Virender Singh, Panipat V. ITO, Panipat

ITA 6011/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53113 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 15-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: K C ANEJA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH H DELHI ] BEFORE MS. DIVA SINGH, JM AND SHRI K. D. RA NJAN, AM I. T. APPEAL NO. 6011 (DEL) OF 2010 ASSESSMENT YEAR : 2007-08. SHRI VARENDER SINGH, THE INCOME-TAX OFFIC ER, S/O. SHRI SATBIR SINGH, H. NO. 135, LATIF GARDEN, VS. W A R D : 4, A S S A N D H R O A D, P A N I P A T [HARYANA]. P A N I P A T . PAN/GIR NO. APOPS 4191F. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI K. C. ANEJA, ADV.; DEPARTMENT BY : DR. B. R. R. KUMAR, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 07-08 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS), KARNAL. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS:- 1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AO HAS WRONGLY OBSERVED THE FACTS AND ARBITRARILY ESTIMATED THE IN COME AT RS.3,00,638/- OTHER THAN AGRICULTURE SOURCE AND THE LD. CIT (APPEALS) E RRED IN CONFIRMING THE SAME; 2 THAT THE TOTAL NET AGRICULTURE INCOME DEC LARED RS.22,52,033/- YIELDED OUT OF 36 ACRES SELF CULTIVATED ANCESTRAL LAND OF THE F AMILY AFTER MEETING EXPENSES. THE ASSESSING OFFICER HAS WITHOUT ANY BASIS AND ON MERE SURMISES EXCLUDED THE 2 I. T. APPEAL NO. 6011 (DEL) OF 2010 INCOME OF RS.3,00,638/- OUT OF RS.11,52,033/- AND T OOK IT INCOME FROM OTHER THAN AGRICULTURE SOURCE, WHICH IS WRONG. AND THE LD. CI T (APPEALS) ERRED IN CONFIRMING THE SAME; 3 THAT THE ASSESSING OFFICER AND THE LD. CI T (APPEALS) HAVE FULLY IGNORED THE CHARACTER OF JOINT HINDU FAMILY BEING RUN BY TH E ASSESSEE THROUGH ANCESTRAL SOURCE OF AGRICULTURE. AND THE INNOCENT ASSESSEE H AS NOT PROPERLY BEEN GUIDED AND WRONGLY CHARGED TO TAX AGRICULTURE INCOME, WHIC H IS BAD-IN-LAW; 4 THAT THE ASSESSING OFFICER WITHOUT ANY BA SIS AND BRINGING EXPERT OPINION ON RECORD ESTIMATED AGRICULTURE EXPENSES 35% OF THE RS .8,51,395/- TO THE TUNE OF RS.2,97,988/- AND ERRED IN CHARGING TO INCOME TAX; 5 THAT THE FODDER AND VEGETABLES CULTIVATIO N, SALE PROCEEDS HAVE NOT BEEN TAKEN INTO CONSIDERATION. ORDER THUS MADE IS BAD-I N-LAW; 6 THAT THE ASSESSMENT ORDER IS FULLY LACKIN G NATURE AND OPERATION OF AGRICULTURAL ACTIVITIES CONDUCTED BY THE ASSESSEE. AS SUCH IS UNFOUNDED IN LAW AND LIABLE TO BE QUASHED. 3. THERE ARE TWO ISSUES FOR OUR CONSIDERATION, THE FIRST RELATES TO ESTIMATION OF INCOME OF RS.3,00,638/- AS INCOME OTHER THAN AGRICULTURE SOUR CE AND SECOND RELATES TO ADDITION OF RS.2,97,988/- ON ACCOUNT OF EXPENSES INCURRED TO EA RN AGRICULTURAL INCOME OF RS.8,51,395/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSE SSEE IS AN AGRICULTURIST AND LIVING JOINTLY WITH HI S FATHER AND YOUNGER BROTHER. THE ASSESSEE AND HIS F AMILY MEMBERS ARE HAVING 36 ACRES CULTIVATED ANCESTRAL LAND. HIS YOUNGER BROTHER IS A QUALIFIED DENTIST [BDS] EMPLOYED IN AUSTRALIA. THE ASSESSEE FOR THE PURPOSE OF GETTING VISA FOR HIS BR OTHER WAS REQUIRED TO ESTABLISH HIS PERMANENT IDENTITY AND THE SOURCE OF INCOME. HE FILED RETURN OF INCOME ADMITTING AGRICULTURAL INCOME OF RS.11,52,033/-. THE ASSESSING OFFICER DURING THE C OURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD FILED J FORMS(AGRICULTURAL SALE PROCEE DS) ALONG WITH THE RETURN OF INCOME TO SUBSTANTIATE HIS INCOME FROM AGRICULTURAL OPERATION S. ON PERUSAL OF J FORMS FILED BY THE ASSESSEE FOR RS.11,47,787/- IT WAS NOTICED THAT J FORMS FOR RS.1,99,313/- AND FOR RS.97,079/- PERTAINED TO SHRI SATBIR SINGH AND SHRI VINOD KUMAR RESPECTIVE LY. FROM THE J FORMS THE AO CONCLUDED THAT THE ASSESSEE HAD SOLD CROP FOR RS.8,51,395/- ONLY. MOREOVER THE ASSESSEE HAD NOT SHOWN ANY WITHDRAWAL FOR AGRICULTURAL EXPENSES. THEREFORE, T HE ASSESSEE WAS REQUIRED TO SUBSTANTIATE HIS CLAIM FOR AGRICULTURAL INCOME OF RS.11,52,033/-. I N RESPONSE TO THE QUERY RAISED BY THE AO IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE OWNED 3 6 ACRES ANCESTRAL LAND IN VILLAGE JOSHI, DISTT. 3 I. T. APPEAL NO. 6011 (DEL) OF 2010 PANIPAT ALONG WITH HIS FATHER, SHRI SATBIR SINGH A ND YOUNGER BROTHER, SHRI VINOD KUMAR IN EQUAL SHARE. THE ASSESSEE FILED PROOF IN SUPPORT OF THE OWNERSHIP OF AGRICULTURAL LAND. IT WAS ALSO SUBMITTED THAT HIS BROTHER SHRI VINOD KUMAR DID BDS FROM DAV DENTAL COLLEGE, YAMUNA NAGAR IN 2005 AND WAS PURSUING HIS MEDICAL LINE AND WAS NOT DOING ANY AGRICULTURAL ACTIVITIES FOR THE LAST SEVERAL YEARS AS HE WAS BUSY IN HIS MEDICA L PROFESSION. THEREFORE, HE GAVE HIS RIGHT TO CULTIVATE HIS SHARE OF LAND TO HIS BROTHER, THE ASS ESSEE. HIS FATHER, SHRI SATBIR SINGH, AGED ABOUT 55 YEARS WAS NOT DOING ANY AGRICULTURAL ACTIVITIES FOR THE LAST 5 7 YEARS AND THE ASSESSEE WAS CULTIVATING HIS SHARE OF LAND ALSO. AS REGARDS J F ROM FORTH RS.1,99,313/- IN THE NAME OF SHRI VINOD KUMAR AND RS.97,079/- IN THE NAME OF SHRI SAT HIR SINGH, IT WAS SUBMITTED THAT SINCE ENTIRE 36 ACRES OF LAND WAS CULTIVATED BY THE ASSESSEE, TH E AGRICULTURAL PROCEEDS INDICATED IN J FORMS ENTIRELY RELATED TO HIM. THE LD. AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT IF YOUNGER BROTHER AND FATHER DID NOT C ULTIVATE AND DID NOT GO TO SELL THEIR CROP IN THE MARKET, THEN HOW DID ARHATIA MENTIONED THEIR NAMES IN J FORMS. SINCE THE ASSESSEE HAD ONLY FILED COPY OF JAMABANDI AND CONFIRMATIONS FROM HIS FATHER AND YOUNGER BROTHER REGARDING CULTIVATION OF LAND, THE AO DID NOT BELIEVE THE SAM E AND TREATED THE ENTIRE STORY AS CONCOCTED ONE. THE AO THEREFORE, TREATED THE AMOUNT OF RS.8, 51,395/- AS AGRICULTURAL INCOME AND ADDED THE BALANCE AMOUNT OF RS.3,00,638/- AS INCOME FROM OTHE R SOURCES. 3.1 FURTHER THE ASSESSEE WAS ASKED TO EXPLAIN THE S OURCE OF EXPENDITURE INCURRED ON AGRICULTURAL OPERATIONS. IT WAS SUBMITTED BY THE A SSESSEE THAT DURING 2006-07 THE ASSESSEE HAD TOTAL AGRICULTURAL RECEIPTS OF RS.15,36,260/- I.E. RS.11,47,787/- FROM SALE OF WHEAT AND PADDY AND RS.3,88,473/- FROM SALE OF VEGETABLES. IT WAS FURT HER SUBMITTED THAT GENERALLY EXPENSES ON CULTIVATION ARE NOT MORE THAN 35% AND HE HAD INCURR ED RS.3,88,473/- ON CULTIVATION OF AGRICULTURAL LAND AND PESTICIDES. THE EXPLANATION GIVEN BY THE ASSESSEE THAT HE HAD SOLD VEGETABLES FOR RS.3,88,473/- WAS NOT FOUND TENABLE IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. THE AO ESTIMATED 35 PER CENT OF TOTAL AGRICULTURAL RECEIPTS OF RS.8,51,395/- ON ACCOUNT OF EXPENSES WHICH MIGHT HAVE BEEN INCURRED ON AGRICULT URAL OPERATIONS WHICH WORKED OUT TO RS.2,97,988/-. THE AMOUNT OF RS.2,97,988/- WAS ADD ED TO THE INCOME OF THE ASSESSEE. 4 I. T. APPEAL NO. 6011 (DEL) OF 2010 4. BEFORE THE LD. CIT (APPEALS) IT WAS SUBMITTED TH AT THE ASSESSEE NEVER MAINTAINED ACCOUNTS FOR AGRICULTURAL OPERATIONS NOR WAS IT POS SIBLE TO MAINTAIN. THE RETURN OF INCOME SHOWING AGRICULTURAL INCOME AT RS.11,52,033/- WAS F ILED TO PROVE FINANCIAL STATUS, WHICH WAS REQUIRED FOR GETTING VISA FOR HIS YOUNGER BROTHER V INOD KUMAR, WHO WAS WILLING TO HAVE JOB IN AUSTRALIA. THE ASSESSEE HAD NO OTHER ACTIVITIES EX CEPT AGRICULTURAL OPERATIONS CARRIED OUT BY HIM AND THE ASSESSING OFFICER WITHOUT ANY COGENT REASON S AND SUPPORTING EXPERT OPINION APPLIED HIS MIND AND ESTIMATED THE INCOME CHARGEABLE TO TAX, WH ICH IS WRONG AND HIGHLY ILLEGAL. THE LD. CIT (APPEALS), HOWEVER, REJECTED THE CONTENTION OF THE ASSESSEE THAT ASSESSEE WAS CARRYING ON AGRICULTURAL ACTIVITIES ON BEHALF OF HIS FATHER AND HIS BROTHER. SINCE THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CONTENTION A ND CONFIRMATION TO THIS EFFECT FROM HIS FATHER AND HIS BROTHER COULD NOT BE BROUGHT ON RECORD NEIT HER DURING THE ASSESSMENT PROCEEDINGS NOR BEFORE HIM, THE LD. CIT (APPEALS), THEREFORE, CONCL UDED THAT RECEIPTS FROM AGRICULTURAL PRODUCE OF THE ASSESSEE DURING THE YEAR WAS UTMOST OF RS.8,51, 395/- AS RECORDED IN J FORMS. THE LD. CIT (APPEALS) ALSO UPHELD THE EXPENDITURE AT THE RATE O F 35 PER CENT OF SALE PROCEEDS IN THE ABSENCE OF ANY EVIDENCE THAT THE ASSESSEE HAD INCURRED THE EXP ENSES OUT OF AGRICULTURAL OPERATIONS. THE LD. CIT (APPEALS), THEREFORE, UPHELD BOTH THE ADDITIONS . 5. BEFORE US THE LD. AR OF THE ASSESSEE REITERATED SIMILAR ARGUMENTS. HE SUBMITTED THAT THE ASSESSEE HAD SOLD PADDY AND WHEAT OF RS.11,47,787/- AND VEGETABLES OF RS.3,88,473/-. THEREFORE, THE TOTAL RECEIPTS FROM AGRICULTURAL OPERATIONS WER E AT RS.15,36,260/-. IF 35 PER CENT EXPENSES ARE DEDUCTED FROM GROSS RECEIPTS OF AGRICULTURAL OPERAT IONS THE ASSESSEE WILL BE LEFT WITH ALMOST THE SAME AMOUNT, WHICH WAS DECLARED IN THE RETURN OF IN COME. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD FILED COPY OF RATION CARD GIVING DETAI LS OF ALL THE FAMILY MEMBERS. AS PER THE DETAILS, THERE ARE 10 FAMILY MEMBERS. SHRI VINOD K UMAR AND SHRI SATBIR SINGH ARE ALSO THE FAMILY MEMBERS. SH. SATBIR SINGH IS FATHER OF THE A SSESSEE. AS ADMITTED BY THE ASSESSEE THE AGRICULTURAL LANDS ARE INHERITED BY THE ASSESSEE. N ORMALLY SH. SATBIR SINGH SHOULD OWN ENTIRE LANDS UNLESS THERE WAS DIVISION OF HUF PROPERTY OR SH SATBIR SINGH HAD MADE SOME ARRANGEMENT TO THAT EFFECT. THERE IS NO EVIDENCE ON RECORDS THA T AGRICULTURAL LANDS OWNED BY SH. SATBIR SINGH 5 I. T. APPEAL NO. 6011 (DEL) OF 2010 AND SH. VINOD KUMAR WERE CULTIVATED BY THE ASSESSEE . IF THE LANDS ARE DIVIDED, IT IS NOT UNDERSTOOD AS TO WHY THE ASSESSEE WILL EXHIBIT FINA NCIAL STATUS FOR THE PURPOSE OF VISA. IF FINANCIAL STATUS OF FAMILY IS TO BE ESTABLISHED IT SHOULD BE OF FAMILY AS SUCH HEADED BY THE FATHER. MOREOVER THE ASSESSEE HAD NOT FILED THE COPY OF KH ASRA AND GIRDAWARI TO EXPLAIN IN WHICH AREA PADDY AND WHEAT WERE GROWN AND THE LAND AREA I N WHICH VEGETABLES WERE GROWN. THE NAMES OF VEGETABLES GROWN ARE ALSO NOT GIVEN. THE ASSESSI NG OFFICER HAS NOT CONDUCTED ANY INQUIRY IN THIS REGARD. IN THE ABSENCE OF THE DETAILS, IT IS NOT POSSIBLE FOR US TO ARRIVE AT THE CONCLUSION THA T THE ASSESSEE HAD DERIVED INCOME FROM SALE OF VEGETA BLES. THE ASSESSEE HAD ALSO NOT GIVEN THE DETAILS OF SOURCE OF INVESTMENT IN AGRICULTURAL OPE RATIONS I.E. THE EXPENDITURE REQUIRED BY WAY OF SEEDS, FERTILIZERS, INSECTICIDES AND PESTICIDES ETC . THERE IS NOTHING ON RECORD TO SUGGEST AS TO HOW THE AGRICULTURAL OPERATIONS WERE CARRIED OUT. IT I S ALSO NOT KNOWN AS TO WHETHER THE ASSESSEE OWNS AGRICULTURAL IMPLEMENTS SUCH AS TRACTOR ETC. FOR TH E PURPOSE OF CULTIVATION OF THE LANDS. IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER SHOULD EXAMINE THE CONTENTION OF THE ASSESSEE AND MAKE ENQUIRIES FROM REVENUE AUTHORITIES AS WELL AS THE NEIGHBOUR-HOOD AS TO WHAT CROPS WERE RAISED ON VARI OUS LANDS OWNED BY HIM. HE WILL ALSO EXAMINE THE CONTENTION OF ASSESSEE AS TO WHETHER LA NDS OWNED BY HIS FATHER AND BROTHER WERE ALSO CULTIVATED BY HIM. IF IT WAS SO, THEN WHAT WAS THE SOURCE OF THEIR LIVELIHOOD. WE, THEREFORE, SET ASIDE THE ASSESSMENT AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH DETERMINATION OF AGRICULTURAL INCOME. THE ASSESSING OFFICER WILL EXAMINE THE CASE AFRESH AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. W E ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 11 TH NOVEMBER, 2011. SD/- SD/- [ DIVA SINGH ] [ K. D. R ANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH NOVEMBER, 2011 . * MEHTA * 6 I. T. APPEAL NO. 6011 (DEL) OF 2010 COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.