the ld. CIT(A) and has also filed a paper book containing the following evidences: S. No. Particulars Page No. 1. Copy of written submission before CIT(A). 1 - 2. Copy of reply furnished before the ld AO during the assessment proceeding. 17 - 30 3. Copy of Girdawari report. 31 - 32 4. Copy of confirmation of Shri Rama Trading Company. 33 5. Copy of affidavits of farmers. 34 - 36 6. Copy of assessment order for A.Y. 2018-19. 37 - 38 7. Copy of decision of Hon'ble ITAT Jodhpur Bench in the case of ACIT, Central Circle-2 v/s Bhanwar Singh Rathore in ITA No. 347/JODH/2019 dt. 21/12/2020. 39 - 51 8. Copy of decision of Hon'ble ITAT Chennai Bench in the case of Smt. Annakkalanjiam Mathivanan v/s ACIT in ITA No. 2451/CHNY/2018 dt. 22/01/2019. 52 - 58 9. Copy of decision of Hon'ble ITAT Jaipur Bench in the case of Smt. Laxmi Devi Choudhary v/s ITO, Ward-7(2) in 291/JP/2013 Dt. 16/07/2013. 59 -70 */ 5.1 The ld. AR of the assessee in addition to the above vehemently argued that during the year the assessee declared gross receipts on sale of agricultural produce amounting to Rs. 64,49,063/- and net income of Rs. 56,23,045/- which was received through banking channel and confirmation, ledger account, Khasara Girdavari, affidavit of I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 8 neighbours of such agricultural land etc. was furnished. However, the ld. AO based on hypothetical way and technical objection disallowed the entire gross receipts of Rs. 64,49,063/- as unexplained cash credits u/s. 68 of the Act. The assessee owns 601 Bigha land, the said land is fully irrigated and fertile area and for best crop of Guar, Bajara etc. The assessee has regularly carried out agricultural operation on such agricultural land since last several years. Not only that in the subsequent assessment year i.e. A. Y. 2018-19 the income of the assessee at Rs. 57,59,500/- accepted in the scrutiny assessment order passed u/s. 143(3) of the Act. Copy of the order filed at page 37-38 of the paper book filed. Considering the detailed submission made ld. AR of the assessee submitted that the finding of the lower authority is unsustainable. 6. The ld DR is heard who has relied on the findings of the lower authorities and submitted that the addition is made based on the spot verification carried out by the inspector and there is a difference in the agricultural produced shown by the assessee and certified by the patvari. Letter was issued u/s. 133(6) to the seller of the agricultural produce but the same was not found at the given address. Even the enquiry were conducted at the Mandi. The report of inspector clarify that I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 9 the land is not irrigated. The ld. AO used the google coordinate to substantiate further the contention and the same finding is elaborately confirmed by the ld. CIT(A) and therefore, the ld. DR supported the finding recorded in the order of the lower authority. 7. We have heard the rival contentions and perused the material placed on record. The only dispute in this case is that whether the based on the set of evidence placed on record the Gross Agricultural income disclosed by the assessee is liable to be tax as unexplained cash credits or not. The brief fact of the case is that the assessee is an Individual engaged in the business of export of handicraft and other items and business of real estate. The assessee also disclosed agricultural income for rate purpose while filling the return of income. The assessee maintains the day to day books of accounts. The books of accounts so maintained are subject to audit u/s. 44AB of the Act. The assessee while filling the return of income on 01.11.2017 declared the agricultural income of Rs. 56,23,045/- for rate purpose. The ld.AO while passing the order u/s. 143(3) of the Act made an addition of Rs. 64,49,063/- by holding that the agriculture receipt declared by the assessee is unexplained cash credit. The assessee has received the said income through banking channel and confirmation, ledger account, khasra I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 10 girdavari, affidavit of neighbours of such agricultural land was furnished. The assessee is having 601 Bigha of agricultural land at Tanot Basti, Bap. The area in which the assessee having agricultural land is fully irrigated and fertile area and also for best crop of Guar, Bajra etc. This fact is accepted in the subsequent year by the ld. AO and has not disputed the subsequent year agricultural income. The assessee regularly carry out the agricultural operation on his agricultural land and since last several years he is offering the income and the same is not disputed. The assessee cultivated the crop of Guar and such fact also approved by the Revenue Authority i.e. Patwari. The certificate issued by the Patwari available on record. The documentary evidences in respect of sale of crop, receipt of payment etc were furnished before ld AO which is on record. The assessee had also made expenditure of Rs. 8,26,017.50 in respect of wages, purchase of fertilizer, seeds etc. The expenditures incurred by assessee were duly recorded and verifiable from the books of accounts. During the assessment proceedings the assessee has furnished copy of ledger account in respect of sale of agricultural crop to M/s Rama Trading Company before AO, it is also clear that the payment had been received against sale of crops through normal banking channel and thus the transaction in respect of sale of agricultural crop to M/s Rama Trading Company as a normal transaction I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 11 and the payment had been received through banking channel which was reflected in the bank statement of the assessee. Further the ld. AO alleged that the notices issued to M/s Rama Trading Company which was not served and on spot verification the Ward Inspector had found no such business concern was run on such premises. The allegation made by ld AO is apparently unsustainable as the assessee had made such transaction and as per instruction of respective parties on the address given in his official document the assessee had delivered the goods. Further the complete details, particulars of M/s Rama Trading Company i.e. PAN Number, TIN Number etc were furnished by the assessee before ld AO and also requested to be verified from their assessment record. The ld AO had also made enquiry from the secretary of Anaj Mandi Samiti, Jodhpur and the Secretary has not denied the transaction made by the assessee with Rama Trading Company but has made arbitrary observation that expenditure in respect of Aadat paid by the assessee at the rate of 1% whereas as per Government norms same is 2% and on the basis of such observation the ld AO made an allegation that such transaction was not genuine is totally arbitrarily as the rate of Aadat was depend on the quality of goods as the quality of agricultural crop sold by assessee is very good and therefore the assessee had paid Aadat @ 1% which is reasonable. The ld. AO based on the image of I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 12 Google Earth which is neither certify by any valid & legal certificate nor supported from any legal & valid evidences the same cannot be used an evidence against the assessee and the physical document supported by the bills, delivery of goods, receipt of payment, payment of aadat all these evidence cannot be compared merely on the google records that may be taken afterwards and the same are not of the relevant previous year. The ld. AO made doubt about genuineness of transaction whereas it is admitted fact that the assessee having 601 Bigha agricultural land which was used for agricultural purpose in the area where number of solar plant, wind mills and other project by the Government or Semi Government organization or private companies had been installed for power generation through sun light & air. If the assessee had given his agricultural land to such companies who have installed such project in the area where agricultural land of the assessee was situated the assessee might have earned lease rent more than 1 Crore yearly in such land. The intention of the assessee when purchased the land was very much clear to cultivate agricultural produce and accordingly he had employed the local labour, staff who have purchased the seeds and fertilizer on behalf of assessee and carried out agricultural operation on the land of the assessee. Even the Revenue Authority had also certified that the assessee had cultivated the agricultural crop in such land and I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 13 these facts also verified by ld AO and no adverse material had been found. That in (Prior years) A.Y. 2015-16 and 2016-17, the assessee had also made claim of agriculture income on such land which was allowed u/s 143(1)of the Act. For subsequent year i.e. A.Y. 2018-19, the ld AO while passing the assessment order u/s 143(3) had allowed the claim of agriculture income for an amount of Rs. 57,59,500/-. That the ld AO had made further relied on report & photograph of inspector and also information gathered from the Tehsildar Office that around 5 quintal Guar is grown in around 1 Acre land. In this regards the ld AO had not provided any evidence or information to assessee during the assessment proceedings, the direct documentary evidence, in the shape of khasra Gidavari, land holding, confirmation letter affidavits, etc, if pitted against the mere oral evidence, the documentary evidence would certainly prevail. The sale proceeds of sale of crop was duly recorded in the books of accounts and supported from the bills & vouchers. The payment made by the assessee in respect of such sale of agricultural crops through banking channel and the land revenue authority had also certified that the assessee had carried out agricultural operation and cultivated the product of Guar on such agricultural land which was neither disputed by Ld AO nor any material contrary to the certificate of revenue authority. Merely the respective party had not been trace out on I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 14 the address as provided by him to the assessee which was provided before ld AO, the ld AO cannot be treated entire transaction as unexplained u/s 68 whereas the other information i.e. income tax assessment, TIN Number etc on record. Further the transaction was duly recorded by M/s Rama Trading Company and also confirmed such transaction by M/s Rama Trading Company and as such without considering the legal & factual submission and documentary evidences placed on record the ld AO made such arbitrarily allegation is totally unwarranted and also contrary to the principal of natural justice. That the area of land, the nature of land, the nature of crop cultivated clearly proves the claim of the assessee of earning the income from agricultural. The claim of income from agricultural is not made for the first time. The income from this source is being shown year after year and as such the rejection of claim of agricultural income is totally erroneous and the addition so made requires to be deleted. Since the revenue has already considered the similar source of income u/s 143(3) of the Act for the subsequent year for an amount of Rs. 57,59,500/- knowing that the in the previous year the ld. AO has observed the adverse remark on the income but there is no cognisance of the said order is recorded and the income is accepted in the subsequent year. I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 15 8. Though the principles of res-djudicata does not apply to income tax proceeding, yet one cannot brush aside the principles of consistency which require that when the facts and circumstances continue to remain same, then there should not be any variation in the treatment from other year. Thus, when the revenue in the subsequent year accepted the claim of agricultural income, respectfully following the ratio decided by the apex court in the case of Radhasoami Satsang vs. CIT (1992) 193 ITR 321 (SC) where in the Hon’ble Apex Court observed as under: “16. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year”. Based on the above discussion and finding so recorded the appeal of the assessee is allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member I.T.A. No. 358/Jodh/2023 Assessment Year: 2017-18 16 Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order