Aditya Kumar Agarwal, Lucknow V. Joint Commissioner of Income Tax, Lucknow

ITA 374/LKW/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4019 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Corroborative evidences
• Section: 143(3); 133(6); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. P . K. BANSAL , ACCOUNTANT MEMBER AND SHRI ABY T VARKEY , JUDICIAL MEMBER ITA NO. 374/LKW/2015 ASSESSMENT YEAR: 2010 - 11 ADITYA KUMAR AGARWAL 13, SHIVAJI MARG LUCKNOW V. THE JOINT CIT RANGE V LUCKNOW T AN /PAN : ACJPA8493Q (APP ELL ANT) (RESPONDENT) ITA NO. 481/LKW/2015 ASSESSMENT YEAR: 2010 - 11 THE DY. CIT RANGE V LUCKNOW V. ADITYA KUMAR AGARWAL 13, SHIVAJI MARG LUCKNOW T AN /PAN : ACJPA8493Q (APP ELL ANT) (RESPONDENT) A SSESSEE BY: SHRI K. R. RASTOGI, C.A. DEPARTMENT BY: SHRI NEEL JAIN, D.R. DATE OF HEARING: 02 06 2016 DATE OF PRONOUNCEMENT: 30 08 2016 PER ABY T VARKEY, J.M : O R D E R THESE ARE CROSS APPEALS PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - II, LUCKNOW DATED 31.3.2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2 . WE TAKE NOTE THAT THE GROUNDS OF APPEAL PREFERRED BY BOTH THE PARTIES RELATE TO AD HOC DISALLOWANCES MADE BY THE ASSESSING OFFICER , FOR WHICH THE LD. CIT(A) HAS GIVEN PARTIAL RELIEF , THEREFORE, THE GROUNDS ARE [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 2 COMMON. THE REVENUE IS AGGRIEVED BY THE PARTIAL RELIEF GIVEN TO CERTAIN DISALLOWANCE S MADE BY THE ASSESSING OFFICER AND THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) FOR NOT GRANTING FULL RELIEF TO THE ASSESSEE. 3 . THE ASSESSEE IS A CONTRACTOR FOR WORK AWARDED BY THE STATE GOVERNMENT FOR STONE CUTTING, POLISHING, FINISHING, MO U LDING, CARVING, ENGRAVING, CARVING AND FIXING BY LABOURS , WHO WERE SPECIALIZED FOR COMPLETING THE WORK OF STATUES, FIXING STATUES, ETC. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,76,89,660/ - . LATER ON THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER RECORDS THAT THE ASSESSEE COMPLIED WITH NOTICES AND PARTICIPATED IN T HE SCRUTIN Y PROCEEDINGS. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE DERIVES INCOME FROM TWO PROPRIETORSHIP CONCERNS, NAMELY M/S LUCKNOW MARBLE INDUSTRIES AND M/S MARBLE ENGRAVERS. THE ASSESSING OFFICER TOOK NOTE THAT M/S LUCKNOW MARBLE INDUSTRIES HAS SHOWN NET PROFIT OF R S.4, 43,50,467/ - AND THAT THIS AMOUNT ALSO INCLUDES INTEREST ON FDRS AMOUNTING TO RS.1,36,18,858/ - . SO IF THE INTEREST ON FDRS IS EXCLUDED, ACCORDING TO THE ASSESSING OFFICER, THE NET PROFIT WILL COME TO ONLY RS.3,07,31,609/ - WHICH GIVES A NET PROFIT RATE OF 5.54% ON THE TOTAL CONTRACT RECEIPT OF RS.55,47,08,699/ - . ACCORDING TO THE ASSESSING OFFICER, WHEN THE NET PROFIT OF THE PREVIOUS YEAR IS CONSIDERED ON THE TOTAL TURNOVER OF RS.38,19,02,981/ - , THE ASSESSEE WAS ABLE TO SHOW THE NET PROFIT RATE OF 6.90% . SINCE THERE IS A DECLINE IN THE NET PROFIT IN COMPARISON TO THE LAST YEAR, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN. ACCORDING TO THE ASSESSING OFFICER, THE WORK CARRIED OUT BY THE ASSESSEE IS A SPECIALIZED WORK O F STONE ENGRAVING, SO THE MA RGIN OF PROFIT IN SUCH A CONTRACT WORK MUST BE VERY HIGH IN COMPARISON TO OTHER CONTRACT WORK. THE ASSESSING OFFICER RECORDS THAT DURING HEARING [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 3 VOUCHERS FOR PURCHASE OF MATERIALS WERE PRODUCED AND HAS BEEN VERIFIED BY HIM. HOWEVER, THE VOUCHERS OF EXPE NDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT UNDER DIFFERENT HEADS WERE NOT PRODUCED BEFORE HIM AND THE WAGE - REGISTER IN THE FORM OF MUSTER ROLL WAS ALSO NOT PRODUCED BEFORE HIM . T HE BOOKS OF ACCOUNT , WHICH SHOULD HAVE BEEN MAINTAINED BY THE ASSESSEE , WER E ALSO NOT PRODUCED. ON THE AFORESAID BACKGROUND, THE ASSESSING OFFICER PROCEEDED TO EXAMINE THE EXPENSES CLAIMED BY THE ASSESSEE AND MADE CERTAIN DISALLOWANCES, WHICH IN APPEAL THE CIT(A) GAVE SOME RELIEF. DISSATISFIED BY THE DECISION OF CIT(A), BOTH THE ASSESSEE AND THE DEPARTMENT IS IN CROSS - APPEAL BEFORE US. 4 . GROUND NO.1 IN ASSESSEES APPEAL IS IN RESPECT TO DISALLOWANCES OF VARIOUS EXPENSES UNDER THE HEAD MACHINERY MAINTENANCE, STAFF WELFARE EXPENSES, CARVING & MOULDING CHARGES, CLAMP MAKING CHARGES, O VERTIME EXPENSES, BUSINESS PROMOTION EXPENSES, CARTAGE EXPENSES, CONVEYANCE EXPENSES, CRANE MAINTENANCE EXPENSES, D EEWALI EXPENSES, REPAIRS & MAINTENANCE CHARGES AND VEHICLE RUNNING EXPENSES. 5 . THE DISALLOWANCE S HA VE BEEN MADE BY THE ASSESSING OFFICER MAIN LY ON THE GROUND THAT THE VOUCHERS WERE NOT PRODUCED AND THE EXPENDITURE UNDER THE RESPECTIVE HEADS ARE NOT FULLY VERIFIABLE AND THE PAYMENTS HAVE BEEN MADE IN CASH. IN RESPECT TO OVERTIME EXPENSES, THE ASSESSING OFFICER NOTICES THAT NO REGISTER HAS BEEN MAINTAINED. 6 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO GIVE PARTIAL RELIEF TO THE ASSESSEE BY SUSTAINING 50% OF THE DISALLOWANCES MADE BY THE ASSESSING OFFICER. 7 . THE CHART GIVEN BELOW WILL SHOW THE AMOUNT OF EXPENDITURE CLAIM ED BY THE ASSESSEE WHICH HAS BEEN DISALLOWED BY THE ASSESSING [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 4 OFFICER AND THE PERCENTAGE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A): - SR. NO. EXPENSE HEAD AMOUNT OF EXPENDITURE DISALLOWED BY A. O. PERCENTAGE OF DISALLOWAN CE BY A.O. DISALLOWANCE BY C.I.T. (A) PERCENTAGE OF DISALLOWANCE BY CIT (A) 1 - MACHINERY MAINTENANCE 3622820.00 300000.00 8.00 150000.00 4.00 2 - STAFF WELFARE EXPENSES 2079552.00 200000.00 10.00 100000.00 5.00 3 - CARVING & MOULD ING 1870660.00 300000.00 16.00 150000.00 8.00 4 - CLAMP MAKING CHARGES 3520210.00 700000.00 20.00 350000.00 10.00 5 - OVER TIME EXPENSES 2000000.00 300000.00 15.00 150000.00 8.00 6 - BUSINESS PROMOTION 3402954.00 800000.00 24.00 400000.00 12.00 7 - CARTAGE 1718533.00 200000.00 12.00 100000.00 6.00 8 - CONVEYANCE 1349331.00 300000.00 22.00 150000.00 11.00 9 - CRANE MAINTENANCE 5758554.00 500000.00 9.00 250000.00 4.00 10 - DEEPAWALI FESTIVAL EXP 310550.00 50000.00 16.00 2 5000.00 8.00 11 - REPAIRS AND MAINT. 1121787.00 300000.00 27.00 150000.00 13.00 12 - VEHICLE RUNNING EXP. 1331085.00 200000.00 15.00 100000.00 8.00 4150000.00 2075000.00 8 . AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEF ORE US CONTESTING THE CONFIRMATION OF 50% DISALLOWANCE SUSTAINED BY THE LD. CIT(A) AND THE REVENUE IS AGAINST THE 50% RELIEF GRANTED TO THE ASSESSEE, VIDE GROUND NO.1 OF THEIR RESPECTIVE APPEAL S . 9 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE F IND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE S ON THE GROUND THAT THE ASSESSEE HAS INCURRED EXPENSES BY CASH AS WELL AS THE ASSESSEE WAS NOT ABLE TO PRODUCE FULL Y THE VOUCHERS IN SUPPORT OF EXPENDITURE S HE CLAIMED TO HAVE OCCURRED; AND IN THE CASE O F OVERTIME EXPENSES, THE AO FOUND FAULT WITH THE ASSESSEE FOR NOT MAINTAINING THE DUTY - REGISTER . THE LD. CIT(A) HAS GRANTED 50% RELIEF TO THE ASSESSEE B Y TAKING INTO CONSIDERATION THE CONTENTION O F THE ASSESSEE THAT THE UNIT OF [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 5 PROPRIETORSHIP CONCERN, M/S LUCKNOW MARBLE INDUSTRIES WAS EXECUTING CONTRACT WORK FOR THE GOVERNMENT DEPARTMENT, M/S U.P. RAJKIYA NIRMAN NIGAM (UPRNN) AND THE CONCERN WAS MAINTAINING REGULAR BOOKS OF ACCOUNT ON ITS COMPUTER. THE BOOKS OF ACCOUNT MAINTAINED THROUGH COMPUTER ALONG WI TH SUPPORTING VOUCHERS HAVE BEEN DULY AUDITED BY THE CHARTERED ACCOUNTANT AND AFTER EXAMINING THE RECORDS THEY HAVE SUBMITTED THE AUDIT REPORT IN FORM NO.3CB AND 3CD AND THE RETURN FOR THE INCOME FROM THIS UNIT WAS E - FILED AT AN INCOME OF RS.4,43,50,467/ - AND IT HAS BEEN BROUGHT TO THE KNOWLEDGE OF THE LD. CIT(A) THAT THE COPY OF THE AUDIT REPORT AND AUDITED FINANCIAL STATEMENTS WERE ALL FILED BEFORE THE ASSESSING OFFICER. IT HAS ALSO BEEN BROUGHT TO THE KNOWLEDGE OF THE LD. CIT(A) THAT THE HARD COPY OF TH E LEDGER ACCOUNT, JOURNAL, CASH BOOK AND BILLS & VOUCHERS WERE PRODUCED FOR VERIFICATION OF THE EXPENSES AND THE ENTRIES ARE DULY SHOWN IN THE TRADING AND PROFIT & LOSS ACCOUNT. IN ORDER TO CORROBORATE THAT THESE DOCUMENTS WERE PRODUCED BEFORE THE ASSESSI NG OFFICER, COPY OF THE ORDER SHEET WAS ALSO PRODUCED WHEREIN THE ASSESSING OFFICER HAS RECORDED THAT THE ASSESSEE HAS COMPLIED WITH THE QUERIES AS ASKED FROM THEM. THE LD. A.R. OF THE ASSESSEE POINTED OUT THAT THE PROFIT & LOSS ACCOUNT AND THE BALANCE SH EETS WERE SUBMITTED ALONG WITH THE REPLY TO THE ASSESSING OFFICER AS WELL AS THE RECORDS AS STATED ABOVE HAVE BEEN PRODUCED. THE LD. A.R. OF THE ASSESSEE POINTED OUT THAT THOUGH ALL THE DOCUMENTS, BILLS, VOUCHERS AND AUDITED BOOKS WERE PRODUCED BEFORE THE ASSESSING OFFICER, BUT HE HAS SIMPLY HELD THAT THE ASSESSEE HAS NOT PRODUCED THE VOUCHERS AND THE BOOKS WHICH, ACCORDING TO THE LD. A.R. OF THE ASSESSEE, IS CONTRARY TO THE FACTS AND SO THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO PROD UCE THE VOUCHERS AND BILLS IN RESPECT OF THE EXPENDITURES IS A PERVERSE FINDING. THE LD. A.R. OF THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NISAR BIRI SIKKA [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 6 NO.1 VS. CIT, 41 SITC 125 (ALLD) WHEREIN THE HON'B LE HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL AND IN THAT CASE THE ASSESSEE HAD TO PAY WAGES BY CASH TO THE SPECIALIZED STONE CARVING LABOURS, WHICH WAS DISALLOWED BY THE AO CITING EXCESS CASH PAYMENT WHICH WAS ALLOWED BY THE TRIBUNAL AND THE SAID VIE W OF THE TRIBUNAL HAS BEEN UPHELD BY THE HON'BLE HIGH COURT. ACCORDING TO THE LD. A.R. OF THE ASSESSEE WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OR WITHOUT SATISFYING THE PRE - CONDITIONS LAID IN SECTION 145(3) OF THE ACT AND WITHOUT REJECTING THE BOOKS OF ACCOUNT, AD HOC DISALLOWANCE AS DONE IN THIS CASE WAS NOT WARRANTED AND ACCORDING TO HIM, THOUGH THE LD. CIT(A) APPRECIATED THESE FACTS , HAS RESTRICTED THE D ISALLOWANCE ONLY TO 50% WHICH ALSO , ACCORDING TO THE LD. A.R. OF THE ASSESSEE , IS ARBITRARY AND NO DISALLOWANCE IS WARRANTED IN THE INSTANT CASE. THE LD. D.R., HOWEVER, WAS OF THE OPINION THAT THE LD. CIT(A) SHOULD NOT HAVE DISTURBED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 10 . WE TAKE NOTE THAT THE LD. CIT(A) HAS OBSERVED THAT THOUGH THE ASSES SING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, HOWEVER, MORE OR LESS IT HAS THE COLO U R OF BEST JUDGMENT ASSESSMENT UNDER SECTION 144 OF THE ACT, BECAUSE THE ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCES FOR MAKING THE ADDITION . THE LD. CIT(A) HAS RIGHTLY POINTED OUT THAT THE A SSESSING OFFICER HAS NEITHER POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT NOR HAS CONSIDERED ANY COMPARABLE CASES TO COME TO A CONCLUSION THAT PROFIT MARGIN OF THE ASSESSEE IS LESS . THE LD. CIT(A) HAS APPRECIATED THE FACT THAT THE ASSESSEE HAS PRODUCED ALL THE PRIMARY RECORDS BEFORE THE ASSESSING OFFICER. THE LD. CIT(A) HAS ALSO TAKEN NOTE THAT THE ASSESSEE HAS CO - OPERATED IN THE PROCEEDINGS AND THE LD. CIT(A) HAS ALSO TAKEN NOTE OF THE FACT THAT IN THE PREVIOUS ASSESSMENT YEARS [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 7 FROM 2008 - 09 ONWARDS , THE SCRUTINY ASSESSMENTS HAVE BEEN CARRIED OUT AGAINST THE ASSESSEE UNDER SECTION 143(3) OF THE ACT. THE LD. CIT(A) WAS OF THE OPINION THAT THE DISALLOWANCES MADE BY THE ASSESSEE ARE ON THE HIGHE R SIDE AND TAKING INTO CONSIDERATION THAT THE EXPENDITURE S CLAIMED ARE MAINLY DISBURSED BY CASH AND THE ASSESSEE COULD NOT VOUCH FOR ALL THE EXPENSES BEFORE THE ASSESSING OFFIC ER TO HIS ENTIRE SATISFACTION AND THAT THE ASSESSEE COULD NOT PRODUCE COMPLETE A ND CORRECT DETAILS OF LABOUR EXPENSES AND OTHER EXPENSES WHICH WERE CONSIDERED BY THE ASSESSING O FFICER FOR DISALLOWANCE AND SINCE THERE WAS DECLINE IN THE NET PROFIT MARGIN FROM THE EARLIER YEARS, FOR WHICH THE ASSESSE E HAS NO PLAUSIBLE EXPLANATION, A CCO RDING TO THE LD. CIT(A) IN SUCH A SCENARIO , THE RIGHT COURSE OF ACTION COULD HAVE BEEN THAT THE ASSESSING OFFICER OUGHT TO HAVE REJECTED THE BOOKS OF ACCOUNT AND WENT AHEAD WITH ESTIMATION UNDER SECTION 144 OF THE ACT AND ALSO THE LD. CIT(A) WAS OF THE OPI NION THAT AD HOC DISALLOWANCE WAS ON HIGHER SIDE AND ACCORDINGLY HE RESTRICTED THE DISALLOWANCE OF RS.41,50,000/ - MADE BY THE ASSESSING OFFICER TO RS.20,75,000/ - I.E. 50%. 11 . WE TAKE NOTE THAT IN ASSESSMENT YEAR 2008 - 09 THE AD HOC DISALLOWANCE WAS TO THE TU NE OF RS. 4,05 ,481/ - WHICH IS 0.74% COMPARED WITH THE RETURN OF INCOME. IN ASSESSMENT YEAR 2009 - 10 , THE AD HOC DISALLOWANCE WAS OF RS.5,32,284/ - WHICH I S 1.65% AS COMPARED TO THE RETURN ED INCOME. IN THE YEAR UNDER CONSIDERATION, THE AD HOC DISALLOWANCE WA S TO THE TUNE OF RS.1 ,36,50,000/ - WHICH COMES TO 30.64% ; AND FOR ASSESSMENT YEAR 2011 - 12 , THE AD HOC DISALLOWANCE WAS OF RS.25,06,057/ - AND FOR ASSESSMENT YEAR 2012 - 13 , THE AD HOC DISALLOWANCE WAS TO THE TUNE OF RS.4,98,410/ - WHICH IS 0.88% AND FOR ASSESSM ENT YEAR 2013 - 14 , THE AD HOC DISALLOWANCE WAS OF RS.4,29,254/ - WHICH IS 2.45%. WE TAKE NOTE THAT IN A LL THESE ASSESSMENT YEARS THE [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 8 ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE IS ENGAGED IN THE SAME KIND OF BUSINESS AND WITHOU T BRINGING ANY COMPARABLE CASES AND WITHOUT REJECTING THE BOOKS OF ACCOUNT, THE ESTIMATION MADE ON AD HOC BASIS CANNOT BE COUNTENANCED. IF THERE WERE ANY ITEM - WISE EXPENSES , WHICH COULD NOT HAVE BEEN SUPPORTED BY VOUCHERS, THEN THE ASSESSING OFFICER WAS A T LIBERTY TO DISALLOW THE EXPENSES ITEM - WISE AND OUGHT NOT TO HAVE GONE FOR AD HOC DISALLOWANCES. HOWEVER TAKING INTO CONSIDERATION THE FACT THAT CERTAIN VOUCHERS REGARDING EXPENSES COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER TO HIS SATISFACTION AN D TAKING INTO CONSIDERATION DISALLOWANCES MADE FROM ASSESSMENT YEAR 2008 - 09 TO 2013 - 14, WE WOULD LIKE TO TAKE AN AVERAGE OF AD HOC DISALLOWANCE WHICH COMES TO 3%. BARRING THIS YEAR, WE FIND THAT IN ASSESSMENT YEAR 2008 - 09 ONWARDS THE AD HOC DISALLOWANCES WERE @ 0.74%, 1.65%, 0.57%, 0.88% AND IN ASSESSMENT YEAR 2013 - 14 IT WAS 2.47%. IN SUCH A SCENARIO TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSING OF FICER HAS MADE DISALLOWANCE OF 3 0 .64% IN THIS ASSESSMENT YEAR AND THE LD. CIT(A) HAS RESTRICTED IT TO 4.56%, IT WOULD BE FAIR AND REASONABLE IF WE COULD FIX THE PERCENTAGE OF DISALLOWANCE AT 3% AND WE ORDER ACCORDINGLY . ACCORDINGLY GROUND NO.1 OF THE REVENUE IS DISMISSED AND GROUND NO.1 OF THE ASSESSEE IS PARTLY ALLOWED. 12 . COMING TO GROUND NO.2 AND 2.1 , TH E ASSESSEE HAS ASSAILED THE DECISION OF THE LD. CIT(A) WHEREIN HE HAS CONFIRMED THE ADDITION OF RS.33,81,850/ - BEING THE OUTSTANDING CREDITORS FOR LABOURS AND RS.8,76,941/ - BEING THE OUTSTANDING CREDITORS FOR STONE CUTTING AND POLISHING CHARGES, TOTALING T O RS.42,58,791/ - AS OUTSTANDING LABOUR DUES PAYABLE. [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 9 13 . THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO 200 PERSONS IN THE FIRST GO AND TO 51 PERSONS IN THE SECOND ROUND. OUT OF THE AFORESAID NOTICES UNDER SECTION 133(6) OF THE ACT , T HE ASSESSING OFFICER NOTICED THAT IN RESPECT TO 103 PERSONS , THE NOTICES WERE RETURNED WITH THE POSTAL REMARK THAT EITHER ADDRESS IS INCOMPLETE OR NO SUCH PERSON IS RESIDING ON THE GIVEN ADDRESS. FROM THE AFORESAID LIST , 82 PERSONS WITH RESPECT TO LABOUR CHARGES TOTALING TO RS.33,81,850/ - AND 21 PERSONS WITH RESPECT TO STONE CUTTING AND POLISHING CHARGES PAYABLE AT RS.8,76,941/ - WAS DISALLOWED AND ADDED UNDER SECTION 68 OF THE ACT. THEREAFTER, BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE LABOURS WERE M AINLY ILLITERATE AND ENGAGED AT WORK SITE AS PER WORK ORDER O F UPRNN LTD. AND THE LABOURS HAVE PROVIDED THEIR NAME AND ADDRESSES WHICH WERE RECORDED BY THE ASSESSEE AND THE ASSESSEE AFTER GETTING THEIR SERVICE S DID NOT VERIFY THEIR IDENTITY AS SUCH AND IT WAS CONTENDED BEFORE THE LD. CIT(A) THAT SINCE THE ASSESSING OFFICER HAS ALREADY DISALLOWED LABOUR DUES TO THE TUNE OF RS.75 LAKHS AND RS.10 LAKHS TOWARDS STONE CUTTING AND POLISHING CHARGES, THE ADDITION UNDER SECTION 68 OF THE ACT WAS NOT WARRANTED. 14 . AF TER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) WAS OF THE OPINION THAT SINCE THE ASSESSING OFFICER HAS VERIFIED CERTAIN CREDITORS OUT OF LABOUR CHARGES AND SINCE HE HAS ADDED THE ENTIRE AMOUNT OF UNVERIFIED CREDITS OUTSTANDING ON LABO UR CHARGES AND STONE CUTTING & JOINING CHARGES, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 42,58,791/ - . 15 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE HAS CLAIMED THAT THE OUTSTANDING LABOUR DUES AND STONE CUTTING AND POLISHING CHARGES PAYABLE WAS OF AN AMOUNT OF RS.42,58,791/ - . THE ASSESSING OFFICER ASKED FOR NAME AND ADDRESSES OF [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 10 THE INDIVIDUALS TO WHOM THE PAYMENTS WERE OUT - STANDING AND TO ASCERTAIN THIS FACT HE ISSUED NOTICE UNDER SECTIO N 133(6) OF THE ACT TO 200 LABOURS AT THE FIRST INSTANCE AND TO 51 LABOURS AFTER SOME TIME. OUT OF THAT NOTICES SENT, 103 NOTICES RETURNED BACK WITH THE POSTAL REMARK THAT NO ONE WAS RESIDING AND IT WAS INCOMPLET E ADDRESS. THEREFORE, WE FIND FROM THIS FA CT ITSELF THAT 148 NOTICES COULD BE SERVED, WHICH MEANS MORE THAN 50% NOTICES COULD BE SERVED ON THE LABOURS TO WHOM THE ASSESSEE HAS TO PAY OUTSTANDING DUES. THEREFORE TAKING INTO CONSIDERATION THE OVERALL FACTS , WHEREIN WE HAVE ALREADY TAKEN NOTE THAT F ROM ASSESSMENT YEAR 2008 - 09 TO 2013 - 14 THE ASSESSMENTS WERE INFACT CARRIED OUT UNDER SECTION 143(3) OF THE ACT AND DIS ALLOWANCES HAVE BEEN VERY LESS WHEN COMPARED TO THIS PARTICULAR ASSESSMENT YEAR, HOWEVER, TAKING INTO CONSIDERATION THAT LESS THAN 50% OF THE NOTICES HAVE BEE N RECEIVED BACK WITHOUT BEING SERVED, IT WOULD BE REASONABLE TO BOTH SIDES IF WE RESTRICT THE DISALLOWANCE TO 50% OF RS.42,58,791/ - WHICH COMES TO RS.21,29,395/ - AND WE ORDER ACCORDINGLY . 16 . GROUND NO.3 RAISED BY THE ASSESSEE RELATE TO T HE CONFIRMATION OF AD HOC DISALLOWANCE OF RS.30 LAKHS UNDER THE HEAD LABOUR CHARGES AND RS.4 LAKHS UNDER THE HEAD STONE CUTTING AND JOINING EXPENSES. 17 . THE BRIEF FACTS ON THIS ISSUE ARE THAT THE ASSESSEE DEBITED A SUM OF RS. 35,26,84,845/ - UNDER THE HEAD LAB OUR CHARGES AND ASSESSEE HAS FILED TWO SETS OF LABOUR CHARGES AS GIVEN BELOW: - A . LABOUR CHARGES PAYABLE (INCLUDING OPEN BALANCE) RS. 22,75,35,749/ - LESS PAID B . CONTRACT WORK LABOUR PAYABLE (INCLUDING OPEN BALANCE) RS. 11,66,81,659/ - RS. 1,60,79,850/ - BALANCE PAYABLE RS. 21,14,55,899/ - [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 11 LESS PAID 18. LIKEWISE, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS DEPOSITED A SUM OF RS. 1,20,15,610/ - UNDER HEAD STONE JOINI NG & CUTTING MATERIAL EXPENSES. THE ASSESSING OFFICER NOTED THAT AGAINST THE AFORESAID, A SUM OF RS. 1,35,00,630/ - IS OUTSTANDING AS ON 31.03.2010. THE ASSESSING OFFICER ASKED FOR THE LIST OF OUTSTANDING LABOUR CHARGES P AYABLE AND THE ASSESSEE PROVIDED THE LIST OF 319 PERSONS, OUT OF WHICH NOTICE U/S 133(6) RS. 4,27,43,301/ - BALANCE PAYABLE RS RS. 7,39,38,358/ - TOTAL WAGES OUTSTANDING = 211422899+73938358= 285394287/ - AFTER NOTING THE ABOVE CHART, WHICH HAS BEEN REPRODUCED AT PAGE 2 OF THE ASSESSM ENT ORDER, THE ASSESSING OFFICER WORKED OUT THE OUTSTANDING WAGES AS ON 31.03.2016 AT RS. 36,33,64,686/ - AS AGAINST THE OUTSTANDING WAGES OF RS.28,53,94,287/ - WORKED OUT BY THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, SINCE THE ASSESSEE HAS NOT SHOWN ANY WORK IN PROGRESS, HE WONDERED AS TO HOW SUCH A HUGE AMOUNT OF WAGES IS OUTSTANDING. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE COULD NOT PRODUCE THE LEDGER ACCOUNT OF EACH LABOUR. FROM THE LIST OF LABOUR ER S TO WHOM DUES HAD TO BE PAID , NOTICES U/S 133(6) WERE ISSUED IN 241 CASES, OUT OF WHI CH THE ASSESSING OFFICER RECORDS THAT 82 NOTICES HAVE BEEN RETURNED BACK UNSERVED. SO ACCORDING TO THE ASSESSING OFFICER THE LABOUR CHARGES ARE NOT VERIFIABLE AND HAVE BEEN INFLATED AND SINCE THE ASSESSEE FAILED TO PRODUCE THE LABOUR REGISTER IN THE FORM OF MUSTER ROLL AND WAGES ARE THEREFORE NOT VERIFIABLE, HE DISALLOWED A SUM OF RS. 75 LAKHS. LIKEWISE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEPOSITED A SUM OF RS.1,75,91,657/ - UNDER THE HEAD STONE CUTT ING & POLISHING CHARGES. THE ASSESSING OFFICER DISALLOWED RS. 10 LAKHS FOR THE REASON THAT THE PAYMENTS HAVE BEEN MADE IN CASH AND NO SUPPORTING VOUCHERS HAVE BEEN PRODUCED. [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 12 WERE ISSUED IN 51 CASES. THE ASSESSING OFFICER TOOK NOT E OF THE FACT THAT IN 21 CASES NOTICE S HAVE RETURNED BACK UNSERVED. TAKING NOTE OF THE SAID FACT AND SINCE THE P AYMENTS HAVE BEEN MADE IN CASH AND IN THE ABSENCE OF VOUCHERS, A SUM OF RS.10 LAKHS WAS DISALLOWED. 19. AGGRIEVED BY THE SAID ORDER OF THE ASSESSING OFFICER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO RESTRICT THE ADDITION BY HOL DING AS UNDER: - REGARDING DISALLOWANCE OF RS. 75,00,000/ - OUT OF LABOUR CHARGES AND RS. 10,00,000/ - OUT OF STONE CUTTING AND JOINING EXPENSES, CONTENTION OF LD. AR THAT SINCE ADDITIONS HAVE BEEN ALREADY DONE U/S 68 OF THE ACT, THESE DISALLOWANCE ARE EXCES SIVE. IT IS ALSO A FACT THAT THE ASSESSING OFFICER HAS VERIFIED ONLY A SMALL PART OF LABOUR PAYMENTS OUTSTANDING AT THE YEAR END. PAYMENTS ARE ALL IN CASH. IT IS ALSO A MATTER OF RECORD THAT THE NET PROFIT OF THE YEAR WAS DOWN BY MORE THAN 1.4% IN COMPARI SON TO EARLIER YEAR FOR WHICH THE APPELLANT HAS NO PLAUSIBLE EXPLANATION. THEREFORE IN MY OPINION THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON EXCESSIVE SIDE LOOKING INTO THE FACT THAT AN AMOUNT OF RS. 42,58,791/ - HAS BEEN ALREADY ADDED U/S 68 AND CONFIRMED BY ME AS DISCUSSED ABOVE. ACCORDINGLY THE DISALLOWANCE OUT OF LABOUR CHARGES IS RESTRICTED TO RS. 25,00,000/ - AND DISALLOWANCE OUT OF STONE CUTTING AND JOINING EXPENSES IS RESTRICTED TO RS. 4,00,000/ - AS AGAINST TOTAL DISALLOWANCE OF RS. 75,00,00 0/ - AND RS. 10,00,000/ - MADE BY THE ASSESSING OFFICER RESPECTIVELY. THUS DISALLOWANCES CONFIRMED IN ADDITION TO PARA NO. 4.6 ABOVE RS. 30,00,000/ - AND RS. 4,00,000/ - AND APPELLANT GETS RELIEF OF RS. 45,00,000/ - OUT OF ADDITIONS IN PARA 3.1 OF THE ASSESSMEN T AND RELIEF OF RS. 6,00,000/ - OUT OF PARA 3.5 OF THE ASSESSMENT ORDER. 20. AGGRIEVED BY THE PARTIAL RELIEF GRANTED TO THE ASSESSEE, THE REVENUE IS IN APPEAL AND ASSESSEE IS IN A PPEAL IN NOT GETTING FULL REDRESSAL . 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSING OFFICER TOOK NOTE THAT THE OUTSTANDING WAGES AS ON [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 13 31.03.2010 WAS AT RS. 36,33,64,686/ - AGAINST THE OUTSTANDING WAGES OF RS. 28,53,94,287/ - AS WOR KED OUT BY THE ASSESSEE WHICH HAS BEEN REPRODUCED (SUPRA). THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE THERE IS NO WORK IN PROGRESS SUCH HUGE AMOUNT OF WAGES CANNOT BE OUTSTANDING AND HE SENT NOTICES U/S 133(6) TO 241 LABOURERS, OUT OF WHICH 81 NOTICES HAVE RETURNED BACK UNSERVED. THEREFORE, THE ASSESSING OF FICER CONCLUDED THAT THE WAGES ARE NOT VERIFIABLE AND SO HE DISALLOWED RS.75 LAKHS. 22. THE LD. CIT(A) HAS GIVEN A RELIEF OF RS.45 LAKHS OUT OF THE ADDITION OF RS.75 LAKHS MADE BY THE ASSESSING OFFICER, THAT MEANS LD. CIT(A) HAS SUSTAINED RS 30 LAKHS ADDIT ION AGAINST THE ASSESSEE AND THE REVENUES GROUND WHICH STATES THAT LD. CIT(A) HAS RESTRICTED THE ADDITION TO RS.25 LAKHS IS PER SE WRONG. WE NOTED THAT THE ASSESSING OFFICER HAD SENT NOTICES TO 241 LABOURERS OF WHICH ONLY 82 NOTICES HAVE COME BACK. IT MEA NS 1 59 NOTICES HAVE BEEN SERVED ON THE LABOURERS. THEREFORE THE LIST GIVEN BY THE ASSESSEE CANNOT BE DISBELIEVED IN TOTO. THERE MAY BE VARIOUS REASONS WHY THE NOTICES COULD NOT HAVE BEEN SERVED ON THE LABOURERS IN THE GIVEN ADDRESSES. THESE SKILLED LABOURE RS AS WE UNDERSTAND ARE MAINLY COMING FROM RAJASTHAN AND USED TO CAMP IN A N ADDRESS/ PLACE FOR SOME TIME WHICH IS ADJACENT TO PLACE OF WORK AND ONCE THE WORK IS OVER OR DISCONTINUED, THEY WILL MOVE TO OTHER LOCATIONS AND THUS ADDRESSES ALSO KEEP S CHANGING DEPENDING ON THE LOCATION OF WORK THEY GET . MOREOVER, THESE LABOURERS CANNOT BE PRESUMED TO BE LITERATE , SO THE ADDRESS MIGHT ALSO HAVE SOME DEFICIENCIES AND MAY BE IN COMPLETE. WE ALSO TAKE INTO ACCOUNT THE FACT THAT WHILE ADJUDICATING GROUND NO. 2 OF THE ASSESSEE , WE HAVE SUSTAINED 50% OF THE OUTSTANDING CREDIT S INRESPECT TO LABOUR OUTSTANDING AND SUSTAINED RS.21,29,395/ - . SO WE ARE OF THE CONSIDERED [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 14 OPINION THAT THERE IS NO NEED OF ANY FURTHER DISALLOWANCE AND THEREFORE, WE DELETE THE ADDITION SUSTAINED BY THE LD. CIT(A) ON THIS ISSUE. 23. COMING TO THE NEXT ISSUE , WE NOTE THAT THE ASSESSEE HAS CLAIME D EXPENSES OF RS . 1,20,15,610/ - UNDER HEAD STONE JOIN ING & CUTTING EXPENSES, A GAINST WHICH RS.1,35,00,630/ - WAS OUTSTANDING AS ON 31.03.2010. THE ASSESSEE HANDED OVER A LIST OF 319 PERSONS, TO WHOM THE WAGES WERE DUE. OUT OF THESE 319 PERSONS , NOTICES U/S 133(6) OF THE ACT WERE ISSUED TO 51 CASES OUT OF WHICH 21 LETTERS CAME BACK. THE ASSESSING OFFICER DISALLOWED RS.10 LAKHS SINCE THE PAYMENTS WERE MADE IN C ASH AND NO SUPPORTING VOUCHERS WERE PRODUCED. THE CIT(A) GAVE A RELIEF OF RS. 6 LAKHS AND SUSTAINED THE ADDITION OF RS.4 LAKHS. 24. WE TAKE NOTE THAT OUT OF THE 51 LETTERS SENT, 21 CAME BACK WHICH MEANS THAT 30 NOTICES COULD BE SERVED ON THE ADDRESSE S OF T HE LABOURERS. THE ASSESSEE HAS HANDED OVER THE LIST OF 319 LABOURERS AND THE ASSESSING OFFICER PREFERRED TO SEND NOTICES ONLY TO 51, OUT OF WHICH 31 COULD BE SERVED. SO IT CANNOT BE SAID THAT THE ASSESSEE HAS INFLATED THE EXPENSES BY SHOWING HUGE OUTSTANDI NG DUES TO THE LABOURERS. NOT ONLY THAT, WE HAVE ALREADY HELD ABOVE THAT AD - HOC DISALLOWANCES SHOULD NOT BE RESORTED TO AND IF THE ASSESSING OFFICER FINDS THAT THE ASSESSEE IS UNABLE TO PRODUCE VOUCHERS ITEM - WISE, THEN THE SAID EXPENSES ON THOSE ITEMS CAN BE TREATED AS NON - GENUINE AND ITEM - WISE DIS - ALLOWANCE CAN BE RESORTED TO BY THE AO . THE AD - H OC DISALLOWANCE IS AN ARBITRAR Y EXERCISE OF POWER, WHICH CANNOT BE COUNTENANCED. THEREFORE, WE DELETE THE AD - HOC DISALLOWANCE MADE ON THIS COUNT. 25. GROUND NO. 4 RELATES TO THE CONFIRMATION OF AD - HOC DISALLOWANCE OF RS.30,000/ - WITH RESPECT TO BUSINESS PROMOTION OF THE UNIT, M/S MARBLE ENGRAVERS. THE ASSESSING OFFICER TOOK NOTE THAT THE SECOND PROPRIETARY CONCERN, M/S MARBLE ENGRAVERS OF THE ASSESSEE CLAIMED [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 15 BUSI NESS PROMOTION EXPENSES OF RS.2,26,609/ - AND HE MADE AD HOC DISALLOWANCE A SUM OF RS. 50,000/ - FOR THE REASON THAT THE PAYMENTS HAVE BEEN MADE IN CASH AND THERE WAS NO SUPPORTING VOUCHERS FOR CLAIMING THE SAID EXPENSES. THE LD. CIT(A) HAS RESTRICTED THE DI SALLOWANCE OF RS.50,000/ - TO RS. 30,000/ - BY STATING THAT THE DISALLOWANCE MADE BY AO IS EXCESSIVE. WE DO NOT AGREE TO THE AD - HOC DISALLOWANCES AS MADE ABOVE. FOR THE SAME REASONS WHICH WE HAVE REITERATED HEREINABOVE, WE DELETE THE AD - HOC DISALLOWANCE SUST AINED BY THE LD. CIT(A) AND, THEREFORE, WE DIRECT DELETION OF RS. 30,000/ - ON THIS ISSUE. 18 . GROUNDS NO.5 AND 6 RAISED BY THE ASSESSEE RELATE TO NON - ACCEPTANCE OF AGRICULTURAL INCOME OF RS.7.40 LAKHS SHOWN BY THE ASSES SEE AND THE REVENUES GROUND IS AGAINST T HE DECISION OF CIT(A) FOR G IVING RELIEF TO THE ASSESSEE BY RESTRICTING THE ADDITION AT RS. 7,40,000/ - WHEN THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 12,99,200/ - ON THIS ISSUE . 19 . THE BRIEF FACTS IS THAT THE ASSESSING OFFICER NOTED THAT THERE WAS CASH DEPOSIT IN THE CAPITAL ACCOUNT OF THE ASSESSEE ON VARIOUS DATES TO THE TUNE OF RS. 15 LAKHS. WHEN ASKED BY THE ASSESSING OFFICER TO FURNISH THE SOURCE OF ADDITION IN THE CAPITAL ACCOUNT, THE ASSESSEE REPLIED THAT HE HAS EARNED AGRICULTURAL INCOME OF RS.7,7 5,000/ - DURING THE FINANCIAL YEAR 2009 - 10 AND RS.7,60,000/ - DURING THE FINANCIAL YEAR 2008 - 09 AND THE ASSESSEE HAS DEPOSITED PART OF AGRICULTURAL INCOME IN THE CAPITAL ACCOUNT OF M/S. MARBLE ENGRAVERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH CO MPUTATION OF AGRICULTURAL INCOME ALONG WITH SUPPORTING EVIDENCE SUCH AS KHASRA KHATAUNI OF THE LAND, COPY OF BILL OF SALE OF CROPS, ETC. PURSUANT TO THE SAID LETTER, ASSESSEE FILED COPY OF THE KHASRA KHATAUNI, HOWEVER, THE ASSESSING OFFICER NOTED THAT NO [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 16 BILLS OF SALE OF CROPS WERE PRODUCED. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS AGRICULTURAL HOLDING OF 7.3425 HECTARE IN DISTRICT BARABANKI AND THAT ACCORDING TO THE ASSESSEE HE HAS CULTIVATED WHEAT FOR RABI SEASON AND URAD FOR KHAREEF SEASON. THE AS SESSING OFFICER COLLECTED THE DETAILS REGARDING YIELD OF AFORESAID CROPS FROM JOINT DIRECTOR OF AGRICULTURAL (STATISTICS) FOR DISTRICT BARABANKI. THEREAFTER, TAKING NOTE OF THE REPLY OF THE JOINT DIRECTOR OF AGRICULTURAL (STATISTICS), THE ASSESSING OFFICER NOTED THAT THE NET INCOME COMPUTED BY ASSESSEE AT RS.7,75,000/ - IS UNREALISTIC AND HE WORKED OUT THE AGRICULTURAL INCOME FOR BOTH YEARS AT ONLY RS.2,00,780/ - ; AND THE DIFFERENCE OF RS.12,99,220/ - [15,00,000 - 2,00,780] WAS TREATED AS DEPOSIT OUT OF UNDISCL OSED SOURCES AND ADDED U/S 68 OF THE ACT . ON APPEAL, T HE LD. CIT(A) HELD AS UNDER: - IN GROUND NO. 4 THE ADDITION OF RS. 12,99,220/ - U/S 68 BEING UNEXPLAINED CASH DEPOSIT IN CAPITAL ACCOUNT OF THIS FIRM HAS BEEN DISPUTED. DURING ASSESSMENT THE APPELLANT H AS TAKEN PLEA THAT CASH DEPOSITS WERE FROM AGRICULTURAL INCOME AS THE APPELLANT HAS LAND HOLDING OF 7.3452 HECTARES AND IN THE EARLIER YEARS ALSO AGRICULTURE INCOME HAVE BEEN OFFERED AND ACCEPTED BY THE ASSESSING OFFICER DURING SCRUTINY ASSESSMENTS. HOWEVE R THE ASSESSING OFFICER HAS PROCEEDED TO COMPUTE THE ESTIMATED AGRICULTURE INCOME ON THE BASIS OF YIELD AND PRODUCE RATES. I HAVE SEEN THAT WORKING OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT, AND I FIND THAT IN EARLIER YEARS AGRICULTURE INCO ME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AS UNDER: - ASSESSMENT YEAR AGRI INCOME AS IN ROI AGRI INCOME ACCEPTED 2009 - 10 7,60,000 7,60,000 2007 - 08 6,95,000 6,95,000 IN BOTH YEARS THE SCRUTINY ASSESSMENT WAS DONE. THEREFORE LOOKING INTO LAND HOLDING WHICH THE ASSESSING OFFICER HAS VERIFIED FROM KHASRA AND THE CROP RECORD FROM KHASRA [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 17 KHATANUNI (7/12), SHOWS THE CROPS HAVE BEEN PRODUCED, IT IS FAIR AND REASONABLE THAT AGRICULTURE INCOME TO THE EXTENT OF RS. 7,60,000/ - IS ALLOWED FOR THE YEAR UNDER CON SIDERATION ALSO. ACCORDINGLY OUT OF THE TOTAL CASH DEPOSITS OF RS. 15,00,000/ - IN CAPITAL ACCOUNT I ALLOW THE BENEFIT OF RS. 7,60,000/ - ON ACCOUNT OF AGRICULTURE INCOME AND THE ADDITIONS IN RESPECT OF BALANCE CASH DEPOSIT OF RS. 7,40,000/ - IS CONFIRMED. TH IS GROUND IS THEREFORE PARTLY ALLOWED. 20 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE AND REVENUE ARE IN CROSS APPEAL BEFORE US. WE TAKE NOTE THAT IN THE ASSESSMENT YEAR 2011 - 12, ASSESSEE HAS SHOWN AN INCOME OF RS.7,95,000/ - AS AGRICULTURAL INCOM E OF WHICH RS.2,50,000/ - HAS BEEN DISALLOWED BY THE ASSESSING OFFICER AND IN ASSESSMENT YEAR 2013 - 14, THE ASSESSEE HAS SHOWN AN AGRICULTURAL INCOME OF RS.4,50,000/ - AND THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS.1,50,000/ - TAKING INTO CONSIDERATION THE OVERALL FACT S STATED BY THE ASSESSING OFFICER IN RESPECT TO THE YIELD FROM 7.3425 HECTARE AS WELL AS THE DEPARTMENTS STAND ON THE AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE IN SUBSEQUENT ASSESSMENT YEARS , W E ARE OF THE OPINION THAT THE CONFIRMATION MADE BY THE LD. CIT(A) OF RS.7,40,000/ - IS FAIR AND REASONABLE , SO WE SUSTAIN IT ; AND THEREFORE WE DISMISS BOTH THE ASSESSEES APPEAL AS WELL AS THAT OF REVENUE ON THIS ISSUE . 21 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF T HE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.8.2016. SD/ - SD/ - [P. K. BANSAL ] [ ABY T VARKEY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH AUGUST , 2016 JJ: 1008 [ ITA NO.374 &481 /LKW/2015, A.Y. 2010 - 11 ] 18 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR