Asstt. Commissioner of Income Tax, Lucknow V. Shri Rajesh Pandey , Lucknow

ITA 615/LKW/2012

• Counselvise Citation: 61523714 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Competent authority

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.615/LKW/2012 ASSESSMENT YEAR:2008 - 09 SHRI RAJESH PANDEY, 11, ASHOK MARG, LUCKNOW. PAN:AEAPP4420P VS DY.C.I.T., RANGE - 2, LUCKNOW. (RESPONDENT) (APPELLANT) SHRI O. N. PATHAK, D. R. APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY 20/10/2014 DATE OF HEARING 11 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 17/10/2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN FAILING TO APPRECIATE THAT INCOME DERIVED FROM SALE OF TREES GROWING NATURALLY DOES NOT CONSTITUTE AGRICULTURAL INCOME AND IS LIABLE TO TAX. HE FAILED TO FOLLOWING THE FOLLOWING CASE LAWS: VISHW ANATH CHETTIAR VS. AGRICULTURAL INCOME TAX COMMISSIONER 61 ITR 50 (KARNATAKA) 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 2 4. WE HAVE CONSIDERED THE RIVAL S UBMISSIONS. WE FIND THAT THE ISSUE IN DISPUTE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 4.7 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 4.7 I HAVE CAREFULLY CONSIDERED THE AO'S FINDINGS IN THE ASSESSMENT ORDER, THE COMMENTS OF AO IN HIS REPORT DATED 19.06.2012 AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. IT APPEARS THAT THE AO TREATED THE INCOME FROM SALE OF TIMBER AS 'BUSINESS INCOME' PRIMARILY ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY E V IDENCE TO T HE EFFECT THAT IT HAD CARRIED OUT THE AGRICULTURAL ACTIVITIES NOR ANY EXPENDITURE IS SHOWN TO HAVE BEEN INCURRED FOR CARRYING OUT ANY HUMAN LABOUR OR SKILL OR BASIC OPERATIONS E.G., TILLING THE LAND, SOWING OF SEEDS, PLANTING, WEEDING, DIGGING THE SOIL ARO UND THE GROWTH, REMOVAL OF UNDESIRABLE UNDERGROWTHS, ETC. THE AO HAS NOT GIVEN ANY CONSIDERATION TO THE SUBMISSIONS MADE BY THE APPELLANT TO THE EFFECT THAT THE TEAK TREES WERE PLANTED SEVERAL YEARS AGO AND OVER THE YEARS THE SAME HAD GROWN TO BECOME MAT URE AND THEREFORE, THEY DID NOT REQUIRE ANY SIGNIFICANT AND REGULAR EXPENDITURE TO BE INCURRED. IN FACT AT THIS STAGE I F REQUI RED ONLY NOMINAL EFFORTS TO MAINTAIN THE FULLY GROWN TREE FOR WHICH NO SUBSTANTIAL EXPENDITURE WAS REQUIRED TO BE INCURRED. AS RE GARDS NON AVAILABILITY OF INFORMATION ON RECORD AS TO WHETHER PRIOR PERMISSION WAS OBTAINED FROM THE FOREST AUTHORITIES BEFORE TRANSPORTATION OF TIMBER, WILL NOT, IN MY OPINION, AFFECT THE NATURE OF INCOME. NON AVAILABILITY OF INFORMATION ABOUT THE PRIOR P ERMISSION FOR TRANSPORTATION OF TIMBER DOES NOT OTHERWISE DISPROVE THE NATURE OF ACTIVITIES/INCOME. WITH REGARD TO AO'S OBSERVATION AS TO HOW THE TREES COULD HAVE BEEN SOLD IN SEPTEMBER/OCTOBER, 2007 WHERE AS THE PERMISSION FROM THE COMPETENT AUTHORITY WAS ACCORDED IN JANUARY 2008, I FIND FROM THE COPY OF KATAN PERMIT PLACED ON PAGE NO. 34 OF PAPER BOOK FILED IN APPELLATE PROCEEDINGS THAT THE SAID PERMISSION WAS GRANTED BY THE FOREST AUTHORITY VIDE LETTER NO. 2002 DATED 26.12.2006. THEREFORE, THE OBSERVATION OF THE AO IN HIS REPORT THAT THE PERMISSION FROM THE COMPETENT AUTHORITY WAS ACCORDED IN JANUARY, 2008 IS FACTUALLY INCORRECT. AS PER AO, THE MAGNITUDE OF RECEIPT TO THE TUNE OF RS.14,50,000/ - , GOES TO ESTABLISH BEYOND DOUBT THAT THE PRODUCT WAS OF WILD A ND SPONTANEOUS GROWTH. IN MY OPINION, SUCH AN OBSERVATION OF THE AO HAS NO FACTUAL BASIS. IN FACT, I FIND THAT THE AO HAS NOT GIVEN ANY BASIS FOR REACHING THE CONCLUSION THAT TEAK TREES CLAIMED BY THE APPELLANT TO HAVE 3 BEEN PRODUCED ON HIS AGRICULTURAL HOL DINGS HAD GROWN SPONTANEOUSLY REPRESENTING WILD GROWTH. THEREFORE, ON A DUE CONSIDERATION OF SUBMISSIONS MADE BY THE APPELLANT AS WELL AS VARIOUS DOCUMENTARY EVIDENCES FURNISHED BOTH IN THE ASSESSMENT AS WELL AS IN APPELLATE PROCEEDINGS, IN MY OPINION THE INCOME FROM SALE OF TIMBER GOT OUT OF THE TEAK TREES GROWN BY THE APPELLANT ON HIS AGRICULTURAL HOLDINGS AND CLAIMED AS AGRICULTURAL INCOME HAS TO BE ACCEPTED AS SUCH. ACCORDINGLY; I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.14,50,000/ - . AS A RESULT, GROUND NOS. 2.1 AND 2.2 ARE DECIDED IN FAVOUR OF THE APPELLANT AND THEY STAND ALLOWED. 5. WE FIND THAT IN THE ABOVE PARA, THIS FINDING IS GIVEN BY LEARNED CIT(A) THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR REACHING THE CONCLUSION TH AT TEAK TREES CLAIMED BY THE ASSESSEE TO HAVE BEEN PRODUCED ON HIS AGRICULTURAL HOLDINGS HAD GROWN SPONTANEOUSLY REPRESENTING WILD GROWTH. THIS FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE. WE ALSO FIND THAT IN THE ASSESSMEN T ORDER, NO BASIS IS INDICATED BY THE ASSESSING OFFICER FOR COMING TO THE CONCLUSION THAT THE TEAK TREES SOLD BY THE ASSESSEE WERE ON ACCOUNT OF WILD AND SPONTANEOUS GROWTH AND NOT ON ACCOUNT OF AGRICULTURAL ACTIVITIES PARTICULARLY WHEN THE ASSESSEE HAS FU RNISHED CERTIFICATE OF TEHSILDAR, WHICH SHOWS THAT TEAK TREES WERE THERE ON THE AGRICULTURAL LAND. IT WAS ALSO EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THESE TREES WERE PLANTED YEARS AGO AND AFTER PROPER CARE AND TREATMENT , THE ASSESSEE WAS ABLE TO SELL THE TREES AFTER SO MANY YEARS. REGARDING THE JUDGMENT REFERRED TO BY THE REVENUE IN GROUND NO. 1 I.E. THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF VISHWANATH CHETTIAR VS. AGRICULTURAL INCOME TAX COMMISSIONER 61 ITR 50 (KAR NATAKA) , WE FIND THAT IN 61 ITR, THERE IS NO SUCH JUDGMENT REPORTED AND LEARNED D.R. OF THE REVENUE ALSO HAS NOT PROVIDED US THE COPY OF THE JUDGMENT OR A CORRECT CITATION. 6. AS PER ABOVE DISCUSSION, WE FIND THAT CIT(A) HAS DECIDED THE ISSUE AFTER CONSIDERING ALL ASPECTS OF THE MATTER WITH A CLEAR FINDING THAT THE OBJECTION OF 4 THE ASSESSING OFFICER IS WITHOUT ANY BASIS AND THIS FINDING OF CIT(A) REMAINED UNCONTROVERTED BY LEARN ED D.R. OF THE REVENUE AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: 11 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR