LALJI K. SHAH HUF, MUMBAI V. DCIT CEN CIR 17 & 28, MUMBAI

ITA 6600/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62720 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Section: 153A; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , , , . . , ! ! ! ! '# '# '# '# $ $$ $ BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER . / ITAS NO. 6595, 6599 & 6600/MUM./2010 ( !% & '& / ASSESSMENT YEARS : 200506, 200607 & 200708 ) LALJI K. SHAH (HUF) B403, PRIME AVENUE, S.V. ROAD NR. NANAVATI HOSPITAL, VILE PARLE (W) MUMBAI 400 056 .. () / APPELLANT % V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE17 & 28, MUMBAI .... *+() / RESPONDENT #( $, . / PAN NO. AANHS7498R !% &-. / 0 $ / ASSESSEE BY : MR. VIJAY MEHTA # / 0 $ / REVENUE BY : MRS. USHA NAIR % / ., / DATE OF HEARING 10.07.2012 '$1 23' / ., / DATE OF ORDER 27.07.2012 '$1 '$1 '$1 '$1 / ORDER PER I.P. BANSAL, J.M. THE PRESENT APPEALS PREFERRED BY THE ASSESSEE, ARE DIRECTED AGAINST THE SEPARATE IMPUGNED ORDERS OF EVEN DATE 4 TH JUNE 2010, , PASSED BY THE LEARNED COMMISSIONER (APPEALS)XXXIX, MUMBAI, FOR A SSESSMENT YEAR LALJI K. SHAH (HUF) 2 200506, 200607 AND 200708 RESPECTIVELY. SINCE GR OUNDS OF APPEAL, FACTS AND CIRCUMSTANCES OF THESE APPEALS ARE COMMON, EXCE PT VARIATION IN FIGURES, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FAC TS FOR ASSESSMENT YEAR 2005-06, WILL BE TAKEN INTO CONSIDERATION WHILE DEC IDING THE APPEALS AND DECISION TAKEN THEREIN SHALL BE EQUALLY APPLICABLE TO OTHER YEARS. 2. THE ASSESSEE DISCLOSED ITS RETURN OF INCOME AT ` 11,74,580, AND AGRICULTURAL INCOME AT ` 4,44,623. A SEARCH WAS CONDUCTED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ), ON 3 RD AUGUST 2006, ON EURO GROUP OF COMPANIES AND THE KARTA OF THE HUF IS LALJI K. SHAH, WHO IS ONE OF THE DIRECTORS OF EURO GROUP OF COMPANIES. TH E RESIDENTIAL PREMISES WERE ALSO SEARCHED. IN RESPONSE TO THE NOTICE SERVE D UNDER SECTION 153A OF THE ACT, THE AFOREMENTIONED RETURN OF INCOME WAS FI LED. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD DISCLOS ED AGRICULTURAL INCOME AT ` 4,44,623, AGAINST SIMILAR INCOME OF ` 1,50,731, SHOWN IN ASSESSMENT YEAR 2004-05. OBSERVING THAT AGRICULTURAL INCOME WAS DIS CLOSED AT HIGHER FIGURE FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFF ICER ISSUED NOTICE TO THE ASSESSEE TO JUSTIFY THE EXTENT OF AGRICULTURAL INCO ME AND IN THE ABSENCE OF COMPLETE DETAILS OF AGRICULTURAL INCOME AND ANY EXP LANATION, THE ASSESSING OFFICER, LOOKING INTO THE PREVIOUS HISTORY OF THE C ASE, TREATED A SUM OF ` 2,00,000, AS AGRICULTURAL INCOME AND THE BALANCE AM OUNT OF ` 2,44,623, WAS TREATED AS INCOME FROM UNEXPLAINED SOURCES, WHICH W AS ADDED TO THE INCOME OF THE ASSESSEE. 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER PASSED B Y THE ASSESSING OFFICER, WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. IT WAS CLAIMED THAT THE ASSESSEE HAD SOLD AGRICULTURAL PRODUCE TO INDEPENDENT PARTIES AND NON-PROFIT MAKING ORGANIZATIONS. IT WAS SUBMITTED T HAT DETAILS AND VARIOUS OTHER DOCUMENTARY EVIDENCES IN RESPECT OF SALE OF A GRICULTURAL PRODUCE WERE FILED AND IT WAS SUBMITTED THAT SINCE THE TRANSACTI ONS WERE WITH UNRELATED PARTIES, THE ASSESSING OFFICER COULD NOT SUSPECT AN Y UNDER HAND DEALINGS. LALJI K. SHAH (HUF) 3 COPY OF BILLS WERE FURNISHED BEFORE THE COMMISSIONE R (APPEALS) EVIDENCING THE SALE OF AGRICULTURAL PRODUCE AND ALSO THE LEDGE R OF THE LAND IN FORM NO.8A, SHOWING COMPLETE DETAILS OF AGRICULTURAL LAN D SHOWING CERTIFICATE NUMBER AND THE AREA OF LAND. IT WAS CLAIMED THAT TH E SALE TRANSACTIONS ARE DULY SUPPORTED BY THE DETAILS OF SALE CONSIDERATION WHICH HAS BEEN RECEIVED THROUGH BANK CHEQUES AND DEMAND DRAFTS. IT WAS FURT HER SUBMITTED THAT THERE BEING NO CASH TRANSACTIONS, THE TRANSACTIONS SHOULD BE TREATED TO BE GENUINE. IT WAS SUBMITTED THAT THE LAND WAS LOCATED IN KUTCH AREA WHERE DUE TO MAJOR EARTHQUAKE ON 26 TH JANUARY 2001, THERE WAS A SUBSTANTIAL LOSS AND DAMAGE TO THE PROPERTY, LIVESTOCK AND HUMAN LIVES, THEREFORE, THE ASSESSEE COULD NOT FIND ANY CULTIVATORS / LABOURS FOR CARRYI NG OUT AGRICULTURAL ACTIVITIES. IT WAS EXPLAINED THAT THE AGRICULTURAL INCOME IN TH E PAST YEARS WAS LESS AND WHEN THE SITUATION BECAME NORMAL AFTER EARTHQUAKE, IT HAS GRADUALLY INCREASED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS HIS OWN BOREWELL IN THE AGRICULTURAL PROPERTY AND THERE IS CONTINUOUS A ND ADEQUATE WATER SUPPLY WHICH HAS RESULTED IN A HIGHER OUTPUT OF THE PRODUC E. 2. THE LAND HOLDING OF THE ASSESSEE IS DESCRIBED BY TH E LEARNED CIT(A) IN THE FOLLOWING TABLE: SR. NO. SURVEY NO. AREA IN HA. AREA IN ACRE AREA IN SQ.FT. 1. 494/2 0.96 2.37 103289.47 2. 1850 4.84 11.95 520751.09 3. 1945/PARTI 1.86 4.95 200123.35 TOTAL 7.66 18.92 824163.91 3. THE LEARNED CIT(A) FOUND THAT THE ASSESSEE, AGAINST THE TOTAL RECEIPTS OF ` 4,54,988, HAD INCURRED EXPENDITURE ONLY TO THE EXT ENT OF ` 10,365. HE OBSERVED THAT, ACCORDING TO ASSESSEE, AGRICULTURAL OPERATIONS WERE CARRIED OUT BY MR. MINAT KARAMSHI VALJI, ON SHARING BASIS W HO WILL CARRY OUT AGRICULTURAL OPERATIONS AND ALSO MEET OUT ALL THE E XPENSES AGAINST 20% OF LALJI K. SHAH (HUF) 4 THE AGRICULTURAL PRODUCE AND 80% WILL BE TAKEN BY T HE ASSESSEE. ACCORDING TO THE LEARNED COMMISSIONER (APPEALS), THE AGREEMENT B ETWEEN THE ASSESSEE AND MR. MINAT KARAMSHI VALJI, COULD NOT BE BELIEVED . IF A FARMER CARRIES OUT AGRICULTURAL OPERATIONS AND MEET OUT ALL THE EXPENS ES, THEN THE FARMER WILL GET 40% OF THE PROCEEDS ONLY. IT IS FOR THAT REASON , THE LEARNED COMMISSIONER (APPEALS) HAS TREATED 60% OF THE RECEI PTS OF THE ASSESSEE AS HIS AGRICULTURAL INCOME AND BALANCE ADDITION OF ` 1,81,995, HAS BEEN SUSTAINED. AGGRIEVED, THE ASSESSEE IS IN FURTHER AP PEAL BEFORE THE TRIBUNAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, AFTER NARRATI NG THE FACTS, VEHEMENTLY PLEADED THAT THE ASSESSEE HAVING FILED A LL THE EVIDENCES WHICH, INTERALIA, INCLUDE EVIDENCES REGARDING OWNERSHIP O F THE LAND, THE AGREEMENT WITH THE PERSON WHO WAS CULTIVATING THE LAND; THE S ALE PROCEEDS HAVING BEEN RECEIVED THROUGH CHEQUES OR DEMAND DRAFTS, ETC. THE ADDITIONS SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) IS CONTRARY TO L AW AND THE SAME SHOULD BE DELETED. IN THE ALTERNATIVE, THE LEARNED COUNSEL SUBMITTED THAT 60% SHOULD BE COMPUTED WITH REFERENCE TO TOTAL PROCEEDS AS THE LEARNED COMMISSIONER (APPEALS) HAS TAKEN INTO CONSIDERATION ONLY THE SALE PROCEEDS OF THE ASSESSEE AND NOT OF MR. MINAT KARAMSHI VALJI . 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) H AS TAKEN A VERY REASONABLE AND PLAUSIBLE VIEW WHICH SHOULD BE SUSTA INED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WE ARE CONVINCED WITH THE OBSERVATIONS O F THE LEARNED COMMISSIONER (APPEALS) THAT THE ARRANGEMENT OF THE ASSESSEE WITH MR. MINAT KARAMSHI VALJI, COULD NOT BE BELIEVED. ONE HA S TO TAKE INTO ACCOUNT THE REALITY ALSO. NO PERSON WILL AGREE TO INCUR ALL THE EXPENDITURE AND TO CARRY OUT AGRICULTURAL ACTIVITY FOR 20% SHARE ONLY. THEREFORE , DESPITE THE FACT THAT THE ASSESSEE MAY HAVE DOCUMENTARY EVIDENCE WITH HIM, TH OSE DOCUMENTS CANNOT BE BELIEVED AS THE SHARE RATIO IS NOT IN ACC ORDANCE WITH NORMAL LALJI K. SHAH (HUF) 5 PRACTICE PREVAILING FOR SUCH AN ACTIVITY. NORMALLY, IF A PERSON WHO IS CULTIVATING LAND OF OTHER PERSON, WILL TAKE THE LAN D ON 50% SHARE AND THEN WILL AGREE TO INCUR THE EXPENDITURE AS WELL AS TO C ARRY OUT AGRICULTURAL ACTIVITIES. THEREFORE, WE ARE OF THE OPINION THAT T HE LEARNED COMMISSIONER (APPEALS) HAS TAKEN A REASONABLE VIEW TO HOLD THAT THE ASSESSEE HAS SHOWN AGRICULTURAL PRODUCE IN EXCESS @ 40%. WE UPHOLD HIS FINDINGS AND DECLINE TO INTERFERE. INSOFAR AS IT RELATES TO THE ALTERNATIVE ARGUMENTS OF THE LEARNED COUNSEL, WE ARE OF THE OPINION THAT THE SAME DOES N OT HAVE ANY FORCE AS THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT, TO WHAT EXTENT, THE OTHER PERSON HAD SOLD THE AGRICULTURAL PRODUCE. THERE BEI NG NO MATERIAL ON RECORD, THE SALES SHOWN BY THE ASSESSEE ARE TAKEN TO BE GRO SS SALES, HENCE, THE ALTERNATIVE ARGUMENT OF THE LEARNED COUNSEL IS ALSO REJECTED. AS THE OTHER YEARS WERE NOT INDEPENDENTLY ARGUED AND FACTS OF OT HER YEARS ARE NOT STATED TO BE DIFFERENT, THE DECISION TAKEN FOR ASSESSMENT YEAR 200506, IS APPLICABLE FOR ALL THE YEARS UNDER APPEAL. CONSEQUE NTLY, APPEALS FOR ALL THE YEARS ARE DISMISSED. 7. - .4 5 ,- / . 67 8 7. IN THE RESULT, APPEALS ARE DISMISSED. '$1 / 3' ,$ 5 9'%4 27 TH JULY 2012 3 / : 8 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2012 SD/- . . G.E. VEERABHADRAPPA PRESIDENT SD/- . . ! ! ! ! '# '# '# '# I.P. BANSAL JUDICIAL MEMBER MUMBAI, 9'% 9'% 9'% 9'% DATED: 27 TH JULY 2012 LALJI K. SHAH (HUF) 6 '$1 '$1 '$1 '$1 / // / *!.;< *!.;< *!.;< *!.;< =$<'. =$<'. =$<'. =$<'. / COPY OF THE ORDER FORWARDED TO : (1) !% &-. / THE ASSESSEE; (2) # / THE REVENUE; (3) > ( ) / THE CIT(A); (4) > / THE CIT, MUMBAI CITY CONCERNED; (5) <: *!.!% , , / THE DR, ITAT, MUMBAI; (6) :?& @ / GUARD FILE. +<. *!. / TRUE COPY '$1% '$1% '$1% '$1% / BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY A AA A / 6 6 6 6 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI