Chandrakantbhai Jashubhai Patel, Surat V. Income Tax Officer, Ward-2(3)(5), Surat

ITA 68/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3082 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-03-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 56; 143(3); 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.68/SRT/2024 Assessment Year: (2017-18) (Hybrid Hearing) Chandrakantbhai Jashubhai Patel, At Devadh, Taluka: Choryashi, Surat – 394210, Gujarat Vs. The ITO, Ward – 2(3)(5), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: BUPPP3357K (Appellant) (Respondent) Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 28/03/2024 Date of Pronouncement 08/04/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], Surat, National Faceless Appeal Centre (in short ‘the NFAC’), dated 22.12.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 10.12.2019. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in passing the order under section 143(3) of the Act, 1961 without considering cash inflow from Agricultural Income and cash withdraw from earlier period and same cash deposit in Bank. But without considering and verify genuineness of Agricultural Income Ld. Assessing Officers make an addition of whole Agricultural Income as income from other sources. 2 68/SRT/2024/AY.2017-18 Chandrakantbhai Jashubhai Patel 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in assuming that the agriculture income is not justifiable even though agriculture bills and Statement from Bardoli Sugar factory were produced. Even though all the history of agriculture income as well as statement of past years from Bardoli Sugar Factory treated as alleged income from other Sources. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.7,22,810/- on account of entire agriculture income treated as alleged income from other sources and brought to tax u/s.56 of the I.T. Act. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Office has erred in initiating penalty proceedings u/s.270A of the Act and issuing notice u/s.270A of the Income Tax Act. 5. It is therefore prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. Brief stated, the relevant material facts are as follows. The assessee before us is an Individual and filed his return of income for assessment year (AY) 2017-18, on 05.08.2017 declaring total income at Rs.40,870/-. The assessee`s case was selected for scrutiny under CASS for limited scrutiny purpose. Accordingly, notice under section 143(2) of the Act has been issued on 21.09.2018 and duly served upon the assessee. During the year, the assessee has earned income from other sources and agriculture activities. Thereafter, notices under section 142(1) of the Act have been issued on various dates. 4. In response to the above notices, the assessee has filed the details regarding agriculture income. The reply of the assessee is as under: Name of Crop Area of cultivation Total production Total sale Sugar Cane 2015-16 71,909 sq mtr. 612 Tones Rs. 18,70,235/- (Attached Statement or Bardoli Sugar) 3 68/SRT/2024/AY.2017-18 Chandrakantbhai Jashubhai Patel Sugar Cane 2016-17 71,909 sq mtr. Rs.7,22,810/- (Sugar Payment credit in bank account) 5. On perusal of the reply, the assessing officer noted that assessee has not shown any quantity of production during the year. Further, vide notice u/s 142(1) of the Act dated 12.11.2019, the assessee has been requested to furnish the requisite details to substantiate the claim of agriculture income during the year. Therefore, a show cause notice has been issued by the assessing officer on 06.12.2019, which is reproduced by the assessing officer on page no.2 of the assessment order. In response to above show- cause notice, the assessee submitted his reply before the assessing officer, which is reproduced below: “The F.Y. 2016-17, I have received agriculture income from Shree Khedut Sahkari Khand Udyog Mandali - Bardoli for the same verification I was already attached statement received from Bardoli Surgar Factory for the verification of the Agriculture income but same maybe see from your side. And as per mention in statement received from Shree Khedut Sahakari Khand Udyog Mandali of agriculture income same is reflected in my Bank statement. So, just forget to mention production in earlier reply it is not justified that there is no agriculture income. Again for such verification I here again attaching stateemnt received from Shree Khedut Sahkari Khand Udhyog Mandli- Bardoli for the F. Y. 2016-17. From that agriculture income has been justified. Submitting expenses vouchers Voucher for labour and wages there is no voucher available and not possible from any farmer to maintain about payment of wages to labour. 2. Payment of seeds for the F. Y. 2016-17 my sugar cane is not freshly planted (called New Ropan) but it is existing sugar cane which is grown up again in farm (called Laam) so for that no voucher for payment of seeds available. 3. Fertilizer is natural fertilizer and it is received from another farmer and it is not possible from them for the available of any vouchers. 4- Electricity expenses paid in cash which is directly paid to village water cooperative of farmers and bill is in the name of water society. 5 Mode of irrigation: Mode of irrigation is from canal as well as Boring water.” 6. However, the assessing officer rejected the contention of the assessee and held that assessee did not maintain agricultural production in quantity and did not submit details of bills/vouchers for incurring 4 68/SRT/2024/AY.2017-18 Chandrakantbhai Jashubhai Patel expenditure on agriculture production during the year, hence, the entire agriculture income of Rs.7,22,810/- was brought to tax as income from other sources and added to total income of the assessee u/s 56 of the I.T. Act. 7. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the assessing officer. The ld CIT(A) noted that for incurring any type of income, the expenditure is also to be incurred and maintaining the records for the agriculture expenditure is primary duty of the assessee to substantiate the agriculture income, however, the assessee failed to do so, therefore, ld CIT(A) confirmed the addition made by the assessing officer. 8. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before us. 9. Shri P. M. Jagasheth, Learned Counsel for the assessee, begins by pointing out that assessee has submitted entire documents and evidences relating to agricultural income. The fact that the assessee has withdrawn amount from the bank and a part amount was redeposited in the bank account out of the cash withdrawal from the Bank. All these evidences and documents were there before the assessing officer, however, assessing officer did not consider these documents and evidences in right perspective. Thus, ld Counsel stated that assessee has deposited the cash in the bank account out of his agricultural income and out of the cash withdrawn from the bank, therefore such cash deposits in bank account should not be subject to levy of tax. Therefore, Ld. Counsel contended that addition made by the assessing officer may be deleted. 5 68/SRT/2024/AY.2017-18 Chandrakantbhai Jashubhai Patel 10. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 11. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer made the addition in the hands of the assessee mainly on the ground that assessee had not maintained any Books of Account, bills/vouchers for incurring expenditure on agricultural production during the year. We note that it is not expected from a small and poor farmer to maintain full accounts department and to maintain books of accounts. In India, by and large, most of the farmers are illiterate and poor and in some cases their land holding is also small, hence it is not feasible to maintain books of accounts. However, this situation will not be applicable in case of a big farmer where the farmer is holding large land and earning a good sizable agricultural income, for such farmers it is feasible and easy to maintain books of accounts as they have necessary infrastructure to maintain the accounts department and books of accounts. 12. The assessee under consideration is a small farmer, and he submitted before the assessing officer the statement of Bardoli Sugar, submitted bill of Shree Khedut Sahkari khand Udyog Mandli and bank statement showing withdrawal and deposit of cash in the bank account. We note that assessee has deposited cash in the bank account out of agricultural income and out of earlier cash withdrawn from the bank, (that is, unused cash out of the cash withdrawn from bank). Therefore, 6 68/SRT/2024/AY.2017-18 Chandrakantbhai Jashubhai Patel assessee has proved the source of the cash deposit in the bank account and hence the addition should not have been made in the hands of the assessee. Therefore, based on these facts and circumstances we delete the addition of Rs.7,22,810/-. 13. In the result, ground nos. 1 to 3 raised by the assessee are allowed. 14. Ground No.4 raised by the assessee is not argued / pressed; hence we dismiss ground No.4, as not pressed. 15. In the combined result, assessee`s appeal is allowed. Order is pronounced on 08/04/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 08/04/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat