Shri Dhruv Dipakbhai Panchal, Ahmedabad V. The Income Tax Officer, Ward-5(2)(2), Ahmedabad

ITA 3592/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7290 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 22-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Initiation of penalty proceedings; Speculation loss; Corroborative evidences
• Section: 271(1)(c); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER DHRUV DIPAKBHAI PANCHAL 402 - 403, SHASHWAT COMPLEX, OPP. GUJARAT COLLEGE, ELLISBRIDGE, AHMEDABAD PAN: AQPPP9919E (APPELLANT) VS THE IT O , WARD - 5 ( 2)(2 ) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI L.P. JAIN , SR. D . R . ASSESSEE BY: MS. URVASHI SHODHAN , A.R. DATE OF HEARING : 08 - 07 - 2 019 DATE OF PRONOUNCEMENT : 15 - 07 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMB ER : - THIS ASSESSEE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A), AHMEDABAD - 5 DATED 08 - 10 - 2 015 , IN PROCEEDINGS UNDER SECTION 1 4 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF AO BY TREATING AGRICULTURE INCOME OF RS. 9, 79, 490/ - AS INCOME FROM UNDISCLOSED SOURCE IGNORING VARIOUS EVIDENCES SUBMITTED BY THE APPELLANT SOLELY RELYING ON THE DECISION OF HON'BLE I TAT IGNORING FACTUAL ASPECTS OF APPELLANT'S CASE. LD. CIT (A) OUGHT NOT TO HAVE TREATED AGRICULTURAL INCOME AS UNDISCLOSED INCOME CONSIDERING VARIOUS EVIDENCES SUBMITTED BY THE APPELLANT. IT BE SO HELD NOW. I T A NO . 3592 / A HD/20 15 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 3 592 /AHD/20 15 A.Y. 2011 - 12 PAGE NO DHRUV DIPAKBHAI PANCHAL VS. IT O 2 2. LD. CIT (A) ERRED IN LAW AND ON FACTS IN GIVING DIRECTION TO AO TO TREAT SPECULATION LOSS AS BUSINESS LOSS AFTER VERIFYING CONDITIONS MENTIONED IN SECTION 43(5)(D) OF THE ACT IGNORING FACT THAT RELEVANT RECORDS WERE DULY SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. LD. CIT (A) OUGHT TO HAVE ALLOWED SPECULATION LOSS AS BUSINESS LOSS AS RELEVANT RECORDS WERE ALREADY BEFORE HIM. IT BE SO HELD NOW. 3. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS. 1, 80, 000/ - OF HOUSEHOLD EXPENSES ON ESTIMATE BASIS IGNORING SUBMI SSIONS OF THE APPELLANT. LD. CIT (A) OUGHT NOT TO HAVE CONFIRMED ESTIMATED ADDITION AS APPELLANT HAS DEMONSTRATED SUFFICIENT HOUSEHOLD WITHDRAWALS FOR FAMILY AS A WHOLE. IT BE SO HELD NOW. 4. LEVY OF INTEREST U/S 234B & 234D OF THE ACT IS UNJUSTIFIED . 5. INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS UNJUSTIFIED. 3 . THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 1 , 40 , 030/ - WAS FILED ON 28 TH SEP, 2011. THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 6 TH AUGUST, 2012. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, ON VERIFICATION OF COMPUTATION OF THE I NCOME, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS. 26 , 67 , 129/ - CLAIMED AS EXEMPT FR OM TAX. HOWEVER, HE HAS NOTICED THAT ASSESSE E HAS CLAIMED ONLY TOTAL EXPENSES OF RS. 1 , 45 , 000/ - INCURRED TOWARDS EARNING AGRICULTURAL INCOME OF RS. 28 , 12 , 729/ - . THE ASSESSEE EXPLAINED THAT HE WAS HAVING ARRANGEMENT OF BHAGIYA BETWEEN ASSESSEE AND SHRI THAKKAR JAGDISH NATWARLAL RESIDING AT DHOLK A . THE ASSESSEE HAS FILED NOTARIZED DECLARATION OF THIS AGREEMENT OF THE ABOVE CITED UNDERSTANDING D A TED 26 TH MARCH, 2014. THE ASSESSEE HAS STATED THAT HE HAS GIVEN THE AGRICULTURAL LAND TO THE AFORESAID PERSON FOR CULTIV ATION AND AFTER DEDUCTING THE SHARE OF AGRICULTURAL PROCEED S THE REMAI NI NG PROCEED S OF AGRICULTURE WAS TAKEN AS ASSESSEE S SHARE. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND H E WAS OF THE VIEW THAT THE RATIO OF AGR ICULTURAL INCOME AND EXPENDITURE SHOULD BE IN T H E RATIO 6 0 TO 40%. THE ASSESSING OFFICER HA S ALSO QUOTED THE DECISION OF IT AT HOWEVER HE COULD NOT MADE AVAILABLE ITS COPY AS ASKED BY THE ASSES S EE, THEREFORE, THE DIFFERENCE OF RS. 9 , 79 , 490/ - WAS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCE. I.T.A NO. 3 592 /AHD/20 15 A.Y. 2011 - 12 PAGE NO DHRUV DIPAKBHAI PANCHAL VS. IT O 3 4. THE AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK COMPRISING DECLARATION OF CULTIVATOR , COPY OF P & L ACCOUNT OF DEVDEEP FARM AND BILLS/LEDGER OF AGRICULTURAL PROCEEDS, DETAIL OF AGRICULTURAL LAND HOLDING AND DETAI L OF SUBMISSIONS MADE BEFOR E THE ASSESSING OFFICER AND LD. CIT(A). THE ASSESSING OFFICER WAS OF THE VIEW THAT RATIO OF AGRICULTURE INCOME TO EXPENDITURE SHOULD BE 60 TO 40% THEREFORE HE HAS MADE AN ADDITION OF RS. 9 , 79 , 490/ - AS INCOME FROM UNDISCLOSED SOURCE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IT IS NOTI CED THAT THERE WAS AN ARRANGEMENT WITH SHARER WHO HAD LOOKED AFTER THE AGRICULTURAL ACTIVITY OF THE ASSESSEE AS PER ARRANGEM ENT. T HE SHARER WAS ALLOWED TO TAKE AGRICULTURAL PROCEED S TO THE EXTENT OF 35%. IN VIEW OF THE ABOVE FACT, THE ASSESSEE HAS SUBMITTED THAT THE TOTAL EXPENDITURE INCURRED TOWARDS AGRICULTURAL WAS WORKED OUT TO 40% OF AGRICULTURAL INCOME AFTER CONSIDERING THE 3.5% AGRICULTURAL PROCEEDS TAKEN BY THE SHARER. IT IS FURTHER SUBMITTED THAT ASSESSEE HAD V OLUNTARILY INCURRED EXPENSES OF RS. 1 , 45 , 600/ - TOWARDS FERTILIZER , PESTICIDES, LABOUR, SEEDS, PLUGGING, DIESEL WHICH WORKED TO BE 5.17% OF AGRICULTURE INCOME OF THE ASSESSEE AFTER INCLUDING 35% OF THE AGRICULTURE PROCEEDS T A KEN BY THE SHARER. THE TOTAL EX PENSES CLAIMED BY THE ASSESEE WORKED TO 40.17% AGRICUL TURAL INCOME. THE ASSESSEE HAS ALSO SUBMITTED THE COPY OF ARRANGEMENT WITH THE CULTIVATOR (SHARER) WHO WAS LOOKING AFTER THE AGRICULTURE ACTIVITIES AND HE WAS ALLOWED TO TAKE AGRICULTUR AL PRODUCE TO TH E EXTENT OF 35% . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ALSO SUBMITTED THE DETAIL AND COPIES OF BILL OF I.T.A NO. 3 592 /AHD/20 15 A.Y. 2011 - 12 PAGE NO DHRUV DIPAKBHAI PANCHAL VS. IT O 4 SALE OF AGRICULTURAL PRODUCE , COPY OF P & L ACCOUNT OF DEVDEEP FARM PROPRIETOR DHRUV PANCHAL FARM OF THE SHARE R PARTY ETC. LOO KING TO THE FACTS AND MATERIAL ON RECORD, WE H AVE OBSERVE THAT ASSESSING OFFICER HAS DETERMINED THE QUANTUM OF AGRICULTURE EXPENSES ON ASSUMPTION BASIS WITHOUT CONTRAVENED THE RELEVANT MATERIAL FURNISHED BY THE ASSESSEE AND WITHOUT DISPROVING THE GENUINE NESS OF ARRANGEMENT MADE BY THE ASSESSEE WITH THE SHARER SHRI THAKKAR JAGISH NATWALAL. A FTER CONSIDERING THE ABOVE FACTS AND MATERIAL ON RECORD, W E DO NOT JUSTIFY THE DECISION OF LD. CIT(A). THEREFORE, THE APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOW ED. 6. GROUND NO . 2 REGARDING DIRECTING THE ASSESSING OFFICER TO VERIFY THE CONTRACT NOTES FOR ALLO WING LOSS ES SUFFERED IN TRADING IN DERIVATIVES IS NOT PRESSED, THEREFORE, THE SAME STANDS DISMISSED. GROUND NO. 3 REGARDING ADDITION OF RS. 1,80,00 0/ - OF HOUSEHOLD EXPENSES 7. D URING THE COURSE OF ASSESSMENT , THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS SHOWN TOTAL WITHDRAWAL OF RS. 12,500/ - ONLY WHICH WAS CONSIDERED FOR MAKING A PART OF LIC PREMIUM. THE ASSESSING OFFICER HAS COMPUTE D HOUSEHOLD EXPENSES @ 15,000/ - PER MONTH AFTER TAKING INTO CONSIDERATION THAT THERE WERE FOUR MEMBERS IN TH E FAMILY WITH PARENTS OF THE AS SESSEE. ACCORDINGLY, AN AMOUNT OF RS. 1,80,000/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF LOW HOUS EHOLD WITHDRAWAL. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE ON THIS ISSUE. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . IT IS NOTICED THAT ASSESSEE HAS FAILED TO SUBSTANTIATE WITH I.T.A NO. 3 592 /AHD/20 15 A.Y. 2011 - 12 PAGE NO DHRUV DIPAKBHAI PANCHAL VS. IT O 5 SUPPORTING EVIDENCES FOR SHOWING MEAGER HOUSEHOLD WITHDRAWAL. THE ASSESSEE HAS ALSO FAILED TO PROVE HIS SUBMISSION THAT HOUSEHOLD EXPENSES WERE BORN BY THE PARENTS WITH RELEVANT SUPPORTING MATERIALS. IN THE LIGHT OF THE ABOVE FACTS AND MATERIAL ON RECORD , WE ARE O F THE VIEW THAT IT WILL BE REASONABLE TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF LOW HOUSEHOLD WITHDRA WAL TO THE EXTENT OF R S. 1,20,000/ - AS AGAINST RS. 1,80,000/ - SUSTAINED BY THE CIT(A). T HEREFORE, THE APPEAL OF THE ASSESSE IS PARTLY ALLOWED. 9. IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 15 - 07 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 15 /07 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,