Sh. Naib Singh, V. The Income tax Officer, Nakodar

ITA 505/ASR/2013

• Counselvise Citation: 50520914 RSA 2013
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Depreciation; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.505(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :BMMPS1195R SHRI NAIB SINGH VS. INCOME TAX OFFICER, S/O SH. AJIT SINGH, NAKODAR. VI.. KOHAR KHURD, PO TALWANDI, BOOTIAN, TEH. SHAHKOT. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.J.S.BHASIN, ADVOCATE RESPONDENT BY:SH. MAHAVIR SINGH, DR DATE OF HEARING: 12/02/2014 DATE OF PRONOUNCEMENT:24/02/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 24.05.2013 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.505(ASR)/2013 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS GROSSLY ERRED IN PARTIALLY SUBSTITUTING ITOS E STIMATE OF EXPENSES OF 50% BY HIS ESTIMATE OF 40% OF THE AGRIC ULTURE RECEIPTS, AGAINST 29.90% CLAIMED BY ASSESSEE, RESUL TING INTO ADDITION OF THE DIFFERENTIAL AMOUNT AS NON AGRICULT URE INCOME. 2. THAT THE LD. CIT(A), HAVING HELD THAT THE TRIBUN ALS DECISION IN THE CASE OF PARAMJIT SINGH, RELIED UPON BY THE ITO, WAS DISTINGUISHABLE OUGHT TO HAVE DELETED THE ADDITION IN FULL. 3. THAT THE ORDER UNDER APPEAL, TO THE EXTENT DISPU TED HEREIN, IS AGAINST LAW AND FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 31.03.2010 DECLARING AN INCOME OF RS.3,15,310/- PLU S AGRICULTURE FROM DAIRY FARMING BUSINESS, SHARE IN A FIRM AND AGRICULTURE I NCOME. DURING THE ASSESSMENT THE AO IN ORDER TO VERIFY THE GENUINENES S OF AGRICULTURE INCOME CALLED THE DETAILS OF LAND HOLDING, J FARMS, EVIDEN CES OF EXPENDITURE INCURRED ON FILLING OF LAND, SOWING, SEEDS, FERTILIZERS, PES TICIDES, DIGGING, WATERING HARVESTING, LOADING AND UNLOADING THE CROP OF MAN DI ETC. IN RESPONSE THE ASSESSEE REPLIED THAT HE ALONGWITH HIS SONS OWNED A BOUT 41.7 ACRES OF LAND IN VILLAGE BUTIAN KOHAR KHURD AND POONIA AND TAKEN 146 ACRES OF LAND FROM THE FARMERS ON LEASE. COPIES OF FARD JAMABANDIES FOR LA ND OWNED AND TAKEN ON LEASE AS PER AGREEMENTS AND DECLARATION OF OWNERS C ONFIRMING THE LEASING OF LAND WERE ENCLOSED. THE ASSESSEE STATED TO HAVE PAI D RS.13,50,000/- AS LEASE RENT. HE ALSO STATED TO HAVE SOLD CROPS WORTH RS.1, 14,78,154/-. THE BOOKS OF ITA NO.505(ASR)/2013 3 ACCOUNT CONSISTING OF CASH BOOK, LEDGER AND BILLS/V OUCHERS WERE STATED TO BE PRODUCED BEFORE THE AO IN THE REPLY OF ASSESSEE FIL ED BEFORE THE AO. THE AO AFTER CONSIDERING THE EXPLANATION OF ASSESSEE AN D POINTING OUT VARIOUS DISCREPANCIES IN THE ACCOUNTS OF ASSESSEE AS PER AS SESSMENT ORDER, AND RELYING ON A DECISION OF ITAT, AMRITSAR IN CASE OF PARAMJIT SINGH PROP. M/S. DOABA FILLIING STATION IN ITA NO.144 AND 159(A SR)/2008 DATED 27.03.2008, ESTIMATED THE INCOME AT 50% OF THE RECE IPTS SHOWN BY THE ASSESSEE AFTER REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT AND MADE AN ADDITION OF RS.23,01,936/- AS NON-AGRIC ULTURE INCOME. 3. BEFORE THE LD. CIT(A), THE ASSESSEE MADE SUBMISS IONS WHICH WERE SENT TO THE AO FOR COMMENTS. THE LD. CIT(A) AFTER H AVING COMMENTS OF THE REJOINDER FROM THE ASSESSEE OBSERVED VIDE PARA 8 T O 10 OF HIS ORDER, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER 8. THE REASONS ADVANCED BY THE AO FOR REJECTION OF THE BOOKS OF ACCOUNTS ARE PRECISELY THAT THE EXPENSES IN RESPEC T OF REPAIRS AND EXPENSES (RS.17800), SALARY/WAGES (RS.96000), STAFF WELFARE (RS.17715), TRANSPORTATION ALLOWANCE (RS.27450). DI RECTOR LABOUR (RS.3,89,760), COMBINE EXPENSES (RS.1,41,100) BARDA NA OLD (RS.6115) WERE UNVOUCHED AND DEPRECIATION (RS.204500) WITHOUT DETAILS OF OPENING BALANCES. ALSO, NO EXPENSES ON SEEDS, PLOUG HING, DIGGING, HARVESTING, LOADING AND UNLOADING OF CROPS WERE NOT SHOWN AT ALL IN THE BOOKS OF ACCOUNT. FOR THESE REASONS THE AO HELD THAT THE BOOKS OF ACCOUNT AND AGRICULTURAL INCOME WAS NOT OPEN TO VER IFICATION. THE ARGUMENT OF ASSESSEE THAT IN ABSENCE OF ANY SUBSTAN TIAL INCOME OTHER ITA NO.505(ASR)/2013 4 THAN AGRICULTURE INCOME, ALL THE EXPENSES CAN BE TR ACED TO BE ARISING OUT OF AGRICULTURE INCOME IS NOT ENTIRELY TENABLE A S THE VITAL EXPENSES LIKE SEEDS, PLOUGHING, DIGGING, HARVESTING, LOADIN G AND UNLOADING DO NOT FIND PLACE IN THE EXPENSES SHOWN IN THE BOOKS OF ACCOUNT AND IN ABSENCE OF THE SAME THE TRUE EXTENT OF AGRICULTURAL INCOME CANNOT BE DERIVED AT. THE ARGUMENT OF ASSESSEE THAT COMPLETE DETAILS IN RESPECT OF DEPRECIABLE ASSETS WERE GIVEN IS FOUND TO BE COR RECT AFTER GOING THROUGH THE ASSESSMENT RECORDS BUT THE FACT REMAINS THAT THE ITEMS OF EXPENSES LISTED AS UNVOUCHED ARE NOT SUPPORTED AND CERTAIN EXPENSES VITAL TO HARVESTING OF CROPS ARE NOT SHOWN WHEREAS ALL THE OTHER EXPENSES SHOWN ARE DULY SUPPORTED BY BILLS AND ALL THE ITEMS OF INCOME IS ALSO SUPPORTED ALONGWITH SALE BILLS ETC. IN VIEW OF THIS I FIND NO FAULT WITH THE ACTION OF THE AO IN REJECTIN G THE ACCOUNTS UNDER SECTION 145(3) OF THE ACT. GROUND NO.2 IS DISMISSED . 9. OTHER GROUNDS I.E. GROUND NO. 1, 3 ,4 AND 5 RELA TES TO ESTIMATION OF INCOME @ 50% OF RECEIPTS SHOWN BY ASS ESSEE. THIS ISSUE INVOLVED IN THESE GROUNDS OF APPEALS IS THE ESTIMAT ION OF AGRICULTURE INCOME IN OTHER WORDS ESTIMATION OF EXPENSES IN REL ATION TO AGRICULTURAL INCOME, AS THE AO HIMSELF HAS ACCEPTED THE RECEIPTS SHOWN BY THE ASSESSEE FROM AGRICULTURAL ACTIVITY. THOUGH, THE AO APPREHENDED THAT THE LEASE AGREEMENT WITH KARAMJI T SINGH S/O JOGINDER SINGH FOR 17 ACRES AND 24 ACRES WAS DATED 08.11.2011 AND DID NOT RELATED TO THIS AY BUT WHEN HE HAD ACCEPTED THE RECEIPTS SHOWN, THIS APPREHENSION REMAINS ACADEMIC ONLY. THE AO HAS BASED THE ESTIMATION OF EXPENSES RELYING ON THE DECISION OF ITAT IN CASE OF PARAMJIT SINGH (SUPRA) IN WHICH IT WAS HELD AS UNDE R: WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL PLACED ON RECORD. THE AO HAS GONE BY THE DATE COLL ECTED FROM THE CHIEF AGRICULTURAL OFFICER BUT AO HAS MADE NO DISCUSSION REGARDING COPY OF ACCOUNT OF THE ASSESSEE IN THE BO OKS OF COMMISSION AGENT. FURTHER THE ASSESSEE SUBMITTED B EFORE THE LD. CIT(A) THAT THE RECEIPT FROM THE SALE OF CROP I S AS FOLLOWS: WHEAT 3,44,693.00 PADDY 3,56,826.39 TOTAL: 7,01,519.00 ITA NO.505(ASR)/2013 5 AGAINST THIS, THE ASSESSEE STATED THAT HE HAS INCUR RED EXPENDITURE OF RS.2,94,511. THUS, THE BALANCE NET R ECEIPT IS RS.4,07,108/-. HOWEVER, THE ASSESSEES PLEA IS THAT HE HAS DECLARED ONLY RS.4,00,000/- AS AGRICULTURAL INCOME, SAME TO BE CONSIDERED. BUT THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM BY PRODUCING REQUISITE EVIDENCE LIKE BILL WITH REGARD TO SALE OF CROPS AND EXPENDITURE INCURRED AND AS SUCH CERTAIN DISALLOWANCE IS NECESSARY. SO IN THE INTEREST OF JU STICE, WE DIRECT THE AO TO CONSIDERING 50% OF THE GROSS RECEI PTS OF RS.7,01,519/- AS INCOME FROM AGRICULTURE AT RS.3,50 ,760/-. THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED. 10. AFTER CAREFULLY CONSIDERING, IT IS FOUND THAT T HE FACTS IN THE CASE OF ASSESSEE AND THAT OF SH. PARAMJIT SINGH ARE NOT IDENTICAL. IN THAT CASE THOUGH THE RECEIPTS WERE SHOWN BY THE ASSESSE E BUT WERE NOT BACKED BY SALE BILLS OF CROPS. THE EXPENDITURE CLAI MED WAS ALSO NOT SUPPORTED BY ANY EVIDENCE IN THAT CASE WHEREAS IN T HE CASE OF ASSESSEE THE DEFAULT IS PARTIAL FOR WHICH THE BOOKS OF ACCOU NT ARE REJECTED. THE RECEIPTS IN THE CASE OF ASSESSEE IS SUPPORTED BY BI LLS AND STAND ACCEPTED BY THE AO. AS FAR AS THE EXPENSES ARE CONC ERNED BARRING A FEW ITEMS, ALL OTHER EXPENSES ARE SUPPORTED BY BILL S ETC, AS PLACED ON RECORD. FURTHER IN THE CASE OF PARAMJIT SINGH, AO H AS WORKED OUT THE INCOME ON THE BASIS OF THE DATA COLLECTED FROM CHIE F AGRICULTURAL OFFICER WHICH IS NOT THE CASE OF THE ASSESSEE. IN V IEW OF THE ABOVE, IN MY OPINION THE DECISION OF ITAT, AMRITSAR IS DISTI NGUISHABLE ON FACTS AS MENTIONED ABOVE. TAKING THE TOTALITY OF CIRCUMST ANCES INTO CONSIDERATION, IT IS FOUND FAIR AND REASONABLE IF T HE EXPENSES @ 40% ARE ADOPTED AS AGAINST 29.90% CLAIMED BY ASSESSEE. THIS WOULD TAKE CARE OF EXPENSES WHICH ARE NOT SHOWN AT ALL AS WELL AS A PART OF EXPENSES WHICH ARE UNVOUCHED. 4. THE LD. COUNSEL FOR THE ASSESSEE, SH.J.S.BHASIN, ADVOCATE, RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED THAT THE AO HAS RELIED UPON THE SOLE DECISION OF THE ITAT, AMR ITSAR BENCH, IN THE CASE OF INCOME TAX OFFICER, KAPURTHALA VS. SH.PARAMJIT SINGH PROP. M/S. DOABA ITA NO.505(ASR)/2013 6 FILLING STATION, KAPURTHALA IN ITA NO. 144(ASR)/200 8 AND 159(ASR)/2008 DATED27TH MARCH, 2008, COPY PLACED ON RECORD, WHIC H FACTS ARE DISTINGUISHABLE, AS SUBMITTED BEFORE THE LD. CIT(A) , AS WELL. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF ITAT A HMEDABAD BENCH IN THE CASE OF ACIT, CIRCLE, BARODA VS. SH. ANIL BHOLABHAI PATEL, BARODA, IN ITA NO.3288/AHD/2008 FOR THE ASSESSMENT YEAR 2004-05 DA TED 10 TH JUNE, 2011, COPY PLACED ON RECORD. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ARGUMENTS MADE BY THE LD. COUNSEL FO R THE ASSESSEE, MR. J.S.BHASIN, ADVOCATE, THAT THE ASSESSEE IS MAINTAIN ING REGULAR BOOKS OF ACCOUNT AND THEREFORE, BOOKS OF ACCOUNT CANNOT BE R EJECTED BY THE AO AND THIS ACTION OF THE AO CANNOT BE CONFIRMED BY THE LD . CIT(A). IN THIS REGARD, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT RAISED ANY GROUND WITH REGARD TO REJECTION OF BOOKS OF ACCOUNT BEFORE US, WHICH IS E VIDENT FROM THE GROUNDS OF APPEAL REPRODUCED HEREINABOVE. ACCORDINGLY , THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS OUTRIGHTLY REJECTED. HO WEVER, IN THE INTEREST OF JUSTICE, WE PROCEED TO DECIDE THE ISSUE AND AFTER P ERUSING THE RECORD AND THE ITA NO.505(ASR)/2013 7 ARGUMENTS MADE BY BOTH THE PARTIES, WE FIND NO INFI RMITY IN THE ORDER OF THE LD. CIT(A) IN PARA 8 OF THE ORDER, SINCE MOST OF T HE EXPENSES REMAINED UNVOUCHED AND WITHOUT DETAILS OF OPENING BALANCES A ND ALSO, NO EXPENSES ON SEEDS, PLOUGHING, DIGGING, HARVESTING, LOADING AND UNLOADING OF CROPS WERE NOT SHOWN AT ALL IN THE BOOKS OF ACCOUNT. THEREFORE , THE BOOKS OF ACCOUNT AND THE AGRICULTURAL INCOME DECLARED BY THE ASSESSE E WAS NOT OPEN TO VERIFICATION TO THE AO. 6.1. AS REGARDS THE ESTIMATION OF EXPENSES, WE CONC UR WITH THE VIEWS OF THE LD. CIT(A) THAT THE AO INSPITE OF REJECTION OF BOOKS OF ACCOUNT HAS ACCEPTED THE RECEIPTS DECLARED BY THE ASSESSEE. 6.2. AS REGARDS THE DECISION OF THE ITAT, AMRITSAR BENCH IN THE CASE OF ITO VS. SH. PARAMJIT SINGH (SUPRA), RELIED UPON BY THE AO, THE LD. CIT(A) HAS WELL APPRECIATED THE ARGUMENTS MADE BY THE LD. COUNSEL THAT THE SAID DECISION IS QUITE DISTINGUISHABLE WHICH, IN FACT HA S ALSO BEEN ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. THE LD. CI T(A) HAS ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE, HAS VERY R EASONABLY ESTIMATED THE EXPENSES @ 40% AS AGAINST RS.29.90% CLAIMED BY ASSE SSEE AND AS AGAINST 50% ESTIMATED BY THE AO. THEREFORE, WE DO NOT FIND ANY ERROR IN THE ORDER ITA NO.505(ASR)/2013 8 OF THE LD. CIT(A) AND THE SAME IS WELL REASONED AN D IS UPHELD. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.505(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. NAIB SINGH S/ SH.AJIT SINGH, C/O P UNJAB RICE & GENERAL MILLS MALSIA ROAD, SHAHKOT, JALANDHAR. 2. THE ITO NAKODAR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR