Shri Bhavesh Satabhai Patel, Anand V. The Income tax Officer,Ward-2, Anand

ITA 381/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72967 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: N C AMIN
• Keywords: Business income; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMB ER BHAVESH SATABHAI PATEL PANDAV SOCIETY, AT & POST ODE, DIST: ANAND-388210 (APPELLANT) VS INCOME TAX OFFICER, ITO WARD-2, ANAND (RESPONDENT) REVENUE BY: SRI R.K. DHANESTA , SR.D.R . ASSESSEE BY: SRI N.C. AMIN, A.R. DATE OF HEARING : 10-02-2014 DATE OF PRONOUNCEMENT : 14-02-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-IV, BARODA DATED 27-12-2012. ITA NO. 381/AHD/2013 ASSESSMENT YEAR 2009-10 I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 2 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL:- 1. THAT ON FACTS AND MATERIAL AVAILABLE ON RECORD, THE SERVICE CHARGES RECEIVED @ 1% IS PERTAINING TO HINDU UNDIVI DED FAMILY AND THE SAID INCOME IS TO BE EXCLUDED FROM THE ASSESSME NT MADE BY LEARNED A.O. AND CONFIRMED BY LEARNED CIT(A). 2. ON IDENTICAL FACTS, THE RETURN OF INCOME FILED B Y APPELLANT UPTO 2008-09 HAVE BEEN ACCEPTED AS INCOME SHOWN BY A PPELLANT AND THERE IS NO ANY ADVERSE COMMENTS BY LEARNED A.O. AS WELL AS CIT(A). WITHOUT PREJUDICE: 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT IS HOLDING 10 TO 12 BIGHAS OF ANCESTRAL AGRICULTURAL LAND IN V ILLAGE ODE AND DOING AGRICULTURAL ACTIVITIES PERSONALLY OF BANANAS AND ALSO SUPPORTING HIS FELLOW BROTHER FARMERS, F RELATIVES AND RECEIVING SERVICE CHARGES 1% WHICH IS CONNECTED WITH THE AGRI CULTURAL ACTIVITIES OF THE APPELLANT AND ALSO OTHER FACTORS THE ADDITIO NS MADE IN THE HANDS OF THE APPELLANT AND CONFIRMED BY LEARNED CIT (A) DESERVES TO BE DELETED. 4. THAT DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, THE APPELLANT HAS SUBMITTED DOCUMENTAR Y EVIDENCES THAT ONLY 1% SERVICE CHARGES WAS RECEIVED BY THE APPELLA NT FROM FARMERS, HOWEVER, AGAINST IT, WITHOUT ANY MATERIAL OR EVIDEN CE, THE LEARNED CIT(A) HAS DIRECTED TO ASSESS 6% INCOME ON TOTAL AM OUNT OF BANANAS INCLUDING ITS OWN DESERVES TO BE DELETED. 5 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED A.O. HAS TAXED ANCESTRAL AGRICULTURAL INCOME OF APPELLANT IN HIS INDIVIDUAL CASE @10% AND REDUCED BY LEARNED CIT(A) @ 6% WHICH IS EX EMPT U/S 10(1) OF THE L.T ACT 1961. HOWEVER, HIS OWN BANANA CROP WAS ALSO CONSIDERED IN SERVICE CHARGES WHICH DESERVED TO BE DELETED. 6. HAVING REGARD TO THE PECULIAR FACTS AND CIRCUM STANCES OF THE CASE OF THE APPELLANT, THE ESTIMATE OF INCOME MADE BY TH E LEARNED A,O. @ 10% AND REDUCED BY CIT(A) AT 6% WITHOUT ANY BASIS, MATERIAL OR DOCUMENTARY EVIDENCES AGAINST WHICH THE CONFIRMATIO NS AND I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 3 STATEMENT OF FARMERS ARE AVAILABLE ON RECORD AND CO NSIDERING THE SAME, IN THE ALTERNATIVE 1% INCOME BE TAXED IN THE HANDS OF THE APPELLANT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE DERIVE D INCOME FROM SALARY AND INCOME FROM TRANSPORT BUSINESS. DURING THE ASS ESSMENT PROCEEDINGS ON VERIFICATION OF ITS DETAILS OF ARI TRANSACTION, AO NOTICED THAT ASSESSEE WAS HAVING SAVING BANK NO. 1008000101070350 WITH PUNJAB NATIONAL BANK, ANAND BRANCH, DESAI LANE, STATION ROAD, ANAND AND MADE CASH DEPOSIT OF RS. 40,34,500/- IN THAT ACCOUNT DURING THE YEAR UND ER APPEAL. THE ASSESSEE DID NOT DISCLOSE THIS BANK ACCOUNT AND THE TRANSACT IONS THROUGH THIS ACCOUNT IN ITS INCOME TAX RETURN. THE ASSESSEE WAS ASKED T O PROVE THE SOURCE OF THE ENTIRE CASH DEPOSITS IN THIS BANK ACCOUNT. IN RESP ONSE TO THIS, ASSESSEE VIDE HIS SUBMISSION DATED 27-06-2011 STATED THAT DURING THE YEAR UNDER APPEAL HE HAS PURCHASED BANANA AND SOLD THE SAME TO PANJAB AN D HARIYANA THROUGH TRANSPORTERS. THE ASSESSEE ALSO SUBMITTED A STATEM ENT OF PURCHASE AND SALES OF BANANA AND OTHER EXPENSES AS UNDER:- PURCHASES RS. 38,58,501/- SALES RS. 40,33,500/- TRANSPORTATION EXPENSES RS. 27,500/- BANK CHARGES RS. 6905/- COMMISSION @ 1% RS. 40,594/- TOTAL RS. 40,33,500/- RS. 40,33,500/- ASSESSEE ALSO FURNISHED THE DETAILS OF PURCHASES. ON PERUSAL OF THE SAME, IT WAS REVEALED THAT PURCHASES INCLUDED ASSESSEES OWN BANANA WORTH RS. 4,50,763/-. HOWEVER ASSESSEE DID NOT DECLARE THE S AME IN HIS RETURN OF I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 4 INCOME BEING AGRICULTURAL INCOME. FURTHER THE ASSE SSEE STATED THAT THE ENTIRE SALES CONSIDERATION OF BANANA WAS DEPOSITED BY THE TRADERS IN HIS SAVING BANK ACCOUNT WITH PUNJAB NATIONAL BANK BY CASH. THEREAF TER THE ASSESSEE WAS WITHDRAWING THE MONEY FROM HIS BANK ACCOUNT AND DIS BURSING THE SAME TO THE FARMERS. THE ASSESSEE ALSO STATED THAT HE WAS GETTING COMMISSION @ 1% FROM THE TRADING OF BANANA BUSINESS. SINCE THE INC OME FROM THESE BUSINESS WAS NOT DISCLOSED IN THE RETURN OF INCOME, DURING T HE ASSESSMENT PROCEEDINGS ASSESSEE OFFERED THE SAME FOR TAXATION AS AN ADDITI ONAL INCOME FROM THIS BUSINESS. THE INCOME OFFERED WAS BETWEEN 40,000/- TO 45,0000/- FOR TAXATION. AO FURTHER ASKED THE ASSESSEE TO FURNISH FOLLOWING DETAILS. 1. THE NAME AND ADDRESSES OF TRADERS WITH WHOM THE ASSESSEE CARRIED OUT THE BANANA TRADING BUSINESS. 2. COMPLETE ADDRESS OF ALL THE FARMERS FROM WHOM TH E ASSESSEE HAS PURCHASED BANANA. 3. NAME AND ADDRESSES OF TRANSPORTERS THROUGH WHOM THE ASSESSEE HAD DELIVERED THE BANANA IN PUNJAB AND HARIYANA IN RESPONSE TO ASSESSEE SUBMITTED A LIST OF THE FAR MERS WITH WHOM THE ASSESSEE HAS PURCHASED BANANA. TO CONFIRM THESE P URCHASES SUMMONS U/S. 131(1) WERE ISSUED TO THE FOLLOWING PERSONS. I). SRI MANIBHAI PARSHOTTAMBHAI PATEL II) SRI ASHOKBHAI AMBALAL PATEL III). SRI RAOJIBHAI SHANKARBHIA PATEL IV). SRI SANABHAI PARSHOTTAMBHAI PATEL I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 5 V). SRI RAMESHBHAI AMBALAL PATEL IN RESPONSE TO THESE SUMMONS SRI RAOJIBHAI SHANKAR BHIA PATEL, SRI SANABHAI PARSHOTTAMBHAI PATEL AND SRI RAMESHBHAI AMBALAL PAT EL ATTENDED THE OFFICE AND THEIR STATEMENTS WERE RECORDED. ALL THESE THRE E FARMERS STATED IN THEIR STATEMENTS THAT DURING THE YEAR UNDER APPEAL THEY H AVE SUPPLIED BANANA TO THE ASSESSEE AND HE WAS NOT ISSUING ANY BILL/VOUCHE RS. THE ASSESSEE DID NOT FURNISH THE DETAILS OF TRADERS AND TRANSPORTERS NOR ANY CONFIRMATION OF THE TRADER OR ANY BILL/VOUCHERS FOR ANY FURTHER VERIFIC ATION. SINCE THE ASSESSEE FAILED TO COMPLY WITH THE INFORMATION/DETAILS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE COMMISSION @ 1% OFFERED FO R TAXATION ON THIS BUSINESS SHOULD NOT BE REJECTED AND TO EXPLAIN AS T O WHY NET PROFIT @ 10% SHOULD NOT BE ADDED TO THE TOTAL INCOME OUT OF THIS BUSINESS. THE ASSESSEE WAS ALSO ASKED TO SHOW AS TO WHY UNDISCLOSED AGRICU LTURAL INCOME OF RS. 4,50,763/- SHOULD NOT BE ADDED TO HIS TOTAL INCOME. IN RESPONSE, THE ASSESSEE VIDE HIS LETTER DATED 05/11/2011 ALONG WITH THE DEC LARATION IN STAMP PAPER STATED AS UNDER:- OUR HUF CONSISTED OF FOLLOWING MEMBERS AND THE DET AILS OF FAMILY MEMBERS ARE AS UNDER:- 1. SHATABHAI RACHHODBHAII PATEL HUF 2. BHAVESHBHAI SATABHAI PATEL AGED ABOUT 36 (KARTA) 3. HEMANTBHAI SATABHAI PATEL AGED ABOUT 30 BROTHER OF KARTA 4. SHARDABEN SATABHAI PATEL, AGED 60, 'MOTHE R OF 'KARTA 5. NAIMISHA SATABHAI PATEL, AGED 38, SISTER OF KARTA 6. MAMTA SATABHAI PATE, AGED 32, SISTER OF KA RTA OUR HUF CONSTITUTED OF ABOVE MEMBERS AS STATED ABOV E AND INHERITED AGRICULTURAL LAND ADMEASURING 12 VIGHAS FROM OUR AN CESTORS WHEREIN OUR FAMILY IS CULTIVATING AND DOING AGRICULTURAL AC TIVITIES OF GROWING I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 6 BANANA. THE BANANA PLANTS ARE ABOUT 9000 AND WE ARE PERSONALLY DOING THE AGRICULTURAL ACTIVITIES WITH THE HELD OF ENGAGING FARMERS AND LABOURERS. FROM THIS AGRICULTURAL LAND OUR FAMILY I S EARNING GROSS AGRICULTURAL SALE PROCEEDINGS OF RS.4,50,763/- AND AFTER DEDUCTING EXPENDITURE OF RS.2,80,305/- THE NET AGRICULTURAL I NCOME EARNED BY OUR FAMILY IS AMOUNTING TO RS.2,70,498/- OVER AND A BOVE I HAVE EARNED COMMISSION INCOME @1% ON SALE PROCEEDS OF BA NA CROPS OF OUR NEAREST LAND OWNERS RELATIVES AND OUR HUF HAS E ARNED AGRICULTURAL INCOME OF RS.2,70 , 498/- AND COMMISSION INCOME OF RS.40,000/-OUR HUF HAS NOT TAXABLE INCOME AND THERE FORE NO RETURN OF INCOME WAS NOT FILED BY OUR HUF. IN SUPPORT OF PROOF OF MY AGRICULTURAL INCOME COPY OF 7/12 FORMS ARE ENCLOSED HEREWITH. REGARDING SALES PROCEEDS OF OTHER RELATIVES, I AM E NCLOSING HEREWITH ACCOUNT OF AMOUNT DEPOSITED IN THE BANK AC COUNT IN PUNJAB NATIONAL BANK, ANAND WHEREIN THE AMOUNT IS TRANSFER RED FORM OM BANANA AGENCY & OTHERS, AMRITSAR AD OTHER TRADERS O UT OF TOTAL AMOUNT DEPOSITED IN BANK I HAVE PAID AN AMOUNT OF R S.39,58,501/- TO THE 5 PARTIES WHOSE BANANA HAVE SOLD THROUGH ME ON COMMISSION BASIS. I HAVE NOT PURCHASED OR SOLD ANY GOODS OF MY RELATIVES NEARBY THROUGH OWNER OF AGRICULTURE LANDS AND THROUGH AGEN T OF PUNJAB DURING THE ACCOUNTING YEARS 1/4/2008 TO 31/03/2009. OUR HUF IS HAVING NO TAXABLE INCOME AND AS SUCH NO RETURN OF INCOME WAS FILED BY US AND AS SUCH I STRONGLY OBJEC T FOR TAXING NET PROFIT @10% IN MY INDIVIDUAL ASSESSMENT. HOWEVER THE ABOVE CONTENTION OF THE ASSESSEE WAS NO T FOUND ACCEPTABLE BY THE AO IN VIEW OF THE FACT THAT THE ASSESSEE INITIA LLY VIDE HIS STATEMENT DATED 27-11-2011 HAS OFFERED 1% OF HIS BANANA BUSINESS IN ADDITION TO SALARY INCOME AND INCOME FROM TRANSPORTER CARRIAGE BUSINES S. FURTHER AO ON VERIFICATION OF THE ABSTRACT OF FORM 7/12 FURNISHED ALONG WITH THE ASSESSEES SUBMISSION DATED 05-10-2011 NOTICED THAT ABSTRACT O F FORM 7/12 BEARING NO C8777036 DATED 09-07-2010 OBTAINED FROM DEPUTY MAMA LDAR ODE, TAL. ANAND SHOWED THAT THE ASSESSEE HAS CULTIVATED TOBA CCO AND VEGETABLE ONLY I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 7 DURING THE YEAR UNDER APPEAL. IN THE CIRCUMSTANCES IT WAS CLEAR THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD NOT C ULTIVATED BANANA IN THEIR LAND AS CLAIMED. THEREFORE THE ENTIRE PRODUCE OF BANANA OF RS. 39,58,501/- WAS FROM OTHER PARTIES ONLY AND NO PURCHASE WAS MAD E FROM THE ASSESSEES HUF AGRICULTURAL ACTIVITIES. IT WAS ALSO NOTICED B Y AO THAT THE ASSESSEE OR ANY OTHER MEMBER OF HUF HAD NOT OBTAINED PAN AND WA S NOT ASSESSED TO TAX IN THE STATUS OF HUF. ACCORDING TO HIM IT WAS NOTHING BUT AN AFTERTHOUGHT THAT ASSESSEE HAS TRIED TO MISLEAD THA T THE ENTIRE BANANA BUSINESS BELONG TO HIS HUF. FURTHER IT WAS ALSO NOTICED THA T THE ENTIRE TRANSACTION THROUGH PNB WAS MADE IN THE ASSESSEES NAME ONLY. THEREFORE AO WAS OF THE VIEW THAT ASSESSEE WAS DOING THE BANANA BUSINES S IN THE INDIVIDUAL CAPACITY ONLY AND THEREFORE INCOME EARNED OUT OF BA NANA BUSINESS WAS TAXABLE IN THE ASSESSEES OWN INDIVIDUAL CASE. SIN CE THE ASSESSEE DID NOT FURNISH THE DETAILS OF TRADERS, TRANSPORTERS, BILLS AND VOUCHERS AND DETAILS OF CASH DEPOSITS MADE IN THE AFORESAID BANK ACCOUNT, T HE MERE COMMISSION OFFERED FOR TAXATION @ 1% OUT OF BANANA BUSINESS WA S NOT JUSTIFIABLE AND THEREFORE AO ESTIMATED A PROFIT @ 10% AS REASONABLE PROFIT ON THIS BUSINESS. THE PROFIT SO WORKED OUT WAS RS. 4,03,350/- AND WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN APPEAL THE LD. CIT(A) AFTER TAKING INTO CONSI DERATION THE SUBMISSION OF THE ASSESSEE WHICH HAVE BEEN REPRODUC ED BY HIM IN HIS ORDER REDUCED THIS ESTIMATION OF PROFIT TO 6% OF TOTAL SA LES TURN OVER. 5. FURTHER AGGRIEVED NOW THE ASSESSEE IS IN APPEAL BEFORE US. I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 8 6. AT THE TIME OF HEARING LEARNED COUNSEL OF THE AS SESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE LOWER AUTHORITIES A ND TOOK US TO SEVERAL PAGES OF PAPER BOOK IN SUPPORT OF HIS SUBMISSION. LD. DR RELIED ON THE ORDER OF LD. CIT(A). 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT ASSESSEE DI D NOT DISCLOSE THE SAVING ACCOUNT NO. 1008000101070350 OF PNB AT ANAND IN WHI CH CASH WAS DEPOSITED TO THE TUNE OF RS. 40,34,500/- DURING THE YEAR UNDER APPEAL. WHEN INQUIRIES WERE MADE BY THE AO IN THIS REGARD, THE A SSESSEES INITIAL REACTION WAS THAT DURING THE YEAR UNDER APPEAL HE HAS PURCHA SED THE BANANAS FROM THE FARMERS AND SOLD THE SAME TO PUNJAB AND HARIYANA AN D EARNED 1% COMMISSION ON THESE TRANSACTIONS AND ALSO OFFERED T HE SAME FOR TAXATION. HOWEVER ASSESSEE COULD NOT GIVE THE DETAILS OF THE TRADERS OF PUNJAB AND HARIYANA WITH WHOM HE MADE TRADING OF BANANA NOR HE COULD GIVE ANY DETAILS OF THE TRANSPORTERS THROUGH WHICH THESE BAN ANAS WERE SUPPLIED TO THE TRADERS. NO DETAILS/VOUCHERS IN THIS RESPECT WERE FURNISHED BY THE ASSESSEE AT ANY STAGES INCLUDING DURING THE HEARING OF APPEAL B EFORE US. WHEN AO PROPOSED TO ADD NET PROFIT @ 10% OF THE TOTAL SALES , ASSESSEE TOOK THE PLEA THAT ALL THESE TRANSACTIONS WERE DONE BY THE ASSESS EE ON BEHALF OF HUF AND IN SUPPORT OF THESE CERTAIN DOCUMENTS WERE ALSO FILED. BUT ON VERIFICATION OF THE SAME, AO FOUND THAT BANANAS WERE NEVER GROWN BY THE ASSESSEE DURING THE YEAR UNDER APPEAL ON THE LANDS OWNED BY THE HUF . AO ALSO FOUND THAT NEITHER THE HUF NOR ANY MEMBER OF HUF OBTAINED PAN NO. AND WERE NOT ASSESSED TO TAX. THEREFORE HE HELD THAT THIS PLEA WAS TAKEN AS AFTERTHOUGHT WHICH ACCORDING TO US APPEARS TO BE A REASONABLE CO NCLUSION UNDER THE FACTS I.T.A NO.381/AHD/2013 A.Y. 2009-10 PAGE N O BHAVESH SATABHAI PATEL VS. ITO 9 AND CIRCUMSTANCES OF THIS CASE. LD. CIT(A) HAS ALS O AGREED WITH THE FINDING OF AO THAT CASH DEPOSIT IN THE UNDISCLOSED BANK ACC OUNT WAS OUT OF TRADING OF BANANAS. HE HOWEVER REDUCED THE ESTIMATION OF P ROFIT FROM 10% TAKEN BY THE AO TO 6%. BEFORE US NOTHING WAS BROUGHT ON REC ORD ON BEHALF OF THE ASSESSEE WHICH COULD PERSUADE US TO GIVE ANY FURTHE R RELIEF TO THE ASSESSEE AND THEREFORE THE ORDER PASSED BY LD. CIT(A) IS HER EBY UPHELD. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (N.S. SAINI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 14/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,