Amitkumar Babaso Shelake, Sangli V. Income-Tax Officer, Ward 1(4), Sangli

ITA 403/PUN/2020

AI Insights

The case revolves around the appellant, Amitkumar B. Shelake, who contested the addition of Rs. 1,46,51,500 to his income as 'Income from Other Sources' by the Income Tax Officer, Sangli. The addition was based on the appellant's return, which mistakenly reported agricultural income with an extra two zeros due to an error by his tax consultant. Despite the appellant's attempts to correct this during the assessment proceedings, the Income Tax Officer and subsequently the Commissioner of Income Tax (Appeals) upheld the addition. The Tribunal, however, found that the department failed to provide concrete evidence that the appellant had actually earned this income, leading to the allowance of the appellant's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136248 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2020
• Other Referred Cases: CIT Vs Durga Prasad More, Sumati Dayal Vs CIT, CIT Vs Shoorji Vallabhdas and Co
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 131; 56; 144; 143(3); 143(1); 250; 143(2)

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “ए” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “A” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 403/PUN/2020 धििाारण वर्ा / Assessment Year : 2011-12 Amitkumar B. Shelake, Near Shrikrishna Math, Burungwadi Rd., At & Post –Dhangaon (Tawadardi), Post- Bhilawadi, Sangli-416303 PAN : COZPS929E . . . . . . . अपीलार्थी / Appellant बिाम / V/s. Income Tax Officer, Ward 1(4), Sangli . . . . . . . प्रत्यर्थी / Respondent द्वारा/ Appearances Assessee by : Shri Kishor Phadke & Amol Kulkarni Revenue by : Shri Ramnath Murkunde सुनवाई की तारीख / Date of conclusive Hearing : 30/11/2022 घोषणा की तारीख / Date of Pronouncement : 20/01/2023 आदेश/ ORDER PER G. D. PADMAHSHALI, AM; Appeal of the assessee is assailed against the order of Commissioner of Income Tax (Appeals)-1, [for short “CIT, (A)”] dt.19/03/2020 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”] which dove out of assessment order dt.14/03/2014 passed u/s 144 r.w.s.143(3) of the Act was passed by ITO, Wd-1(4), Sangli [for short “AO”] for the assessment year [for short “AY”] 2011-12. Amitkumar B. Shelake ITA No. 403/PUN/2020 AY: 2011-12 ITAT-Pune Page 2 of 6 2. Briefly state facts of the case are; 2.1 The assessee is a resident individual deriving income from salary and agricultural operation furnished his return of income [in short “ITR”] for the AY 2011-12 declaring total income of ₹96,000/- solely earned from employment with a claim of exempt agricultural income of ₹1,46,51,500/-. The said return after being summarily processed u/s 143(1) was subjected to scrutiny under CASS u/s 143(2) of the Act wherein all the notices served remained unresponded by the assessee. After recording satisfaction about non-compliance and dilating reasons, the Ld. AO denied accepting the income arising from agricultural, resultantly income reported to have derived from agricultural is brought to tax u/s 56 of the Act as earned from other sources by framing the assessment u/s 144 r.w.s. 143(3) of the Act. 2.2 Aggrieved by aforesaid action of the Ld. AO, the assessee unsuccessfully appealed before first appellate authority, successively the matter came before Tribunal on the following grounds of appeal; Amitkumar B. Shelake ITA No. 403/PUN/2020 AY: 2011-12 ITAT-Pune Page 3 of 6 “1. The learned Commissioner of Income Tax (Appeals)-1, Kolhapur (hereinafter referred to as "learned CIT(A)") erred in law and on facts in confirming the addition of Rs. 1,46,51,500 made by Income Tax Officer, Ward 1(4), Sangli (hereinafter referred to as "learned AO") u/s 56 of the Income Tax Act, 1961 by treating the same as "Income from Other Sources". 2. The learned CIT(A) erred in law and on facts in not appreciating the fact that the appellant has earned agricultural income to the tune of Rs. 1,46,515. 3. The learned CIT(A) erred in law and on facts by concluding that the appellant has not earned any agricultural income at all, just because income from secondary agricultural produce is more than income from main agricultural produce. 4. The learned CIT(A) erred in law and on facts in not appreciating the fact that the alleged agricultural income reported in Return of Income was an absolute error committed by Tax Consultant of the appellant and the same could not be verified by the appellant prior to the conclusion of assessment proceedings. 5. The learned CIT(A) erred in law and on facts in not appreciating the fact that existence of alleged income of Rs.1,46,51,500 could not be demonstrated by Income Tax Authorities after conducting extensive enquiries. 6. The appellant craves leave to add / modify / delete / amend all / any of the grounds of appeal.” 3. The learned representative of the assessee [in short “AR”] during the course of the present appellate proceedings, adverting to statement recorded u/s 131, bank statement of the appellant and page no. 12-21 of the paper book, argued that, the tax consultant while Amitkumar B. Shelake ITA No. 403/PUN/2020 AY: 2011-12 ITAT-Pune Page 4 of 6 filing return had reported the agricultural income inadvertently with two extra zeros to actual income, and in-spite same being showcased before tax authorities below, the incorrect income is brought to tax which not at all earned by the assessee. Per contra, the learned representative of the Revenue Mr Ramnath Murkunde intensely entreated that, substantial income earned by the assessee was found reported in the guise of agricultural income solely to escape from taxation and when assessee was put to inquiry, the appellant in turn came with make-believe story of incorrect reporting which cannot be accepted. Ld. DR further adverting to Hon’ble Supreme Court’s decision in “CIT Vs Durga Prasad More” reported in 82 ITR 540 and “Sumati Dayal Vs CIT”, reported at 214 ITR 801 contended that apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality, accordingly this matter of taxation has been considered by applying the test of human probabilities. Amitkumar B. Shelake ITA No. 403/PUN/2020 AY: 2011-12 ITAT-Pune Page 5 of 6 4. After hearing to rival contention of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records and duly considered the facts in the light of settled legal position and are forewarned to parties present, we note that the sole and substantive ground revolves around taxation of unreal or unearned income by the tax authorities. 5. Ostensibly from the records it evident that, while filing return of income the tax consultant had erred in keying the figure of exempt income to ₹1,45,51,500/- in place of actual income derived of ₹1,45,515/- and in support of this claim the appellant in addition to statement recorded u/s 131 and affidavit deposed, has brought on records all the evidential documents which inter-alia includes receipts of agricultural income, expense vouchers, bank statement, affidavit of tax consultant etc. On the contrary, the department failed to prove its case with deprecative material establishing that the appellant indeed has earned or derived any such income which has escaped from tax. Amitkumar B. Shelake ITA No. 403/PUN/2020 AY: 2011-12 ITAT-Pune Page 6 of 6 6. We note that, the return may not be an accurate guide of the real income earned by the assessee, hence applying the real income principle, we are inclined to concur with the Ld. AR’s contention that in the absence of evidence exhibiting the income has actual earned or received, taxing the same would be outside the scope of taxation in the light of Hon’ble Apex Court’s decision in “CIT Vs Shoorji Vallabhdas and Co” reported in 46 ITR 144. Therefore we hold that agricultural income which has neither accrued nor received by appellant cannot be brought to tax. 7. Resultantly, the appeal of the appellant assessee is ALLOWED in terms of above observation. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Friday 20 th day of January, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; ददनाांक / Dated : 20 th day of January, 2023. आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The PCIT, Kolhapur (Mh-India) 4. The CIT- (A)-1, Kolhapur (Mh-India) 5. DR, ITAT, Pune “A” Bench, 6. गार्डफ़ाइल / Guard File. आदेशानुसार / By Order, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, पुणे / ITAT, Pune.