The DCITNavsari Circle, Navsari V. Shri Pratapsingh Ranjitsinh Rajput, Navsari

ITA 435/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85842 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Depreciation; Income from undisclosed sources; Non-deduction of tax; Royalty expenses
• Section: 40A(3); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NOS. 435 & 436/AHD/2011 (ASSESSMENT YEARS:2006-07 & 2007-08) DY. COMMISSIONER OF INCOME-TAX, NAVSARI CIRCLE, NAVSARI APPELLANT VS. SHRI PRATAPSINGH RANJITSINH RAJPUT PROPRIETOR OF NILKANTH QUARRY WORKS, DEGAM, TAL: CHIKHLI , DIST.:- NAVSARI RESP ONDENT & ITA. NOS. 541 & 542/AHD/2011 (ASSESSMENT YEARS:2006-07 & 2007-08) SHRI PRATAPSINGH RANJITSINH RAJPUT PROPRIETOR OF NILKANTH QUARRY WORKS, DEGAM, TAL: CHIKHLI , DIST.:- NAVSARI APPELLAN T VS. INCOME TAX OFFICER, WARD-3, NAVSARI RESPONDENT PAN: ACAPR0226K I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 2 / BY REVENUE :SHRI M. K. SINGH, SR. D.R. / BY ASSESSEE : SHRI UMAID SINGH BHATI, A.R. /DATE OF HEARING :26.02.2015 !' /DATE OF PRONOUNCEMENT :31.03.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO SET OF CROSS APPEALS OF ASSESSEE AND REVE NUE ARE ARISING OUT FORM THE ORDERS OF CIT(A), VALSAD, DATED 24.11.2010 FOR THE ASSESSMENT YEARS 2006-07 AND 25. 11.2010 FOR A.Y. 2007-08. SO, THEY ARE BEING DISPOSED OF B Y WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 435/AHD/2011 FOR A.Y. 2006-07, REVENU E HAS FILED APPEAL ON THE FOLLOWING GROUNDS: [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS. 3,50,000/- MADE ON ACCOUNT OF DISALLOWANCE UNEXPLAINED CASH CREDIT U/S.68 OF THE IT ACT. [2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.75000/- MADE WITHIN THE MEANING OF SECTION.40(A)(IA) R.W.S 194J OF THE IT ACT FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT/CREDITING THE AMOUNT OF THE INCOME 'TAX CONSULTANT FEES, AUDITORS REMUNERATION TO THE RESPECTIVE PERSONS. I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 3 [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.19,253/- MADE BY INVOKING SECTION 40(A)(3) OF THE IT ACT. IN RESPECT OF PAYMENT EXCEEDING RS.20,000/- AT ONE TIME IN A SINGLE DAY. [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.34,992/-OUT OF TOTAL ADDITION MADE BY THE AO OF RS.150635/- ON ACCOUNT OF PERSONAL USE OF TELEPHONE , PETROL, CAR AND FOR WANT OF PROPER CHECK OVER THE D IESEL, REPAIR AND MAINTENANCE EXPENSES. [5] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.3,50,000/- OUT OF TOTAL ADDITION OF RS.9,57,8 10/- MADE ON ACCOUNT OF DISALLOWANCES OF BOGUS UNVERIFIABLE AGRICULTURE INCOME. 2.1 IN ITA NO. 541/AHD/2011 FOR A.Y. 2006-07, ASSES SEE HAS FILED APPEAL ON THE FOLLOWING GROUNDS: (1) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO INVO KE PROVISIONS OF SEC.40A(IA) OF THE ACT IN RESPECT OF PAYMENT TO MANOJ C. PATEL, PROPRIETOR OF MOHMANGAL CARTING CONTRACTOR FOR RS.3,62,440/ TOWARDS MOVING METAL FROM MINE TO CRUSHER MACHINE AND CRUSHED METAL FROM CRUSHER MACHINE TO STORAGE PLACE IGNORIN G THE FACT THAT MOVEMENT OF GOODS WITHIN FACTORY PREMISES DOES NOT CAME WITHIN ABMIT OF SEC. 194C.LR . CIT(APPLS.), VALSAD ALSO ERRED IN LAW TO HOLD THAT S UCH PAYMENT ATTRACTS TDS PROVISIONS OF SEC. 194C. HIRE CHARGES IN SUCH MANNER, WITHOUT ANY CONTRACT, WILL NOT ATTRACT PROVISIONS OF SEC. 194C OF I.T. ACT. (2) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO INVOK E PROVISIONS OF SEC.40A(IA) OF THE ACT IN RESPECT OF RAMAIYA COMPRESSORWALA FOR PAYMENT OF RS. 1,61,006/ AND LADUBHAI COMPRESSORWALA FOR AN AMOUNT OF RS. 1,23,366/ IN RESPECT OF HIRE CHARGES PAID FOR USE OF COMPRESSOR WITHOUT ANY CONTRACT AND WITHOUT ANY MAN POWER. LR. CIT(APPLS.), VALSAD HAS I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 4 ALSO ERRED IN HOLDING THAT HIRING OF EQUIPMENT ATTR ACTS PROVISIONS OF SEC.L94C OF THE ACT. (3) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO DISA LLOW 10% OUT OF TELEPHONE EXPENSES, PETROL EXPENSES AND MOTO R CAR DEPRECIATION ON PERSONAL GROUND. LR. CIT(APPLS. ), VALSAD HAS ALSO ERRED IN RESTRICTING SUCH DISALLOWAN CE TO 5% ON PRESUMPTIVE AND AD HOC BASIS. (4) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD RS.1,14,672/ BEING 5% OF REPAIRS / MAINTENANCE AND DIESEL EXPENSES WITHOUT POINTING OUT ANY MISTAKE IN THE BOOKS OF ACCOUNTS OR IN ANY OF THE RECORDS PERTAINING TO THESE EXPENSES. LR. CIT(APPLS.), VALSA D HAS ALSO ERRED IN UPHOLDING SUCH DISALLOWANCE IN PA RT. (5) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO TREAT AGRICULTURAL INCOME OF RS.9,57,810/ AS UNEXPLAINED BUSINESS INCOME OF THE YEAR UNDER APPEAL. LR. CIT(APPLS.), VALSAD HAS ALSO ERRED IN SUSTAINING ADDITION OF RS.6,07,810/ THOUGH BILLS OF AGRICULTUR AL PRODUCTS WERE MAINTAINED AND FILED BEFORE BOTH THE LOWER AUTHORITIES. 3. ASSESSEE IS RUNNING A STONE QUARRY AND IS ALSO D OING AGRICULTURAL ACTIVITY FOR LAST MANY YEARS. HE IS E XTRACTING BOULDERS FROM HIS QUARRY AND AFTER CRUSHING CONVERT ING THEM INTO STONE OR METAL OF VARIOUS SIZES AS PER THE REQ UIREMENT OF CUSTOMERS. ASSESSEE HAS BEEN PAYING ROYALTY AS SPE CIFIED BY GOVERNMENT OF GUJARAT FOR EXTRACTING STONE FROM QUA RRY LAND. 3.1 FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.1 ,00,000/- AND RS.2,50,000/- U/S.68 OF INCOME TAX ACT. IN ASS ESSMENT ORDER, ASSESSING OFFICER HAS GIVEN REASONS FOR ADDI TION OF RS. 1 LAC ON ACCOUNT OF A CREDIT IN NAME OF NANAK SADI CE NTRE AND RS.2,50,000/- CASH RECEIVED FROM NILKANTH INDUSTRIE S U/S. 68 I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 5 OF INCOME TAX ACT. STAND OF ASSESSEE BEFORE ASSESS ING OFFICER HAS BEEN THAT THESE ARE NOT ADVANCES RECEIVED BUT W ERE THE RECEIPTS OF REPAYMENTS MADE TO BOTH ENTITIES I.E. N ANAK SADI CENTRE AND NILKANTH INDUSTRIES. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE SAME AND MADE THE ADDITION OF RS.3,5 0,000/- UNDER THE PROVISION OF SECTION 68 OF THE ACT. 3.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN ASSESSEE FILED (1) A COPY OF CONFIRMATION F ROM SHREE NANAK SADI CENTRE, CHIKHLI I.E. COPY OF ASSESSEE,S ACCOUNT IN THEIR BOOKS (2) COPY OF CENTURIAN BANK'S CURRENT AC COUNT'S STATEMENT FOR A PERIOD OF 30.6.2005 TO 27.07.2005 S HOWING AN AMOUNT OF RS. 1,00,000/- ADVANCED BY NILKANTH QUARR Y WORKS TO NANAK SADI CENTRE ON 21.7.2005 VIDE CHEQUE NO.24 8384 SHOWN WITHDRAWN ON 27.07.2O05. ADVANCE MADE BY ASSE SSEE VIDE ABOVE CHEQUE NO.248384 DTD. 18.07.2005 DRAWN O N HIS CENTURIAN BANK WAS CLEARED ON 21.07.2005 WHICH IS S HOWN AS CREDITED / WITHDRAWN ON 21.07.2005. NANAK SADI CEN TRE REPAID THIS AMOUNT ON 18.03.2006 BY CHEQUE NO.58835 5 DRAWN ON THEIR SBI ACCOUNT. THE OTHER ADDITION MADE BY ASSESSING OFFICER WAS OF RS.2,50,000/- RECEIVED FR OM NILKANTH INDUSTRIES ON DATES AS SHOWN BY ASSESSING OFFICER I N PARA 4, PAGE 2 OF ITS ORDER. THIS WAS ALSO EXPLAINED TO BE REPAYMENTS OF ADVANCES MADE BY ASSESSEE TO NILKANTH INDUSTRIES WHICH IS A PROPRIETARY CONCERN OF HIS DAUGHTER-IN-LAW (SON'S WIFE). ASSESSEE PRODUCED A COPY OF LEDGER ACCOUNT OF NILKA NTH I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 6 INDUSTRIES FROM HIS BOOKS OF ACCOUNT WHICH SHOWS RS.2,00,000/- BEING DRAWN ON ICICI BANK ON DT.20.6. 2005 AND RS.50,000/- ON 21.11.2005 DRAWN ON ICICI BANK, SURA T BRANCH. THE ICICI BANK STATEMENT FOR THE MONTH OF JUNE,2005 AND NOVEMBER, 2005 CONFIRMS THIS POSITION. M/S. NIL KANTH QUARRY WORKS IS SHOWN TO HAVE WITHDRAWN AN AMOUNT O F RS.2,00,000/- AND RS.50,000/- BY CHEQUES NO. 614601 AND 614604 RESPECTIVELY. THUS AN AMOUNT OF RS.1,00,000 /- RECEIVED FROM NANAK SADI CENTRE AND RS.2,50,000/- R ECEIVED FROM NILKANTH INDUSTRIES WAS NOT FOUND CASH CREDITS BUT REPAYMENT RECEIVED FROM THEM TOWARDS ADVANCES MADE TO THEM ON EARLIER DATES. IN THIS BACKGROUND, CIT(A) WAS C ONVINCED FROM THE EXPLANATION GIVEN BY ASSESSEE THAT AMOUNTS REPRESENT ADVANCE REPAYMENTS FROM NANAK SADI CENTRE AND NILKA NTH INDUSTRIES AND FULLY EXPLAINED AND HELD THAT IN THE SE CIRCUMSTANCES, PROVISIONS OF SECTION 68 OF THE ACT ARE NOT ATTRACTED AND ACCORDINGLY, HE RIGHTLY DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION IN QUESTION. THIS R EASONED FINDING OF CIT(A), NEEDS NO INTERFERENCE FROM OUR S IDE. WE UPHOLD THE SAME. 4. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF F OLLOWING AMOUNTS BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BECAUSE ASSESSEE HAD NOT DEDUCTED AT SOURCE BEFORE MAKING THOSE PAYMENTS. I. MOHMANGAL CARTING CONTRACTOR RS.3,62,440/- I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 7 II. RAMAIYA COMPRESSORWALA RS.1,61,006/- III. LADUBHAI COMPRESSORWALA RS.1,23,366/- IV. FEES PAID TO AUDITOR RS.75,000/- ISSUE AROSE WHETHER PAYMENTS LISTED IN I. TO III AR E SUBJECT TO PROVISIONS OF SECTION 194C AND PAYMENT LISTED IN IV IS SUBJECT TO PROVISIONS OF SECTION 194J OF THE INCOME TAX ACT . ASSESSING OFFICER HAS ELABORATELY DISCUSSED THE ISSUES IN PA RA 5 OF THE ASSESSMENT ORDER. HE OBSERVED THAT PROVISIONS OF S ECTION 194C APPLIES FOR FIRST THREE ITEMS. ASSESSING OFFI CER ALSO CONSIDERED THE ALTERNATIVE PLEA MADE BY ASSESSEE BE FORE HIM BEFORE COMING TO THE CONCLUSION. STAND OF ASSESSE E HAS BEEN THAT AS PER GUIDELINES OF CBDT IN VIEW OF SUPREME C OURT'S JUDGEMENT IN CASE OF ASSOCIATED CEMENT COMPANY LTD. VS. CIT (1993) 201 ITR 435 (SC) WHEREIN IT HAS BEEN HELD TH AT PROVISIONS OF SECTION 194C WOULD NOT BE MADE APPLIC ABLE TO THE PAYMENT MADE FOR HIRING OR RENTING OF EQUIPMENT. R EFERRING THE SAID DECISION, IT WAS CONTENDED ON BEHALF OF AS SESSEE THAT HYDRAULIC TRUCK WAS HIRED FOR REMOVING BLASTED BOUL DERS TO THE CRUSHER MACHINE FOR CRUSHING BOULDERS INTO DIFFEREN T SIZES OF STONE. HIRE CHARGES WERE FIXED PER TRIP. MOH MANG AL PREPARES ONE BILL FOR EVERY MONTH AND THEREFORE, SECTION 194 C DOES NOT APPLY IN SAID CASE. SIMILAR CONTENTIONS WERE MADE FOR OTHER PAYMENTS. ASSESSING OFFICER REJECTING THE STAND OF ASSESSEE DISALLOWED ABOVE AMOUNTS BY INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THEACT. I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 8 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED AS DISCUSSE D ABOVE AND HAVING CONSIDERED THE SAME CIT(A) ALSO CONFIRME D THE ADDITION. WITH REGARD TO ADDITION MADE TO MOHMANGA L CARTING CONTRACTOR, RAMAIYA COMPRESSORWALA AND LADUBHAI COMPRESSORWALA WHILE DELETED THE ADDITION MADE ON A CCOUNT OF FEES PAID TO AUDITOR. AGAINST DELETION OF RS.75,00 0/- MADE WITHIN MEANING OF SECTION 40(A)(IA) READ WITH SECTI ON 194J FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT/CR EDITING THE AMOUNT OF INCOME TAX CONSULTANT FEES, AUDITORS REMUNERATION TO THE RESPECTIVE PERSONS. WHILE ASSE SSEE IS AGAINST CONFIRMING THE DISALLOWANCE OF RS.3,62,440/ - MADE TO PROPRIETOR MOHMANGAL CARTING CONTRACTOR, RS.1,61,00 6/- TO RAMAIYA COMPRESSORWALA AND RS.1,23,366/- TO LADUBH AI COMPRESSORWALA CLAIMED TO HIRE CHARGES PAID TO ABOV E PARTIES. 4.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT WITH REGARDS TO PAYMENT OF RS. 3,62,440/- MADE TO MOHMANGAL CARTING CONTRACTOR, ASSESSEE HAS HIRED HYDRAULIC TRUCKS FOR CARTING BOULDERS FROM EXPLOSIO N SITES TO THE CRUSHERS SITES FOR MAKING METALS ETC. PAYMENTS WERE MADE ON REGULAR BASIS. IN CASE OF ASSOCIATED CEMENT LTD . (SUPRA) WAS IN CONNECTION WITH ANY WORK AND ON INCOME CO MPRISED THEREIN IN SECTION 194C(1) OF THE ACT. CIT(A) DIS TINGUISHING THE CASE LAW HAS RIGHTLY CONFIRMED THE ADDITION MAD E BY I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 9 ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTIO N 40(A)(IA) OF THE ACT. WE UPHOLD THE SAME. 4.2.1 IN RESPECT OF PAYMENT TO MOHMANGAL CARTING CONTRACTOR OF RS.3,63,440 TOWARDS MOVING MATTER FRO M MINE TO CRUSHER-MACHINE AND CRUSHED METAL FROM CRUSHER TO S TORAGE PLACE. IN FACTS AND CIRCUMSTANCES, ASSESSING OFFIC ER WAS JUSTIFIED IN INVOKING PROVISION OF SECTION 194C FOR MAKING DISALLOWANCE UNDER THE PROVISIONS OF SECTION 40(A)( IA). SAME IS UPHELD BECAUSE ASSESSEE HIRED HYDRAULIC TRUCKS FOR CARTING BOULDERS FROM EXPLOSION SITES TO THE CRUSHERS SITES FOR MAKING METALS ETC. 4.2.2 WITH REGARD TO PAYMENT MADE TO RAMAIYA COMPRESSORWALA AND LADUBHAI COMPRESSORWALA. STAND OF ASSESSEE HAS BEEN THAT THESE PAYMENTS DO NOT ATTRAC T PROVISION OF SECTION 194C. PAYMENT MADE TO RAMAIYA COMPRESS ORWALA OF RS. 1,61,006/- WAS FOR HIRING CHARGES OF COMPRES SOR USED IN MAKING HOLES OR DRILLING HOLES IN QUARRY LAND TO FI LL EXPLOSIVES TO BLAST OUT. MAN POWER, MATERIALS USED IN THIS DR ILLING WORK ARE SUPPLIED BY ASSESSEE. PAYMENTS WERE FOR HIRE O R RENT CHARGE FOR EQUIPMENT LIKE COMPRESSOR ONLY. IT WAS STATED ON BEHALF OF ASSESSEE THAT HIRE CHARGES OR RENT CHARGE S PAID WAS NOT FALLING UNDER SECTION 194C AND SECONDLY THERE W AS NEITHER WRITTEN OR ORAL CONTRACT. SIMILAR PAYMENTS WERE MAD E TO LADUBHAI COMPRESSORWALA OF RS.1,23,366/-. CIT(A) H AVING CONSIDERED THE SUBMISSION OF ASSESSEE OBSERVED THAT ASSESSEE I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 10 HAS BEEN HIRING EQUIPMENT FROM YEAR TO YEAR AND THE PAYMENTS ARE MADE ON REGULAR BASIS EVEN IF NO WRITTEN AGREEM ENT EXISTS BETWEEN THE CONTRACTOR AND CONTRACTEE. THE EQUIPME NT IS SPECIALIZED ONE HIRED FOR THE DRILLING WORK. HIRIN G OF SUCH EQUIPMENT AND PAYMENT ON SUCH HIRING SQUARELY FALLS WITHIN THE SCOPE OF SECTION 194C. IN VIEW OF ABOVE, CIT(A ) CONFIRMED THE ORDER WITH REGARD TO ABOVE PAYMENTS, DISALLOWED BY ASSESSING OFFICER BY INVOKING PROVISION OF SECTION 40(A)(IA). THIS FACTUAL AND REASONED FINDING OF CIT(A) NEEDS N O INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4.2.3 REGARDING DISALLOWANCE OF PAYMENT MADE FOR ACCOUNTING WORK, AUDIT FEES AND INCOME TAX FEES PAY ABLE. ASSESSING OFFICER DISALLOWED THE PAYMENT MADE FOR A CCOUNTING WORK, AUDIT FEES AND INCOME TAX FEES WHICH FALL UND ER SECTION 194J AND TDS WAS NOT MADE, EXPENSES PAYABLE AND PAI D DISALLOWED U/S. 4O(A)(IA) AS PER PARA 7 OF ASSESSME NT ORDER. THE DETAILS OF ADDITIONS MADE BY AO ARE AS UNDER: (1) INCOME TAX CONSULTANT FEES- RS.30,000/- (2) ACCOUNTANT FEES- RS.20,000/ (3) AUDITOR'S REMUNERATION- RS.10,000/ (4) PROVISION FOR AUDITOR'S RS.25,000/ REMUNERATION FOR A.Y.2006-07 TOTAL RS.75.000/ ASSESSEE VIDE HIS LETTER DATED 15.12.2008 EXPLAINED TO THE ASSESSING OFFICER, DRAWING HIS ATTENTION TO THE LED GER ENTRIES IN THIS REGARD, BUT ASSESSING OFFICER REJECTED THE STA ND OF ASSESSEE I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 11 AND MADE ADDITION OF RS.75,000/-. MATTER WAS CARRI ED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONT ENTIONS WERE RAISED ON BEHALF OF ASSESSEE AND HAVING CONSIDERED THE SAME CIT(A) GRANTED RELIEF TO THE ASSESSEE. SAME HAS BE EN OPPOSED ON BEHALF OF REVENUE INTER ALIA SUBMITTED THAT CIT( A) ERRED IN DELETING ADDITION OF RS.75,000/- MADE WITHIN THE ME ANING OF SECTION 40(A)(IA) R.W.S. 194J OF THE ACT. ACCORDIN GLY ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER B E RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SU PPORTED THE ORDER OF CIT(A) ON THE ISSUE. AFTER GOING THRO UGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT AS SESSEE PAID BY CHEQUE CONSULTANT FEES OF RS.15,000/- DEBITED AS PA YABLE OF IMMEDIATE PREVIOUS YEAR, PAID BY CHEQUE IN THE YEAR UNDER CONSIDERATION. ASSESSEE MADE PROVISION OF INCOME TA X FEES PAYABLE FOR A.Y. 2006-07. PROVISION IS NOTHING BUT EXPENDITURE PAYABLE WAS DEBITED AND TO WHOM TO BE PAID WAS EITH ER TO BE CREDITED TO THE PERSON CONCERNED OR CREDITING CONSU LTANT FEES PAYABLE ACCOUNT. THUS, IN CASE OF ASSESSEE WHO FOL LOWS MERCANTILE SYSTEM, INCOME & EXPENDITURE ACCOUNT PER TAINING TO THE RELEVANT YEAR IS REQUIRED TO BE SHOWN AS LIABIL ITY. WHEN OUTSTANDING LIABILITY IS PAID, IT IS NOT PAYABLE OF CURRENT YEAR EXPENDITURE BUT A DISCHARGING OF LIABILITY IN THE Y EAR UNDER ASSESSMENT OF EARLIER YEAR. PROVISION MADE DURING T HE YEAR IS NOTHING BUT AMOUNT CREDITED IS EXIGIBLE TO TDS. TH EREFORE, ONLY AMOUNT OF RS.15,000/- PROVISION MADE ON 31.03. 2006 FOR FEES TO BE PAID FOR THE YEAR CONCERNED I.E. A.Y.200 6-07 MAY I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 12 ATTRACT TDS LIABILITY AND AMOUNT PAID RS.15,000/- F EES ACCRUED FOR EARLIER YEAR AND PAID IN THE YEAR 2006-07 WAS N OT EXIGIBLE TO TDS. PROVISION MADE OF RS.15,000/- FEES PAYABLE TO INCOME TAX CONSULTANT ON 31.3.2006 FOR THE A.Y. 2006-07 WH ICH WAS UNDERSTOOD AS CREDITED IN ANY OTHER NAME, IS EXIGIB LE TO TDS BUT BEING BELOW RS.20,000/, NO TDS WAS REQUIRED TO BE MADE. REGARDING ACCOUNTING FEES, AMOUNT OF RS.20,000/- WA S SHOWN PAYABLE ON 01.4.2005 WAS THE EXPENDITURE OF EARLIER YEAR AND PAID DURING THE YEAR IS NOT EXPENDITURE BUT A DISCH ARGING OF LIABILITY WHICH IS NOT EXIGIBLE TO TDS PROVISION MA DE OF RS.20,000/- OF ACCOUNTING FEES FOR A.Y.2006-07 WAS AS GOOD AS AMOUNT OF FEES PAYABLE FOR A.Y.2006-07. AMOUNT OF PROVISION DOES NOT EXCEED RS.20,000/-, SO, IT WAS HELD NOT DE DUCTIBLE TO TDS AND THEREFORE NON-DEDUCTION OF TAX DOES NOT ATT RACT THE PROVISION OF SECTION 4O(A)(IA). IN VIEW OF THE ABO VE, CIT(A) AGREED WITH THE CONTENTION OF ASSESSEE THAT PAYMENT MADE ON THIS ACCOUNT IS NOT SUBJECT PROVISION OF SECTION 40 (A)(IA) OF THE ACT. ACCORDINGLY, CIT(A) RIGHTLY DIRECTED THE ASSE SSING OFFICER TO DELETE THE ADDITIONS MADE ON THIS ACCOUNT. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SI DE. WE UPHOLD THE SAME. THIS TAKE CARE OF GROUND NO.1 & 2 RAISED IN ASSESSEES APPEAL AND GROUND NO.2 OF REVENUES APPE AL. 5. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS .19,253/- MADE BY THE ASSESSING OFFICER BY INVOKING PROVISION OF SECTION U/S. 40A(3) OF THE ACT. ASSESSING OFFICER IN PARA ( 6) OF HIS ORDER I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 13 HAS GIVEN THE PARTICULARS OF AMOUNT OF RS. 96,296/- PAID TO LAXMANBHAI AND 3 OTHERS COMPRESSORWALAS IN TABULAR FORM. ASSESSING OFFICER AFTER VERIFYING VOUCHERS AND BOO KS OF ACCOUNTS TREATED THAT CASH PAYMENT WERE MADE FOR TO TAL AMOUNT OF RS.96,296/- AND THEREFORE HE DISALLOWED RS.19,253/- BEING 20%. 5.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN ASSESSEE FILED PARTICULARS OF PAYMENTS MAD E TO LAXMANBHAI COMPRESSORWALA AND THREE OTHERS. ASSESSE E STATED THAT LAXMANBHAI AND THREE OTHER COMPRESSORWA LAS PAYMENTS ARE NO DIFFERENT FROM THE PAYMENTS MADE TO RAMAIYA COMPRESSORWALA AND LADUBHAI COMPRESSORWALA. PAYMENT S MADE TO THEM WERE TREATED AS CONTRACT RECEIPTS THEN WHY TOTAL PAYMENTS OF RS.96,296/- WERE TREATED NOT PAYMENTS F OR CONTRACT WORKS. ASSESSEE CONTENDED THAT ASSESSING OFFICER HAS GIVEN NO REASON FOR DISTINGUISHING PAYMENT MADE TO RAMAIYA COMPRESSORWALA AND LADUBHAI COMPRESSORWALA FROM PAYMENTS MADE TO EACH OF THESE 4 COMPRESSORWALAS WH O ARE ALSO PAID HIRE CHARGES FOR HIRING THEIR COMPRESSORS . IN THE CASE OF 4 COMPRESSORWALAS, PAYMENT MADE TO EACH OF THEM DID NOT EXCEED RS.50,000/- DURING THE WHOLE YEAR. ALL THE A FORESAID COMPRESSORWALAS SHOWN IN PARA (6) OF ASSESSMENT ORD ER HAVE NOT BEEN PAID AMOUNT EXCEEDING RS.20,000/- PER BILL AND THEREFORE, PROVISIONS OF SECTION 4OA(3) WAS NOT APP LICABLE. FURTHER STAND OF ASSESSEE HAS BEEN THAT PAYMENTS WE RE MADE I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 14 TO THESE PERSONS ALSO COVERED IN EXPLANATION CLAUSE OF RULE 6DD OF SUB-RULE(G) BECAUSE PAYMENT IS MADE IN A VIL LAGE- ALIPORE, DEGAM, WHICH ON THE DATE OF SUCH PAYMENT W AS NOT SERVED BY ANY BANK TO ANY PERSON WHO ORDINARILY RES IDE OR CARRYING ON ANY PROFESSION, BUSINESS OR VOCATION IN ANY OF VILLAGE. PAYEES HAD NO BANK ACCOUNT AT ALIPORE-DEG AM, THEREFORE ASSESSEE WAS REQUIRED TO MAKE PAYMENT IN CASH. IN THIS BACKGROUND, CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DELETE ADDITION BECAUSE APPLICATION WAS WITHIN ELIGIBLE LIMITS. THIS REASONED FINDING OF CIT(A) N EEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 6. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF 10 % AND 5% OUT OF VARIOUS EXPENSES. ASSESSEE CLAIMED FOLLOWIN G EXPENSES: (I) TELEPHONE EXPENSES RS.70,825/ (II) PETROL EXPENSES RS. 48,610/ (IN) DEPRECIATION ON LANCER CAR RS. 1,78,017/ (IV) DEPRECIATION ON TATA SAFARI CAR RS. 62,161/ RS.3,59,633/ (V) REPAIRS & MAINTENANCE EXPENSES RS.1,38,920/ (VI) DIESEL EXPENSES RS.21,54,503/- RS.22,93,423/- ASSESSING OFFICER MADE ADDITION OF RS.35,963/- BEIN G 10% OUT OF ABOVE I TO IV AGGREGATE EXPENSES OF RS.3,59,633/ - AND MADE ADDITION OF RS.1,14,672/- BEING 5% OUT OF ABOVE V & VI AGGREGATE EXPENSES OF RS.22,93,423/-. IN APPEAL, C IT(A) ESTIMATED LUMP SUM 5% DISALLOWANCE ON TELEPHONE EXP ENSES (RS.70,825/-), PETROL EXPENSES (RS.48,610/-) AND DI ESEL EXPENSES (RS.21,93,423/-) AND DIRECTED THE ASSESSIN G OFFICER TO I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 15 RESTRICT THE DISALLOWANCE TO 5% OF RS.23,12,858/- [ (RS.70,825/- ) + (RS.48,610/-) + (RS.21,93,423/-) = 23,12,858/-] . THIS REASONED FINDING OF CIT(A) NEED NO INTERFERENCE FRO M OUR SIDE. WE UPHOLD THE SAME. 7. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF AG RICULTURAL INCOME OF RS.9,57,810/-. ASSESSING OFFICER AFTER M AKING INQUIRY FROM LAND RECORDS AND FROM APMC GAVE THE FI NDING THAT ASSESSEE HAD INFLATED INCOME FROM VEGETABLES. FURT HER, WHILE ACCEPTING THE INCOME FROM PADDY AND MANGO, ASSESSIN G OFFICER DISPUTED THAT INCOME FROM VEGETABLES GROWN ARE EXOR BITANT AND THEREFORE, MAJOR PORTION OF INCOME FROM VEGETABLES WAS TREATED AS BUSINESS INCOME AND ADDED TO THE INCOME OF ASSES SEE. STAND OF ASSESSEE HAS BEEN THAT ASSESSING OFFICER H AS NOT DISPUTED THE LAND OWNED BY ASSESSEE AND VEGETABLES, MANGO AND PADDY WERE GROWN THERE. THE DISPUTE WAS ONLY O N THE INCOME FROM VEGETABLES. IT WAS ALSO STATED THAT GE NERALLY EXPENSES ON CULTIVATION COMES TO 25% TO 30%. WHILE CONTESTING THE RATE FROM APMC, CHIKHLI, ADOPTED BY ASSESSING OFFICER, ASSESSEE CONTENDED THAT THE RATE CAN VARY DEPENDING ON THE AVAILABILITY OF PRODUCE IN MARKET IN A PARTI CULAR DAY. IN CASE OF ASSESSEE, IT IS SOLD ON RETAIL BASIS, THERE FORE, RATES OF APMC CANNOT BE APPLIED IN THE CASE OF ASSESSEE. AS SESSEE HAS SUBMITTED AS UNDER: NATURE OF CROP SOLD GROSS SALES AS PER CASH MEMO ESTIMATED EXPENSES DEDUCTED NET AGRICULTURAL INCOME SHOWN I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 16 VEGETABLES RS. 10,17,195/ RS. 3,38,945/ RS. 6,78,250/ MANGOS 4,19,344/ 1,39,784/ 2,79,560/ PADDY 34,800/ 11,600/ 23,200/ TOTAL 14,71,339/ 4,90,329/ 9,81,010/ 7.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY AGAINST TOTAL ADDITION OF RS.9,57,810/- MADE ON ACC OUNT OF DISALLOWANCE OF BOGUS UNVERIFIABLE AGRICULTURE INCO ME. CIT(A) OBSERVED THAT THERE IS NO DISPUTE ON LAND HOLDING A ND THE PRODUCE THEREON. THE ONLY DISPUTE WAS THAT ASSESSI NG OFFICER FOUND ONLY ISSUE WITH REGARD TO INCOME FROM VEGETAB LES. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , CIT(A) FOUND THAT ASSESSING OFFICER WAS TOO CONSERVATIVE T O ADOPT INCOME FROM SALE VEGETABLES AT RS. 24,200/-. VEGET ABLES ARE GROWN FROM 0.59 HECTOR. ACCORDINGLY, HE ESTIMATED THE INCOME FROM VEGETABLE AT RS. 3,50,000/-. UNDER THE FACTS AND CIRCUMSTANCES, CIT(A) DIRECTED THE ASSESSING OFFICE R TO GIVE RELIEF OF RS.3,50,000/-. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 8. IN ITA NO. 436/AHD/2011 FOR A.Y. 2007-08, REVENU E HAS FILED APPEAL ON THE FOLLOWING GROUNDS: [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS. 1,00,000/- MADE ON ACCOUNT OF DISALLOWANCE UNEXPLAINED CASH CREDIT U/S.68 OF THE IT ACT. [2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.15,940/- OUT O TOTAL ADDITION OF RS.1,15,940/ - I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 17 MADE ON ACCOUNT OF DISALLOWANCE OF EXCESS PAYMENT O F ROYALTY CLAIMED. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.41,469/- MADE ON ACCOUNT OF PERSONAL USE OF C AR AND TELEPHONE EXPENSES. [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE AD DITION OF RS.6,50,000/-OUT OF TOTAL ADDITION OF RS.11,54,9 30/- MADE ON ACCOUNT OF BOGUS UNVERIFIABLE AGRICULTURE INCOME AND TREATING IT AS BUSINESS INCOME. 8.1 IN ITA NO. 542/AHD/2011 FOR A.Y. 2006-07, ASSES SEE HAS FILED APPEAL ON THE FOLLOWING GROUNDS: (1) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD AN AMOUNT OF RS.6,15,320/-. IT IS PAID TO MANOJ C. PA TEL, PROPRIETOR OF MOHMANGAL CARTING CONTRACTOR WHO HIRE D OUT HYDRAULIC TRUCK FOR SHIFTING CRUSHED MATERIAL F ROM STONE-MINE AND CRUSHED STONES FROM CRUSHER MACHINE TO STORAGE SITE, DOES NOT ATTRACT PROVISIONS OF SEC .194C. A.O. AND LR. CIT(APPLS.), VALSAD PRESUMED WITHOUT AN Y EVIDENCE THAT THERE WAS ORAL CONTRACT BETWEEN ASSES SEE AND MANOJ C. PATEL FOR SUCH CARTING WORK. PAYMENT OF RS.6,15,320/- DOES NOT ATTRACT PROVISIONS OF SEC.19 4C OF I.T.ACT, 1961 AND THEREFORE INVOCATION OF PROVIS IONS OF SEC. 40A(IA) IS NOT JUST AND PROPER. LR. A.O. W AS NOT JUSTIFIED TO DISALLOW PAYMENT OF RS.6,15,320/- U/S. 40A(IA) AND LR.CIT(APPLS.), VALSAD HAS ALSO ERRED TO CONFIRM ADDITION. (2) LR. A.O. HAS ERRED IN LAW AND ON FACTS TO TREA T AN AMOUNT OF RS.11,95,145/- OUT OF TOTAL AGRICULTURAL INCOME CLAIMED OF RS.12,74,936/- AS BUSINESS INCOME , WITHOUT PINPOINTING NATURE OF SUCH BUSINESS BECAUSE INCOME FROM QUARRY BUSINESS IS CONTROLLED BY STATUT ORY ROYALTY PAYMENT AND INCOME CLAIMED BY THE APPELLANT IS SUPPORTED BY SALES BILLS AND THEREFORE DISALLOWA NCE MADE BY A.O. IS NOT JUST AND PROPER. LR.CIT(APPLS. ), I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 18 VALSAD HAS ALSO ERRED IN SUSTAINING DISALLOWANCE OF RS.4,65,435/-. 9. FIRST ISSUE IN REVENUES APPEAL IS WITH REGARDS TO ADDITION OF RS.1 LAC MADE BY ASSESSING OFFICER U/S. 68 OF TH E ACT. STAND OF ASSESSEE HAS BEEN THAT AMOUNT PERTAINS TO REPAYM ENT OF ADVANCE MADE TO NANAK SAREE CENTRE AND SITUATION WA S CLARIFIED WITH REGARD TO LEDGER ACCOUNT AND BANK ST ATEMENTS. SIMILAR POINT IS RAISED IN A.Y. 2006-07 ON IDENTICA L FACTS. IN APPEAL, CIT(A) FOLLOWING THE ORDER OF ITS PREDECESS OR GRANTED RELIEF TO ASSESSEE BECAUSE AMOUNT IN QUESTION WAS F ULLY EXPLAINED. ACCORDINGLY, ASSESSING OFFICER WAS DIRE CTED TO DELETE THE ADDITION. THIS REASONED FINDING GIVEN I N THE BACKGROUND OF A.Y. 2006-07 AS DISCUSSED ABOVE, NEED S NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 10. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF H IRE CHARGES PAID TO M/S. MOHMANGAL CARTING APPLYING PROVISION O F SECTION 40(A)(IA) OF THE ACT. AS PER PARA 6 OF ASSESSMENT ORDER, ASSESSING OFFICER TREATED PAYMENT MADE TO MANOJBHAI C. PATEL PROPRIETOR OF M/S. MOHMANGAL CARTING CONTRACT FALLS U/S.194C OF THE ACT AND PROVISIONS OF SECTION 40A(IA) WERE APPLICABLE. ACCORDINGLY, HE DISALLOWED EXPENSES OF RS.6,15,231/ -. 10.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN CIT(A) CONFIRMED THE SAME. SAME HAS BEEN O PPOSED BEFORE US. WE FIND THAT IN SIMILAR SET OF FACTS IN A.Y. 2006-07 IN ASSESSEES OWN CASE WHILE DEALING THE APPEAL SAID Y EAR, CIT(A) I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 19 DECIDED THIS GROUND OF ASSESSEE CONSIDERING THE SIM ILAR SUBMISSIONS MADE ON BEHALF OF ASSESSEE AND FOLLOWIN G ITS PREDECESSORS DECISION IN A.Y. 2006-07, CIT(A) DECI DED THE ISSUE AGAINST HIM. WE HAVE DISCUSSED AND DECIDED THE SIM ILAR ISSUE AGAINST ASSESSEE IN A.Y. 06-07 VIDE PARA 4 OF THIS ORDER ON SIMILAR SET OF SITUATION. IN VIEW OF SAME, WE ARE NOT INCL INED TO INTERFERE IN THE FINDING OF CIT(A)(A) WHO HAD SUSTAINED THE A DDITION MADE BY ASSESSING OFFICER FOLLOWING DECISION FOR A.Y. 06 -07 UNDER THE PROVISIONS OF SECTION 194C. SAME IS UPHELD. 11. NEXT ISSUE IN REVENUES APPEAL IS WITH REGARDS TO ADDITION OF RS.15,940/- OUT OF TOTAL ADDITION OF RS.1,15,940/- MADE ON ACCOUNT OF DISALLOWANCE OF EXCESS PAYMENT OF ROYALT Y. ASSESSING OFFICER NOTICED THAT ASSESSEE HAD DEBITED EXCESS RO YALTY CHARGES IN PROFIT AND LOSS ACCOUNT. HE COLLECTED INFORMATI ON FORM THE MINING DEPARTMENT WHICH CONFIRMED ROYALTY PAID WAS RS.13,58,098/- WHEREAS ASSESSEE HAD CLAIMED RS.14,7 4,038/-. THEREFORE, ASSESSING OFFICER PROPOSED TO DISALLOW T HE EXCESS AMOUNT OF RS.1,15,940/-. IN APPEAL, MATTER WAS CAR RIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN CIT(A) OBSER VED THAT ROYALTY IS A KIND OF CESS ALLOWABLE AS DEDUCTION ON ACTUAL PAYMENTS AMOUNTING TO RS.13,74,038/- DURING YEAR. IN THIS CASE, ASSESSEE FURNISHED DATE-WISE PAYMENTS AMOUNTI NG TO RS.13,74,038/- BEFORE HIM. THUS, ASSESSEE WAS ENTI TLED FOR DEDUCTION OF RS.13,74,038/-. ACCORDINGLY, ASSESSIN G OFFICER WAS RIGHTLY DIRECTED TO ALLOW THE DEDUCTION OF ROYALTY EXPENSES OF RS.13,74,038/-. SAME IS UPHELD. I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 20 12. NEXT ISSUE IS WITH REGARDS TO VARIOUS MISCELLAN EOUS EXPENSES. ASSESSING OFFICER MADE DISALLOWANCE OF R S.41,469/- BEING 10% OF VARIOUS EXPENSES CLAIMED. IN APPEAL, CIT(A) OBSERVED THAT IN ASSESSEES APPEAL FOR A.Y. 2006-07 , PERSONAL ELEMENT CAN BE ATTRIBUTABLE FOR TELEPHONE AND PETRO L/DIESEL EXPENSES. ASSESSING OFFICER HAS DISALLOWED 10% OF EXPENSES ON TELEPHONE, DIESEL/PETROL AND ON DEPRECIATION ON CAR S. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, CIT(A) HELD THAT PERSONAL ELEMENT EXISTED IN TELEPHONE AND PETROL/DI ESEL EXPENSES AND NOT ON DEPRECIATION. UNDER THE FACTS AND CIRCU MSTANCES, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITI ON MADE ON THIS GROUND. THIS REASONED FACTUAL FINDING OF CIT(A) NE EDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 13. NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF A GRICULTURAL INCOME OF RS.11,95,145/- AND TREATING SAME AS BUSIN ESS INCOME BY ASSESSING OFFICER. FACTS OF THE CASE ARE THAT A SSESSEE HAS SHOWN RS.12,74,936/- AS INCOME FROM AGRICULTURE IN RETURN OF INCOME. ASSESSING OFFICER SUSPECTED IN EARLIER YEA R ASSESSEE HAD INFLATED AGRICULTURAL INCOME TO COVER UP THE CONCEA LED INCOME FROM QUARRY BUSINESS OF ASSESSEE. FINDINGS OF ASSE SSING OFFICER WERE FOUND IDENTICAL IN PREVIOUS YEAR. THE SUBMISS ION MADE BY ASSESSEE BEFORE CIT(A) WAS ALSO IDENTICAL BARRING F EW LEGAL SUBMISSIONS. IN THESE CIRCUMSTANCES, CIT(A) TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION DECISION TAKEN FOR A.Y. 2006-07 OBSERVED THAT INCOME SHOWN FOR A.Y. 2006-07 & 2007- 08 ARE AS UNDER: I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 21 NATURE OF CROP SOLD GROSS SALES AS PER CASH MEMO ESTIMATED EXPENSES DEDUCTED NET AGRICULTURAL INCOME SHOWN LAND USED VEGETABLES RS. 10,17,195/ - RS. 3,38,945/ - RS. 6,78,250/ - O - 59 - 33 HECTOR. MANGOS 4,19,344/ - 1,39,784/ - 2,79,560/ - O - 37 - 43 HECTOR PADDY 34,800/ - 11,600/ - 23,200/ - O - 72 - 68 HECTOR TOTAL 14,71,339/ - 4,90,329/ - 9,81,010/ - THE EXPENDITURE MADE BY ASSESSEE ALTHOUGH DETAILS W ERE NOT PRODUCED BEFORE ASSESSING OFFICER, WAS 33.31%. THE PRODUCE COST VIS--VIS SALES WILL BE MORE, PARTICULARLY FOR VEGETABLE, COMPARED TO PLACES WELL CONNECTED AND CONSUMERS ARE LOCATED NEAR BY TO THE PRODUCE CENTRE. IN THE INSTANT CASE , ASSESSEES PRODUCE CENTRE IS LOCATED IN INTERIOR VILLAGE LIMIT S. ASSESSEE HAD ALSO CLAIMED OF HAVING GROWN SUGARCANE AND CHIK KU IN PROTION OF LAND WHICH ASSESSING OFFICER HAD NOT DIS PUTED HAVING TAKEN INTO CONSIDERATION THE DETAILS FILED B Y ASSESSEE. ASSESSING OFFICER HAS GIVEN DEFINITE FINDING ON THI S ISSUE, WHICH IS AS UNDER: NATURE OF CROP SOLD GROSS SALES AS PER CASH MEMO ESTIMATED EXPENSES DEDUCTED NET AGRICULTURAL INCOME SHOWN LAND USED VEGETABLES RS. N.A. RS. N.A. RS. 7 , 8 8, 99 0/ - O - 59 - 33 HECTOR. MANGOS N.A. N.A. 4 , 06 , 15 5/ - O - 37 - 43 HECTOR PADDY N.A. N.A. 79 , 719 / - O - 72 - 68 HECTOR TOTAL N.A. N.A. 12 , 74 , 963 / - I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 22 ON THE BASIS OF COMPARISON OF TABLE A & B, IT WAS S UBMITTED THAT ASSESSEE HAS INCREASED AGRICULTURAL INCOME AT 30% WHICH APPEARS TO BE HIGHER SIDE PARTICULARLY THE AREA OF CULTIVATION REMAINS SAME. IN THIS BACKGROUND, CIT(A) OBSERVED THAT THERE IS NO DISPUTE ON LAND HOLDING . HOWEVER, ASSESSING OFFICER HAD DISPUTED THE PRODUCE OF MANGO AND VEGETABLES THEREB Y HE TREATED THE INCOME FROM THOSE ITEMS AS UNACCOUNTED INCOME FROM BUSINESS. ASSESSING OFFICER DISPUTED THE INCO ME BY WAY OF SALE OF VEGETABLES AND MANGO. IN EARLIER YEAR, ASSESSING OFFICER HAD GIVEN FINDING THAT ASSESSEE HAS BEEN PR ODUCING MANGO AND VEGETABLES BUT INCOME FROM THEM WAS HIGH. ACCORDINGLY, INCOME FROM SALE OF MANGO AND VEGETABL ES WAS ESTIMATED AND ALLOWED AS AGRICULTURAL INCOME. ONCE , MANGO TREES START GIVING FRUITS, IT CONTINUES TO DO SO T ILL TREES ARE UPROOTED. CIT(A) FOUND IT INCORRECT TO ASSUME THAT THIS YEAR THERE WAS NO VEGETABLE CULTIVATION WHEN RECORD SHOW S OTHERWISE. ASSESSING OFFICER SHOULD TAKE APPROPRIA TE VIEW IN THIS MATTER. PRECISELY, ISSUE BEFORE CIT(A) WAS RE GARDING QUANTIFICATION OF AGRICULTURAL INCOME. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, CIT(A) ESTIMATED INCOME FOR SALE OF VEGETABLES AT RS.3,50,000/- WHILE DECIDING APPEALS FOR A.Y. 2006-07. IN THIS BACKGROUND, CIT(A) IN THIS Y EAR ESTIMATED INCOME FROM SALES OF VEGETABLES AT RS.3,7 0,000/- FOR THIS YEAR WITH MARGINAL INCREASE OF 5%. ACCORDINGL Y, ASSESSING OFFICER WAS RIGHTLY DIRECTED TO ALLOW RS.3,70,000/- OUT OF ADDITION OF RS.7,88,990/- MADE IN THIS COUNT. THUS , ADDITION I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 23 OF RS.4,18,990/- WAS CONFIRMED. SIMILAR TREATMENT WAS GIVEN WITH REGARD TO INCOME FROM SALE OF MANGO. ASSESSEE HAD GROWN MANGO IN 0.37 HECTARE IN LAST YEAR. THE INCOME FRO M SALE OF MANGO OF RS.2,79,560/- FOR THE LAST YEAR WAS ACCEPT ED BY ASSESSING OFFICER. IN THIS CASE ALSO NO MATERIAL C HANGE WAS NOTICED BY AUTHORITIES BELOW. THE CONDITIONS FOR G ROW OF MANGO REMAINED SAME. UNDER THESE FACTS AND CIRCUMSTANCES , CIT(A) WAS JUSTIFIED TO ESTIMATE THE INCOME FROM SALE OF M ANGO AT RS.2,80,000/- FOR THE YEAR UNDER CONSIDERATION AND ASSESSING OFFICER WAS DIRECTED TO GIVE RELIEF ACCORDINGLY WHE REBY ADDITION OF RS.1,26,155/- WAS CONFIRMED. 14. THIS REASONED FINDING OF CIT(A) ON THE ISSUE NE EDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 15. AS A RESULT, ASSESSEES APPEALS AS WELL AS REVE NUES APPEALS FOR BOTH YEARS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF MARCH, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 31/03/2015 TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE I.T.A. NOS. 435, 436, 541 & 542/AHD/11 FOR A.YS. 06-07 & 07-8 (DCIT VS. SHRI PRATAPSINGH R . RAJPUT) PAGE 24 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;