Shri Chandrappa Busenahalli , Bangalore V. Assistant Commissioner of Income TAx Circle-1(3)(1), Bangalore

ITA 849/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4655 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DK JHA
• Keywords: Question of law
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 849 / BANG/201 8 ASSESSMENT YEAR : 201 3 - 1 4 SHRI CHANDRAPPA BUSENAHALLI, NO. 55/AC, 3 RD CROSS, 8 TH MAIN, VASANTH NAGAR, BANGALORE 560 052. PAN: AKHPB6707E VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (3)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI BALRAM R. RAO, ADVOCATE RESPONDENT BY : SHRI D.K. JHA, ADDL. CIT (DR) DATE OF HEARING : 2 2 .05.2018 DATE OF PRONOUNCEMENT : 08 .0 6 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A)-3, BANGALORE DATED 14.02.2018 FOR ASSESS MENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN THE MANNER IN WHICH HE DID. 2. THE LEARNED CIT (APPEALS) AS WELL AS THE AUTHORI TIES BELOW ERRED IN DISALLOWING THE CLAIM OF RS.18,28,286/- BEING AG RICULTURAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. THE LEARNED CIT (APPEALS) AS WELL AS THE AUTHORI TIES BELOW FAILED TO CONSIDER THE CERTIFICATE FROM LAKSHMI RANGANATHA ARECANUT PROCESSING CENTRE, WHEREIN IT WAS CERTIFIED THAT TH E SAID PARTY HAD PURCHASED ARECANUT TO EXTENT OF RS. 20,80,000/-. 4. THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE T HE FACT THAT A FARMER CAN WITHHOLD THE SALE OF AGRICULTURE PRODUCT S AND CAN SELL THE SAME STOCK IN A PARTICULAR TIME WHEN THERE IS GOOD PRICE. ITA NO.849/BANG/2018 PAGE 2 OF 6 5. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF AGRICULTURAL INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCES BY RELYING ON THE PUBLISHED REPORT IN THE FARMER'S WEB PORTAL AS A YARD STICK TO ASSESS THE APPELLANT'S AGRICULTURAL INCOME . 6. THE LEARNED CIT (APPEALS) FAILED TO CONSIDER THE EVIDENCES WITH REGARD TO AGRICULTURE LAND HOLDING SUCH AS RTC OF L ANDS AND OTHER SUCH RECORDS TO PROVE HIS CLAIM. 7. THE LEARNED CIT (APPEALS) FAILED TO CONSIDER THE JUDGEMENT OF HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT, BIKANER VS RAMASHWAR LAL DUDI DATED 15/03/2010 IN D.B INCOME T AX APPEAL NO. 78/2009. 8. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE INTEREST LEVIED UNDER SECTION 234A & 234B AMOUNTING TO RS.46,032/-R S.2,07,144/- RESPECTIVELY. 9. FOR THESE AND OTHER SUCH GROUNDS THAT MAY BE URG ED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE ASSESSEE HAS CLAIMED THAT THERE IS AGRICULTURAL INCOME OF RS. 23.55 LAKHS BUT THE AO HAS HELD THAT AGRICULTURAL INCOME OF RS. 5,26,714/- ONLY IS ACCEP TABLE AND ON THAT BASIS, HE HELD THAT BALANCE INCOME OF RS. 18,28,286/- IS INCO ME FROM OTHER SOURCES AND MADE ADDITION. HE ALSO SUBMITTED THAT AS PER THE N OTING OF AO IN PAGE 10 OF ASSESSMENT ORDER, THE ASSESSEE WAS HAVING LAND AREA OF 21.14 ACRES UNDER CULTIVATION OF ARECANUT, 4.51 ACRES UNDER CULTIVATI ON OF PADDY AND 2 ACRES UNDER CULTIVATION OF RAGI TOTAL OF 28 ACRES. HE PLACED R ELIANCE ON A JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F S.L. BASAVARAJ (HUF) VS. ACIT AS REPORTED IN 61 TAXMANN.COM 367 (KARNATA KA), COPY AVAILABLE ON PAGES 44 TO 50 OF PAPER BOOK. HE DRAWN OUR ATTENTI ON TO PARA 20 OF THIS JUDGEMENT AND POINTED OUT THAT IT IS NOTED BY THE H ONBLE HIGH COURT IN THIS PARA THAT IN THE CASE OF N.G. PAI, THE AO HAD ESTIMATED THE YIELD OF ARECANUT PER ACRE AT 14 QUINTALS AND AFTER CALCULATING THE AVERA GE SALE PRICE AT RS. 10,000/- PER QUINTAL AND AFTER DEDUCT OF 1/3 RD OF SUCH SALE PROCEEDS AS EXPENSES, THE BALANCE WAS TAKEN AS THE TOTAL AGRICULTURAL INCOME OF THE SAID ASSESSEE-N.G. PAI AND BY SUCH CALCULATION, THE INCOME PER ACRE WO ULD COME TO RS. 93,200/- PER ACRE. HE FURTHER POINTED OUT THAT IN PARA 24 O F THE SAME JUDGEMENT, IT IS ITA NO.849/BANG/2018 PAGE 3 OF 6 STATED BY THE HONBLE HIGH COURT THAT THE YIELD AT THE RATE OF RS. 93,200/- PER ACRE AS IN THE CASE OF N.G. PAI OUGHT TO HAVE BEEN TAKEN FOR THE ADDITIONAL AREA OF 11 ACRES WHICH WAS ADDED AFTER ASSESSMENT YEAR 1 998-99 IN WHICH CASE THE INCOME OF THE ASSESSEE WOULD HAVE COME TO APPROXIMA TELY THE SAME AMOUNT AS HAD BEEN DECLARED BY THE ASSESSEE IN HIS BOOKS O F ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR 2003-04. HE SUBMITTED THAT IN THE PRESENT CASE ALSO, THE AGRICULTURAL INCOME OF ASSESSEE SHOULD BE COMPUTED ON THE SAME BASIS AT LEAST. THE LD. DR OF REVENUE SUPPORTED THE ORDER O F CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARAS 20 TO 24 OF THIS JUDGEMENT OF HON'BLE KARNATAKA HIGH C OURT RENDERED IN THE CASE OF S.L. BASAVARAJ (HUF) VS. ACIT (SUPRA). THE SAME ARE AS UNDER. 20. THE CONTENTION OF LEARNED COUNSEL FOR THE APPEL LANT IS THAT FOR THE SAME YEAR 2003-04, IN THE CASE OF N.G. PAI, THE ASS ESSING OFFICER HAD ESTIMATED THE YIELD OF ARECANUT PER ACRE AT 14 QUIN TALS, AND AFTER CALCULATING THE AVERAGE SALE PRICE AT RS. 10,000/- PER QUINTAL, A DEDUCTION OF 1/3 RD EXPENSES WAS MADE, AND THE BALANCE WAS TAKEN AS THE TOTAL AGRICULTURAL INCOME OF THE SAID ASSESSEE N.G. PAI. BY SUCH CALCULATION, THE INCOME PER ACRE WOULD COME TO RS. 93,200/-. ACCORDING TO SRI SHANKAR, IF THE BOOKS OF ACCOUNT O F THE ASSESSEE HAD TO BE REJECTED, THEN THE YIELD PER ACRE SHOULD HAVE BEEN ESTIMATED BY THE ASSESSING OFFICER FOR THE TOTAL AREA AT THE SAM E RATE OF RS. 93,200/- PER ACRE, AS HAD BEEN DONE IN THE CASE OF N.G.PAI B Y THE SAME ASSESSING OFFICER FOR THE SAME ASSESSMENT YEAR 2003 -04 AROUND THE SAME TIME WHEN THE ASSESSMENT ORDER IN THE CASE OF THE PRESENT ASSESSEE HAD BEEN PASSED. ACCORDINGLY, IF SUCH METH OD OF CALCULATION WAS ALSO ADOPTED IN THE CASE OF THE APPELLANT, THE AGRICULTURAL INCOME WOULD COME OVER RS. 25 LACS, WHEREAS THE ASSESSEE H AS CLAIMED AGRICULTURE INCOME OF ONLY ABOUT RS. 22 LACS AS PER THE BOOKS OF ACCOUNT MAINTAINED BY HIM. IN THE ALTERNATIVE, IT I S SUBMITTED BY LEARNED COUNSEL FOR THE APPELLANT THAT EVEN IF RS. 12 LACS AND ODD AS INCOME DECLARED BY THE ASSESSEE FOR CERTAIN PARCELS OF LAND WAS NOT TO BE ACCEPTED AND RS. 7,93,350/- WAS TO BE ASSESSED A S AGRICULTURAL INCOME FOR THE RELEVANT ASSESSMENT YEAR ON THE BASI S OF INCOME FOR THE SAME PARCELS OF LAND FOR ASSESSMENT YEAR 1998-99, T HEN FOR THE ADDITIONAL TWO PLOTS OF LAND TOTALLING TO ABOUT 11 ACRES, THE ASSESSING OFFICER OUGHT TO HAVE TAKEN THE YIELD PER ACRE AT R S. 93,200/- (AS HAD BEEN DONE IN THE CASE OF N.G. PAI) AND NOT RS. 50,0 00/- PER ACRE, IN WHICH CASE AN ADDITION OF ABOUT RS. 4,78,950/- WOUL D BE THERE (I.E. RS.10,25,200/- MINUS RS. 5,46,250/-) WHICH WOULD AP PROXIMATELY COME TO THE SAME AMOUNT OF RS. 4,89,019/- WHICH HAS BEEN REDUCED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE F OR THE ASSESSMENT YEAR 2003-04. ITA NO.849/BANG/2018 PAGE 4 OF 6 21. ON THE OTHER HAND, SRI K. V. ARAVIND, LEARNED C OUNSEL FOR THE RESPONDENT-REVENUE HAS SUBMITTED THAT THE ASSESSING OFFICER HAD ADOPTED THE INCOME DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1998-99, IN WHICH YEAR THE PRICE OF ARECANUT WAS HI GHER THAN THE PRICE IN THE ASSESSMENT YEAR 2003-04 IN QUESTION, A ND AFTER CALCULATING THE AGRICULTURAL INCOME OF THE ASSESSEE ON SUCH BASIS, THE ASSESSING OFFICER HAS ACCEPTED THE OTHER ADDITION W ITH REGARD TO FALLEN ARECANUT TREES, TENDER COCONUTS, ETC., AS DECLARED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. HE, THUS, JUSTIFIES THAT THE TRIBUNAL HAS RIGHTLY ACCEPTED THE CALCULATION MADE BY THE ASSESSING OFFI CER, AND SUBMITS THAT THE QUESTION OF LAW IN THIS REGARD BE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 22. HAVING GONE THROUGH THE RECORD, WHAT WE NOTICE IS THAT THE ASSESSING OFFICER HAS, AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE, ACCEPTED CERTAIN PORTION OF THE ACCOUNTS SUBMITTED BY THE ASSESSEE (I.E., WITH REGARD TO FALLEN ARECANUT TREE S, TENDER COCONUTS ETC.) AND THEN PROCEEDED TO CALCULATE THE AGRICULTU RAL INCOME ON THE BASIS OF THE AGRICULTURAL INCOME DECLARED BY THE AS SESSEE FOR THE ASSESSMENT YEAR 1998-99. IT IS NOT UNDERSTOOD AS TO WHY THE INCOME DECLARED FOR THE YEAR 1998-99 WAS CHOSEN BY THE ASS ESSING OFFICER FOR CALCULATING THE INCOME FOR THE ASSESSMENT YEAR 2003 -04. FROM THE RECORD IT APPEARS THAT FOR A CLOSER ASSESSMENT YEAR 2001-02 THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WAS RS . 20,41,000/-, WHICH HAS ALSO BEEN AFFIRMED BY THE TRIBUNAL. IT IS THUS NOT UNDERSTOOD AS TO WHY THE SAID ESTIMATION FOR THE AS SESSMENT YEAR 2001-02 WAS NOT TAKEN FOR CONSIDERATION FOR THE ASS ESSMENT YEAR IN QUESTION I.E., 2003-04 IN WHICH YEAR THERE WAS A MA RGINAL INCREASE OF ABOUT RS. 1.5 LACS ONLY AND WAS AN ASSESSMENT YEAR WHICH WAS CLOSER TO THE ASSESSMENT YEAR IN QUESTION, THAN THE YEAR 1 998-99. 23. AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE AS SESSEE TAKING UP ONE METHOD OF CALCULATION FROM ONE PARTICULAR ASSESSMEN T YEAR AND THEN ACCEPTING A PART OF THE OWN ACCOUNTS OF THE ASSESSE E, CANNOT BE ACCEPTED TO BE A METHOD OF CALCULATING THE INCOME O F THE ASSESSEE. AFTER THE BOOKS OF ACCOUNT ARE TO BE REJECTED FOR V ALID REASONS, A CONSISTENT METHOD OF ESTIMATION OF INCOME IS THEN T O BE ADOPTED BY THE ASSESSING OFFICER, WHICH HAS NOT BEEN DONE IN THE P RESENT CASE. AN ASSESSING OFFICER CANNOT BE PERMITTED TO CHOOSE ONE METHOD FOR ASSESSING ONE PART OF INCOME ON THE BASIS OF ANYONE PARTICULAR EARLIER ASSESSMENT YEAR, AND ANOTHER PART ON THE BASIS OF S OME OTHER ESTIMATION AND THE THIRD PART AS PER THE BOOKS OF A CCOUNT AS MAINTAINED BY THE ASSESSEE. AFTER REJECTING THE ACC OUNT BOOKS, THE ASSESSING OFFICER MAY HAVE THE FREEDOM TO CHOOSE A METHOD FOR ESTIMATING THE INCOME OF THE ASSESSEE, BUT THERE HA S TO BE CONSISTENCY OF SUCH METHOD MAINTAINED FOR CALCULATION OF THE EN TIRE INCOME OF THE ASSESSEE. 24. AS WE HAVE ALREADY NOTICED ABOVE, THE ASSESSING OFFICER, AFTER REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE, CO ULD HAVE MADE THE CALCULATION OF AGRICULTURAL INCOME AS HAD BEEN DONE IN THE CASE OF ITA NO.849/BANG/2018 PAGE 5 OF 6 N.G. PAI, BY THE SAME ASSESSING OFFICER FOR THE SAM E ASSESSMENT YEAR, WHICH WAS CALCULATED AT THE YIELD OF 14 QUINTAL PER ACRE AND THE PRICE OF ARECANUT AT RS. 10,000/- PER QUINTAL, IN WHICH C ASE THE INCOME OF THE ASSESSEE WOULD BE OVER RS. 25 LACS, WHICH IS MU CH HIGHER THAN CLAIMED BY HIM. IF THE SAID CALCULATION WAS NOT TO BE ADOPTED, THEN EVEN IF THE INCOME FOR CERTAIN PARCEL OF LAND WHICH WAS THERE IN 1998- 99 WAS TAKEN AT RS. 7,93,350/- YET THE YIELD AT THE RATE OF RS. 93,200/- PER ACRE (AS IN THE CASE OF N.G. PAI) OUGHT TO HAVE BEEN TAKEN FOR THE ADDITIONAL AREA OF 11 ACRES (WHICH WAS ADDED AFTER ASSESSMENT YEAR 1998-99) IN WHICH CASE THE INCOME OF THE ASSESSEE W OULD HAVE COME TO APPROXIMATELY THE SAME AMOUNT AS HAD BEEN DECLARED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT FOR THE RELEVANT ASSESSMENT YEAR 2003-04. THE TRIBUNAL HAS, WITHOUT GIVING ANY COGENT REASON, SET ASIDE THE ORDER OF THE APPELLATE COMMISSIONER AND RESTORED THE ORDER O F THE ASSESSING OFFICER, EVEN THOUGH THE TRIBUNAL HAS NOTICED THAT THE AGRICULTURAL INCOME FOR A CLOSER ASSESSMENT YEAR 2001-02 WAS RS. 20,41,000/- WHICH HAS BEEN AFFIRMED BY IT, YET THE SAME HAS NOT BEEN TAKEN TO BE A MATERIAL BASIS FOR ARRIVING AT AN INCOME OF THE ASS ESSEE FOR THE ASSESSMENT YEAR IN QUESTION I.E., 2003-04, WHERE TH E ASSESSEE HAD DISCLOSED HIS AGRICULTURAL INCOME OF RS. 21,93,569/ - WHICH WAS MERELY RS.1.5 LACS MORE THAN THE INCOME ACCEPTED TWO YEARS EARLIER IN 2001- 02. 5. AS PER THE ABOVE PARAS REPRODUCED FROM THIS JUDG EMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS SEEN THAT THE HONBLE HIGH COURT HAS APPROVED THE INCOME OF RS. 93,200/- PER ACRE ON THE AREA UNDER CULTIVATION OF ARECANUT. IN THE PRESENT CASE, IT IS NOTED BY AO ON PAGE NO. 10 OF ASSESSMEN T ORDER THAT ASSESSEE IS HAVING 21.14 ACRES UNDER CULTIVATION OF ARECANUT AN D IF WE CONSIDER THE SAME YIELD IN THE PRESENT CASE ALSO, WHICH IS ASSESSMENT YEAR 2013-14, THEN INCOME OF RS. 19,70,248/- (21.14 ACRES MULTIPLIED BY RS.10 ,000/- 93,200/- PER ACRE)SHOULD BE OUT OF ARECANUT CULTIVATION. IN ADD ITION TO THAT, THERE IS 4.51 ACRES UNDER PADDY CULTIVATION AND 2 ACRES UNDER RAG I CULTIVATION. IN RESPECT OF PADDY, THE AO HAS CONSIDERED GROSS INCOME OF RS. 58 ,500/- AND IN RESPECT OF RAGI, HE HAS CONSIDERED RS. 19,500/- AS GROSS INCOM E AND AFTER DEDUCTING EXPENDITURE OF 63.3% AS HAVE BEEN DONE BY THE AO, T HE NET INCOME FROM CULTIVATION OF PADDY AND RAGI COMES TO RS. 28,626/- . IN RESPECT OF CULTIVATION OF THESE TWO ITEMS, NO ARGUMENT WAS ADVANCED BY LD. AR OF ASSESSEE AND HENCE, INFER THAT THE ASSESSEE ACCEPTS THE WORKING OF AO R EGARDING THESE TWO ITEMS I.E. PADDY AND RAGI BUT HOLD THAT IN RESPECT OF CUL TIVATION OF ARECANUT, INCOME SHOULD BE ACCEPTED AT RS. 19,70,248/- @ RS. 93,200/ - PER ACRE FOR 21.14 ACRES AND IN THIS MANNER, THE TOTAL AGRICULTURAL INCOME S HOULD BE ACCEPTED AT RS. ITA NO.849/BANG/2018 PAGE 6 OF 6 19,98,874/-. WE ORDER ACCORDINGLY AND DIRECT THE A O TO ACCEPT THE AGRICULTURAL INCOME OF RS. 19,98,874/-. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 08 TH JUNE, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.