ACIT, Patiala V. Shri Hari Gopal Singh HUF, Patiala

ITA 698/CHANDI/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5066 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-07-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: K P BAJAJ
• Keywords: Unexplained expenditure; Income from undisclosed sources; Wrong claim
• Section: 69C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.698/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ACIT, VS. SHRI HARI GOPAL SINGH (HUF), PATIALA PATIALA PAN NO. AAAHH7360C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAISHREE SHARMA RESPONDENT BY: SHRI K.P.BAJAJ ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A), PATIALA DATED 31.3.2003 RELATING TO ASSESSMENT YEAR 2007-0 8 AGAINST THE ORDER PASSED UNDER SECTION 143 (3) OF THE I.T. ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 1,18,500/- ON ACCOUNT OF BOGUS CLAIM OF SALE OF BYE - PRODUCTS I.E. TOORI & PARALI, IGNORING THE FACT THAT THE ASSESSEE HAD FAILED TO FURNISH THE DETAILS OF THE I MPUGNED SALES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 7, 47,205/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE TO EARN AGRICULTURAL INCOME, INCLUDING INCOME FROM THE HARVEST OF SUNFLOWER, IGNORING THE FACT TH AT THE ASSESSEE HAD FAILED TO FURNISH THE DETAILS OF THE E XPENSES AND, THAT THE ADDITION HAD BEEN MADE BY THE ASSESSI NG OFFICER ON A SCIENTIFIC BASIS AFTER EVALUATING THE COST OF PRODUCTION AS PER THE NORMS FIXED BY THE COMMISSION FOR 2 AGRICULTURAL COSTS AND PRICES (A GOVERNMENT OF INDI A AGENCY) 3. THE ISSUE IN GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS. 1,18,500/- MADE ON ACCOUNT OF SALE OF TOORI AND PAR ALI CLAIMED AS AGRICULTURAL INCOME. THE ISSUE RAISED IN GROUND NO.2 BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED TO EARN AGRICULTURAL INCOME. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD GROWN WHEAT, PADDY A ND SURAJMUKHI AND THE SALES AS PER THE FORM J' AND SALES VOUCHERS AG GREGATED TO RS. 14,97,791/-. THE ASSESSEE HAD ALSO SHOWN SALE OF BY E PRODUCTS I.E. TOORI AND PARALI AT RS. 1,18,500/-. OUT OF TOTAL AGRICUL TURAL INCOME OF RS. 16,15,591/-, THE ASSESSEE HAD CLAIMED EXPENDITURE O F RS. 2,77,191/- AND NET AGRICULTURAL INCOME OF RS. 13,38,400/-WAS DECLA RED BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON. THE EXPENSES INCURRED FOR EARNING THE AGRICULTURAL INCOME WERE C LAIMED TO HAVE BEEN MET BY MAKING WITHDRAWALS FROM THE ACCOUNT OF ASSES SEE IN THE BOOKS OF ACCOUNT OF COMMISSION AGENT AT RS. 1,91,763/- AND O UT OF CASH SALES OF BYE PRODUCTS AT RS. 1,18,500/-. THE ASSESSEE CLAIM ED THAT IT WAS NOT MAINTAINING ANY ACCOUNTS IN RESPECT OF THE AGRICULT URAL INCOME FOR THE PAST SEVERAL YEARS. THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, REQUISITIONED THE ASSESSEE TO EXPLAIN WHY IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, THE SALE PROCEEDS OF TOOR I AND PARALI BE NOT TREATED AS INCOME FROM UNDISCLOSED SOURCES. FURTHE R, IT WAS ALSO POINTED OUT THAT THE EXPENSES INCURRED BY THE ASSESSEE ON T HE GROWING OF WHEAT AND PADDY WERE INADEQUATE IN VIEW OF THE REPORT OF COMMISSION ON AGRICULTURAL COST AND PRICES (IN SHORT CACP). TH E ASSESSEE EXPLAINED 3 BEFORE THE ASSESSING OFFICER THAT TOORI OF WHEAT AN D PARALI OF PADDY ARE KNOWN BYE PRODUCTS AND ONCE THE SAME ARE PRODUCED, ITS SALE COULD NOT BE DENIED. IN RESPECT OF THE EXPENSES INCURRED ON GRO WING OF CROPS AS PER THE ALLEGED REPORT OF CACP, THE DEFECTS WERE POINTED OU T BY THE ASSESSING OFFICER, WHICH ARE INCORPORATED AT PAGE 3 OF THE AP PELLATE ORDER. IT WAS FURTHER SUBMITTED BY THE ASSESSEE BEFORE THE ASSESS ING OFFICER THAT NO RELIANCE COULD BE PLACED ON THE REPORT OF CACP WHIC H WAS PRIMARILY MEANT FOR DETERMINATION OF MSP, WHICH HAS NOTIONAL ELEMENTS LIKE INTEREST, RENT OF THE LAND, ELECTRICITY ETC. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SALE OF TOORI AND PARALI COULD NO T BE ADMITTED AS BYE PRODUCTS AS THE SAME ARE OBTAINED IF THE HARVESTING IS DONE MANULALLY. THE EXPLANATION OF THE ASSESSEE POINTING OUT VARIOU S DEFECTS IN THE ESTIMATION OF COST OF PRODUCTS OF VARIOUS CROPS WAS REJECTED IN THE ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD. THE ASSESS ING OFFICER MADE AN ADDITION OF RS. 1,18,500/- ON ACCOUNT OF SALE OF BY E PRODUCTS AND RS. 7,14,485/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE IN CURRED ON CULTIVATION CROPS OF WHEAT AND PADDY AND RS. 32,720/- ON ACCOUN T OF CULTIVATION OF SUNFLOWER. 5. BEFORE THE CIT(A), BESIDE POINTING OUT THE DEFEC TS IN THE CACP REPORT, IT WAS FURTHER CLAIMED BY THE ASSESSEE THAT IN THE ABSENCE OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS, THE PAST HISTORY OF THE CASE WAS A BEST GUIDE FOR DETERMINATION OF AGRICULTURAL INCOME. IT WAS POINTED OUT THAT IN ASSESSMENT YEAR 2006-07, AGRICULTURAL INCOME OF RS. 7,38,405/- WERE ACCEPTED BY THE TRIBUNAL, AGAINST WHICH DURING THE YEAR, THE ASSESSEE HAD SHOWN INCOME FROM WHEAT AND PADDY AT RS. 10,72,720/ - AND NET INCOME FROM SURAJMUKHI AT RS. 3,05,680/-. THE CIT(A) IN V IEW OF THE PAST HISTORY OF THE CASE AND THE ORDER OF THE TRIBUNAL R ELATING TO ASSESSMENT 4 YEAR 2006-07, ALLOWED THE CLAIM OF THE ASSESSEE ON BOTH THE GROUNDS. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT(A). 6. THE LEARNED DR FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF THE ASSESSING OFFICER POINTED OUT THAT IN RESPECT OF TH E SALE PROCEEDS TO TOORI AND PARALI, THE OBJECTION OF THE ASSESSING OFFICER VIDE PARA 10 WAS THAT THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE TO PROVE THAT THE HARVESTING OF WHEAT AND PADDY WAS DONE MANUALLY. FURTHER, NO DETAILS OF LABOUR EXPENSES INCURRED OR NAME OF ANY WORKERS WER E PRODUCED TO PROVE THE CASE OF THE ASSESSEE. IN RESPECT OF THE SECOND ISSUE RAISED IN THE PRESENT APPEAL, THE LEARNED DR POINTED OUT THAT THE ESTIMATION OF EXPENDITURE WAS MADE BY THE ASSESSING OFFICER ON TH E BASIS OF THE CAPC REPORT RESULTING IN THE ADDITIONS U/S 69 C OF THE A CT. IT WAS FURTHER CLAIMED BY THE LEARNED DR THAT IN THE YEAR UNDER AP PEAL, THE REPORT OF CAPC WAS FORWARDED TO THE ASSESSEE. THE LEARNED A R FOR THE ASSESSEE PLACING RELIANCE ON THE ORDER OF THE CIT(A) AND THE SUBMISSIONS MADE BEFORE THE CIT(A) SUBMITTED THAT THE ISSUE STANDS C OVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO AS SESSMENT YEAR 2006-07. IN RESPECT OF GROUND NO.1 RAISED BY THE REVENUE, TH E LEARNED AR POINTED OUT THAT THE SALE OF BYE PRODUCT HAVE BEEN ACCEPTED FROM YEAR TO YEAR AND IN ASSESSMENT YEAR 1995-96, THE CIT(A) HAD WHILE WO RKING THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE INCLUDED THE SALE OF BYE PRODUCTS. FURTHER, IT WAS POINTED OUT THAT THE AGR ICULTURAL INCOME SHOWN BY THE ASSESSEE OF RS. 13,38,000/- ON A LAND HOLDI NG OF 43.6 ACRES MERITS TO BE ACCEPTED IN VIEW OF SIMILAR INCOME BEING DECL ARED AND ACCEPTED IN THE CASE OF THE ASSESSEE. THE LEARNED AR FURTHER PO INTED OUT THAT THE CAPC REPORT IS THE GUIDELINES FOR FIXING THE MSP PR ICE AND THE FINDINGS OF THE SAID REPORT COULD NOT BE APPLIED TO ESTIMATE TH E AGRICULTURAL 5 EXPENDITURE OF THE ASSESSEE. IT WAS POINTED OUT BY THE LEARNED AR THAT DURING THE YEAR UNDER CONSIDERATION THAT THE ASSESS EE WAS NOT MAINTAINING ANY ACCOUNT FOR HIS AGRICULTURAL INCOME BUT A SUM O F RS. 1,91,763/- WAS INCURRED BY WAY OF WITHDRAWALS FROM HIS ACCOUNT IN THE BOOKS OF ACCOUNT OF THE COMMISSION AGENT. FURTHER EXPENDITURE OF RS. 1,18,500/- WAS MET OUT OF CASH SALES OF BYE PRODUCTS. THE LEARNED AR POINTED OUT THAT SIMILAR ADDITION ON THE BASIS OF CAPC REPORT WAS MADE IN AS SESSMENT YEAR 2006- 07, WHICH STANDS DELETED BY THE ORDER OF THE TRIBUN AL. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS THE OWNER OF 43.6 ACRES OF LAND HOLDING AND DURING THE YEAR HAD DECLARED AGRICULTURAL INCOME OF RS. 13,38,400/- , AFTER CLAIMING EXPENDITURE OF RS. 191,763/- PLUS 1,18,500/- OUT OF THE GROSS AGRICULTURAL INCOME. THE ASSESSEE WAS CULTIVATING WHEAT AND PAD DY AND THE SALE PROCEEDS ARE CLAIMED TO BE SUPPORTED BY J' FORM. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD ALSO CULTIVATED SURA JMUKHI AND THE SALES AS PER THE SALES VOUCHERS WAS RS. 338400/- DURING THE YEAR. IN ADDITION THE ASSESSEE HAD DECLARED SALE OF BYE PRODUCT OF TOORI AND PARALI AT RS. 1,18,500/-. THE SAID BY PRODUCTS ARE CLAIMED TO PR ODUCED IN THE HARVESTING OF WHEAT AND PADDY RESPECTIVELY. SIMIL AR INCOME ON SALE OF THE BYE PRODUCTS HAS BEEN ACCEPTED AS PART OF AGRIC ULTURAL INCOME EARNED BY THE ASSESSEE IN THE EARLIER YEARS I.E. ASSESSMEN T YEAR 1995-96. FURTHER, THE SAID BYE PRODUCTS ARE KNOWN TO BE THE BYE PRODUCTS OF CROPS OF WHEAT AND PADDY HARVESTED BY THE ASSESSEE. THE ASSESSING OFFICER HAD REJECTED THE CLAIM OF THE ASSESSEE AS ACCORDING TO HIM, THE BILLING WAS NOT DONE MANUALLY. HOWEVER, THE PLEA OF THE ASSESSEE V IDE REPLY DATED 2.11.2009 WAS THAT NO DETAILS OF CASH EXPENSES ARE MAINTAINED, BUT THE ASSESSEE IS OWNING A TRACTOR. WE FIND NO MERIT IN THE ORDER OF ASSESSING 6 OFFICER IN TREATING THE SAME AS INCOME FROM UNDISCL OSED SOURCES IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND SIMI LAR INCOME BEING ACCEPTED IN THE PRECEDING YEARS. WE CONFIRM THE O RDER OF CIT(A) IN INCLUDING THE SALE PROCEEDS OF TOORI AND PARALI AS AGRICULTURAL INCOME OF THE ASSESSEE. THE GROUND NO.1 RAISED BY THE ASS ESSEE IS THUS ALLOWED. 8. THE SECOND ISSUE RAISED IN THE PRESENT APPEAL IS WITH REGARD TO THE ESTIMATION OF AGRICULTURAL INCOME. THE ASSESSING O FFICER WAS OF THE VIEW THAT THE EXPENDITURE DEBITED BY THE ASSESSEE FOR EA RNING THE AGRICULTURAL INCOME DURING THE YEAR WAS INSUFFICIENT AND SUCH EX PENDITURE WHICH WAS TO BE INCURRED AS PER THE ASSESSING OFFICER WAS TRE ATED AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. THE BASIS FOR SUCH ESTIMATION WAS THE CACP REPORT. WE FIND THAT SIMILAR ESTIMATION BEING MADE IN THE EARLIER YEAR I.E ASSESSMENT YEAR 2006-07 AND ALSO 2005-06. THE CIT(A) IN APPELLATE PROCEEDINGS RELATING TO ASSESSMENT YEAR 2 006-07 VIDE ORDER DATED 26.3.2009, WHILE ASSESSING THE AGRICULTURAL I NCOME IN THE HANDS OF THE ASSESSEE, HAD NOTED THAT THE ASSESSEE CONTINUED TO BE OWNER OF 43.6 ACRES OF LAND AGAINST WHICH INCOME OF RS. 7,38,405/ - WAS DECLARED IN ASSESSMENT YEAR 2005-06 AND RS. 10,44,900/- WAS DEC LARED IN ASSESSMENT YEAR 2006-07. THE CIT(A) FURTHER NOTED THAT IN AS SESSMENT YEAR 2005- 06, THE CACP REPORT WAS CONFRONTED TO THE ASSESSEE AND BY SHOWING THAT VARIOUS VARIANTS OF INPUTS COSTS WERE NOT APPLICABL E IN THE CASE OF THE ASSESSEE, THE INCOME WAS WORKED OUT AS PER THE REPO RT AT RS. 11,01,197/-. THE CIT(A) OBSERVED THAT IF THAT VERSION OF ASSESSI NG OFFICER IS ACCEPTED, IT WOULD RESULT IN NET LOSS IN AGRICULTURAL ACTIVIT IES IN ASSESSMENT YEAR 2006-07. IN THE ABSENCE OF THE REPORT BEING NOT CO NFRONTED TO THE ASSESSEE, AND IN VIEW OF THE PAST HISTORY OF THE CA SE, THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE TOTALING RS. 7,9 8,620/- WAS DELETED BY 7 CIT(A) IN ASSESSMENT YEAR 2006-07. HOWEVER, AN ADD ITION OF RS. 1 LAC WAS MADE ON ACCOUNT OF UNEXPLAINED AGRICULTURAL INC OME / EXPENSES EARNED TO EARN SUCH INCOME. THE TRIBUNAL IN ITA NO . 523/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 ALONG WITH C.O . NO. 32/CHD/2009, IN ASSESSEES OWN CASE, RELATING TO ASSESSMENT YEAR 2006-07, UPHELD THE ORDER OF CIT(A) IN ACCEPTING THE DECLARED AGRICULTU RAL INCOME AT RS. 7,38,405/- IN VIEW OF THE FACT THAT IN THE PRECEDIN G YEAR I.E. ASSESSMENT YEAR 2005-06, AGRICULTURAL INCOME OF RS. 9,44,900/- WAS ACCEPTED. FURTHER, ADDITION OF RS. 1 LAC ON ACCOUNT OF ALLEGE D LOW EXPENSES FOR EARNING AGRICULTURAL INCOME WAS DELETED. IN THE TO TALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND THE ISSUE BEING IDENT ICAL TO THE EARLIER YEARS, WE ARE IN CONFORMITY WITH THE ORDER OF THE C IT(A) THAT THE AGRICULTURAL INCOME AS DECLARED BY THE ASSESSEE AT RS. 13,38,400/- MERITS TO BE ACCEPTED IN ENTIRETY AS ON SAME LAND HOLDING OF AGRICULTURAL LAND, AGRICULTURAL INCOME OF RS. 738405/- HAS BEEN ACCEPT ED IN ASSESSMENT YEAR 2006-07 AND AGRICULTURAL INCOME OF RS. 944900/- HAS BEEN ACCEPTED IN ASSESSMENT YEAR 2005-06. WE UPHOLD THE ORDER OF C IT(A) AND DISMISS THE GROUND NO.2 RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD JULY, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR