SATISH WAMAN WAGH, MUMBAI V. JT. CIT RANGE - 24(1), MUMBAI

ITA 6026/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5441 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI LD
• Assessee Lawyers: RAHUL K HAKANI LD
• Keywords: Unexplained cash credit
• Section: 133(6); 131; 68

Judgement Text

ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.6026/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) SATISH WAMAN WAGH 207/208, UDYOG BHAVAN SONAWALA ROAD, GOREGAON (E) MUMBAI-400 063 / VS. JOINT COMMISSIONER OF INCOME TAX-24(1) MUMBAI ! ./ ./PAN/GIR NO. AAAPW-7907-N ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : RAHUL K. HAKANI , LD.AR RE VENUE BY : RAM TIWARI, LD. DR / DATE OF HEARING : 18/07/2018 / DATE OF PRONOUNCEMENT : 25/07/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)- 42[CIT(A)], MUMBAI, APPEAL NO.CIT(A)-42/IT-378/14-15 DATED 19/05/2016 QUA CONFIRMATION & ENHANCEMENT OF CERTAIN ADDITIONS ON ACCOUNT OF AGRICULTURAL INCOME REFLECTED BY THE ASS ESSEE IN HIS RETURN OF INCOME. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED B Y LD. JOINT ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 2 COMMISSIONER OF INCOME TAX-24(1), MUMBAI [AO] U/S 1 43(3) OF THE INCOME TAX ACT, 1961 ON 03/03/2014 WHEREIN THE ASSESSEE WAS ASSESSED AT RS.154.30 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES. THE ASSESSEE HAD REFLECTED AGRICULTURAL INCOME OF RS.36 .25 LACS IN THE RETURN OF INCOME WHICH HAS BEEN ACCEPTED FOR RS.10 LACS AND THE BALANCE AMOUNT OF RS.26.25 LACS HAS BEEN ADDED AS C ASH CREDIT U/S 68 IN THE HANDS OF THE ASSESSEE. THE NATURE / QUANTUM OF AGRICULTURAL INCOME EARNED BY THE ASSESSEE IS THE SOLE SUBJECT M ATTER OF THIS APPEAL. 2. THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ENGAG ED IN MANUFACTURING OF PHARMACEUTICAL DRUGS AND CHEMICALS ETC. DURING IMPUGNED AY. IN SUPPORT OF AGRICULTURAL INCOME EARN ED DURING THE YEAR, THE ASSESSEE SUBMITTED COPY OF 7/12 EXTRACT AND PURCHASE AGREEMENT OF AGRICULTURAL LAND. THE INCOME WAS STATED TO BE EARN ED OUT OF CASH SALE OF FLOWERS, COCONUTS, CHIKU, KAJU AND VEGETABLES. THE ASSESSEE DEFENDED THE INCOME BY SUBMITTING THAT THE AREA OF THE LAND WAS 11 ACRES APPROX. AND INCOME @3 LACS PER ACRE WAS REASONABLE EXPECTED EARNINGS. HOWEVER, IT WAS NOTED THAT NO PROPER BOOKS OF ACCOU NTS WERE BEING MAINTAINED BY THE ASSESSEE AND IN SUPPORT OF THE IN COME, ONLY FEW SALE BILL WERE PRODUCED. THE ASSESSEE FAILED TO FURNISH COMPLETE AND SPECIFIC DETAILS REGARDING AGRICULTURAL ACTIVITY CARRIED OUT BY HIM. RESULTANTLY, FOR WANT OF ADEQUATE DETAILS, LD. AO ACCEPTED THE AGRIC ULTURAL INCOME TO THE EXTENT OF RS.10 LACS AND ADDED THE BALANCE AMOUNT A S CASH CREDIT U/S 68. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE THE LD. CIT(A) VIDE IMPUGNED ORDER DATED 19/ 05/2016, WHEREIN THE LD. CIT(A) NOT ONLY CONFIRMED THE STAND OF LD. AO BUT ALSO OPINED ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 3 THAT EVEN THE BALANCE INCOME OF RS.10 LACS WAS TO B E ASSESSED AS CASH CREDIT. THE MATTER WAS CONCLUDED IN THE FOLLOWING MANNER: DECISION: THE FACTS OF THE CASE, AS SUMMARIZED ABOVE, AND THE RELEVANT ORDERS AND WRITTEN SUBMISSIONS MADE ARE ALL DULY CONSIDERED. THE SOLE GROUND OF APPEAL IS DECIDED AS UNDER. THE CLAIM OF THE ASSESSEE CONCERNING HIS AGRICULTUR AL INCOME IS FANTASTIC. THE ASSESSEE HAS CLAIMED HE HAS ACQUIRED ABOUT 11 ACRES OF LAND FOR A SUM OF RS.23,00,000/- AT VILLAGE UPLAT, TAL. TALASARI, DIS T. THANE VIDE AN IRREVOCABLE GENERAL POWER OF ATTORNEY DATED 31.03.2009. THIS IN DICATES THAT F.Y. 2009-10 WAS THE FIRST YEAR IN WHICH THE ASSESSEE OWNED AN AGRIC ULTURAL LAND. THE BUSINESS OF THE ASSESSEE IS CARRIED OUT AT LOTE PARSHURAM INDL. ARE A, MIDC, TAL. KHED, DIST. RATNAGIRI. THIS IS QUITE FAR FROM AGRICULTURAL LAND S IN DIST. THANE. THE ASSESSEE HAS CLAIMED THAT THE AGRICULTURAL LAND HAD ORCHARDS OF COCONUTS, CHIKOO, KAJU, MANGOES ETC. AND THE ASSESSEE HAS ALSO CULTIVATED VEGETABLE S AND FLOWERS ON THE LAND. THE ASSESSEE CLAIMED THAT DURING THE F.Y. 2010-11 HE HA D SPENT A SUM OF RS. 48,000/- ON FERTILIZER, MANURE AND SEEDS AND THE ASSESSEE AL SO CLAIMED TO HAVE SPENT RS.1,08,000/- ON WAGES IN RESPECT OF THE AGRICULTUR AL LAND. AS AGAINST THESE EXPENSES THE ASSESSEE CLAIMED THAT HE HAS EARNED AG RICULTURAL INCOME OF RS.36,25,000/-. THIS TRANSLATES INTO A 157% RETURN ON THE TOTAL INVESTMENT IN THE FARMLAND IN ONE YEAR WHICH IS UNBELIEVABLE. THE ASS ESSING OFFICER CALLED FOR THE DETAILS OF THE CROPS CULTIVATED ALONGWITH THE DETAI LS OF THE PRODUCE, THE FERTILIZERS PURCHASED, THE MANURE PURCHASED, THE LABOUR EMPLOYE D AND THE DETAILS OF PAYMENTS MADE TO THE LABOUR IN RESPECT OF THIS AGRI CULTURAL INCOME. THE ASSESSEE CLAIMED THAT EVERYTHING WAS DONE IN CASH AND THE AG RICULTURAL WORK IS DONE ON BATAI I.E. THE CROP IS SHARED WITH THE FARM WORKERS WHO M ANAGE THE FARM AND INCUR EXPENSES ON THE FARMLAND. THIS INDICATES THAT THE G ROSS RETURN FROM THE FARM WAS NEARLY DOUBLE THE INCOME DECLARED BY THE ASSESSEE A S THE BATAI IS USUALLY DONE IN THE RATIO 50:50. BEFORE THE AO THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY BOOKS OF ACCOUNT OR AGREEMENTS IN RESPECT OF BATAI. THE AS SESSEE WAS ALSO NOT ABLE TO PRODUCE ANY OTHER DETAILS EXCEPT FOR A FEW BILLS. T HE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE IS UNABLE TO EXPLAIN AND JUSTIFY THE SOURCE OF THE INCOME AND ACCORDINGLY HELD THAT A SUM OF RS.26,25,000/- REPRE SENTS UNEXPLAINED INCOME AND THE SAME WAS BROUGHT TO TAX UNDER SECTION 68 OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OTHER EVIDENCE TO SUBSTANTIATE THE CLAIM IN RESPECT OF TH E AGRICULTURAL INCOME. CONSEQUENTLY, VIDE ORDER SHEET DATED 27.04.2016 THE ASSESSEE WAS CONFRONTED ABOUT THE SAME AND A SHOW CAUSE FOR ENHANCEMENT OF INCOME WAS GIVEN AS TO WHY THE ENTIRE SUM OF RS.36,25,000/- SHOULD NOT BE TREA TED AS UNEXPLAINED CASH CREDIT. THE ASSESSEE MERELY REITERATED THAT THE AGRICULTURA L PRODUCE WAS SOLD IN CASH TO VARIOUS PERSONS WHO COME TO THE FARM AND THAT THESE PERSONS PAY FOR THE PRODUCE AND CARRY THE SAME WITH THEM. THIS IS CONTRARY TO T HE CLAIM MADE BEFORE THE AO TO THE EFFECT THAT THE PRODUCE IS SOLD IN THE MARKET ( AS PER LETTER DATED 26.02.2014). IN THE APPELLATE PROCEEDINGS VIDE LETTER DATED 04.05.2 016, THE ASSESSEE ADMITTED THAT THERE ARE NO RECORDS OF THE AGRICULTURAL PRODUCE OR EXPENSES. ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 4 THE REPLY OF THE ASSESSEE IS DULY CONSIDERED. UNDER SECTION 68 OF THE ACT, IT IS NOT ONLY THE SOURCE OF A CASH CREDIT THAT REQUIRES TO B E PROVED BUT ALSO THE EXPLANATION REGARDING THE CASH CREDIT HAS TO BE SATISFACTORY. AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 SC THE TEST IS OF HUMAN PROBABILITIES. THE SUPREME COURT HAD IN THAT CASE INTER-ALIA HELD THAT THE APPARENT MUST BE CONSIDERED TO BE REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT REAL AN D THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TES T OF HUMAN PROBABILITIES. THE SAME RATIO WAS FOLLOWED BY THE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT (1995) 214 ITR 801 (S.C) AND IT WAS RE AFFIRMED IN THE CASE OF CIT V. P. MOHANKALA (2009) 291 ITR 278 (S.C). KEEPING IN V IEW THE DECISIONS OF THE SUPREME COURT IT IS HELD THAT THE STORY OF THE ASSE SSEE EARNING BUMPER AGRICULTURAL INCOME IS BEYOND HUMAN PROBABILITIES. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE FOLL OWING FACTS: - (A) THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN AS TO HOW AN INVESTMENT OF RS.23,00,000/- IN THE AGRICULTURAL LAND CAN YIELD A RETURN OF RS.36,25,000/- IN ONE YEAR BESIDES GIVING SIMILAR RETURN TO THE SHARE CRO PPER UNDER THE BATAI SYSTEM. (B) THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE OF HAVI NG MADE INVESTMENTS IN ORCHARDS OR TREES OR FLOWERS EITHER IN F.Y.2009-10 OR 2010-11. (C) THE ASSESSEE IS ENGAGED IN SENSITIVE BUSINESS O F PHARMACEUTICAL AND THE ASSESSEE ADMITTEDLY DID NOT DO THE AGRICULTURAL ACT IVITIES HIMSELF BUT THE ASSESSE IS ALSO UNABLE TO PROVIDE THE DETAILS OF THE PEOPLE SUPPOSEDLY ENGAGED BY HIM TO CARRY OUT THE AGRICULTURAL ACTIVITIES. (D) THE ASSESSEE HAS NOT BEEN ABLE TO NAME OR FILE DETAILS OF THE PERSONS WHO SUPPLIED LABOUR, AGRICULTURAL INPUTS OR HELPED SELL THE PRODUCT OF THE ASSESSEE. AS A RESULT, THE ASSESSING OFFICER COULD NOT THINK OF EXAMINING ANY SUCH PERSON ON OATH EITHER UNDER SECTION 131 OR UNDER 133(6) OF TH E ACT. (E) THE ASSESSEE HAS NOT KEPT ANY RECORD OF THE AGR ICULTURAL RECEIPTS OR EXPENSES AND THERE IS NO RECORD OF PERIODICITY OF THE RECEIP TS AND AS A RESULT IT CANNOT BE VERIFIED AS TO WHEN THE ASSESSEE HAD ALLEGEDLY RECE IVED THE SO CALLED AGRICULTURAL INCOME. (F) THE ENTIRE RESPONSE OF THE ASSESSEE IS HELD TO BE ONLY ORIENTED TOWARDS THWARTING THE POSSIBLE ENQUIRIES BY THE AO AND THE ASSESSEE HAS NOT GIVEN ANY VERIFIABLE EVIDENCE IN THE APPELLATE PROCEEDINGS AL SO. IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS GROUND OF APPEAL AND HAS NOT BEEN ABLE TO JUSTI FY THE SOURCE OF THE SO CALLED AGRICULTURAL INCOME. THE ASSESSEE HAS EITHER GIVEN NO EXPLANATION ABOUT THE AGRICULTURAL INCOME/ACTIVITIES OR HAS NOT SATISFACT ORILY EXPLAINED THE NATURE AND SOURCE THEREOF. IN VIEW OF THE ABOVE, IT IS HELD TH AT THE ENTIRE SUM OF RS.36,25,000/- REPRESENTS UNEXPLAINED INCOME IN THE HANDS OF THE A SSESSEE AND THE SAME IS DIRECTED TO BE TAXED U/.68 OF THE ACT. THUS THE GRO UND OF APPEAL OF THE ASSESSEE IS DISMISSED AND AN ENHANCEMENT OF RS.10,00,000/- IS D IRECTED TO BE MADE. IN THE SUM, THE APPEAL OF THE ASSESSEE IS DISMISSED AND AN ENHANCEMENT OF TAXABLE INCOME IS ALSO DIRECTED TO BE MADE. ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 5 AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE SHRI. RAHUL K.HAKANI DEFENDED THE AGRICULTURE INCOME REFLECTED BY THE A SSESSEE BY DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN TH E PAPER BOOK. IT WAS SUBMITTED THAT THE ASSESSEE REFLECTED SIMILAR AGRIC ULTURAL INCOME OF RS.21.80 LACS IN AY 2012-13 WHICH HAS BEEN ACCEPTED BY THE REVENUE IN SCRUTINY ASSESSMENT U/S 143(3). THE SAME HAS BEE N CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTED SHRI RAM TIWARI BY SUBMITTING THAT EACH YEARS ASSESSMENT WAS INDEPENDENT UNIT OF ASSE SSMENT AND EVEN THE PRIMARY ONUS OF EARNING OF AGRICULTURAL INCOME HAS NOT BEEN DISCHARGED BY THE ASSESSEE. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTION AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. UPON DUE CON SIDERATION, WE FIND THAT THE ASSESSEE HAS PREFERRED THE CLAIM OF AGRICU LTURAL INCOME MERELY ON THE BASIS OF LAND PURCHASE DOCUMENTS AND FEW SAL E BILLS. THE LAND WAS PURCHASED FOR 23 LACS AGAINST WHICH THE ASSESSE E REFLECTED AGRICULTURAL INCOME OF RS.36.25 LACS, BEING HIS SHA RE OF INCOME AND THE SAME TRANSLATES INTO WHOPPING RETURN OF 157%. THE L AND HAS BEEN STATED TO BE CULTIVATED ON BATAI BASIS AND AS PER THE OBSERVATIONS OF LD. CIT(A), THE SAME IS DONE ON 50:50 BASIS WHICH MEAN THE INCO ME FROM THE AFORESAID LAND WAS MUCH MORE. NO EVIDENCE COULD BE ADDUCED BY THE ASSESSEE TO DEMONSTRATE CARRYING OUT OF ANY PRIMARY & SECONDARY AGRICULTURAL OPERATIONS ON THE SAID LAND DURING IMP UGNED AY. NO RECORD OF INCOME AND EXPENDITURE WAS KEPT BY THE ASSESSEE AND FURTHER NO DETAILS ABOUT THE PERSONS WHO FACILITATED CARRYING OUT OF THE AGRICULTURAL OPERATIONS COULD BE PRODUCED BY THE ASSESSEE. THUS, THE PRIMARY ONUS ITA NO.6026/MUM/2016 SATISH WAMAN WAGH ASSESSMENT YEAR-2011-12 6 OF SUBSTANTIATING THE INCOME REMAINED UN-DISCHARGED . HOWEVER, GIVING THE BENEFIT OF THE FACT THAT THE ASSESSEE WAS IN PO SSESSION OF AGRICULTURAL LAND AND FEW SALE BILLS WERE PRODUCED BY HIM BEFORE LOWER AUTHORITIES, WE CONFIRM THE STAND OF LD. AO AND DELETE THE ENHAN CEMENT OF RS.10 LACS AS DONE BY LD. CIT(A). IN OTHER WORDS, THE ADD ITION OF RS.26.25 LACS AS MADE BY LD. AO U/S 68 STANDS CONFIRMED. THE ACTION OF LD. AO IN ESTIMATING THE AGRICULTURAL INCOME @ RS.10 LACS ALSO STAND CONFIRMED. 6. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 25.07.2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI