Income Tax Officer-2(3), Kanpur V. Shri Rahul Prakash,

ITA 87/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1088 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 31-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Assessment record
• Section: 143(3); 144

Judgement Text

I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 INCOME TAX OFFICER-2(3), KANPUR. VS. SHRI RAHUL PRAKASH, C/O SHREE GANESH FARMS, VILLAGE PIPALIA, KICHHA, DISTT. U.S. NAGAR. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THESE ARE TWO APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A) BOTH DATED 07/11/2016. I.T.A. NO.87 IS AGAINST THE DELETION MADE BY LEARNED CIT(A) WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNTS OF THE ASSESSEE WH EREAS I.T.A. NO.88 REPRESENTS THE DELETION MADE BY LEARNED CIT(A) ON A CCOUNT OF PENALTY WHICH THE ASSESSING OFFICER HAD IMPOSED U/S 271(1)(C) OF THE ACT. BOTH THE APPEALS WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 2. FIRST WE TAKE UP APPEAL IN I.T.A. NO.87/LKW/2017 . THE BRIEF FACTS, AS NOTED IN THE ASSESSING OFFICER, ARE THAT THE ASSESS EE DECLARED TOTAL INCOME OF RS.67,48,033/-. THE ASSESSING OFFICER DURING AS SESSMENT PROCEEDINGS APPELLANT BY CHAUDHARY ARUN KUMAR SINGH, D.R. RESPONDENT BY MRS. ANJALI RAHUL PRAKASH, A.R. DATE OF HEARING 15/03/2018 DATE OF PRONOUNCEMENT 19 / 03 /201 8 I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 2 OBSERVED THAT THE ASSESSEE HAD DEPOSITED RS.2,05,57 ,695/- IN STATE BANK OF INDIA FOR WHICH ASSESSEE HAD NOT OFFERED ANY EXPLAN ATION AND THEREFORE, THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE TO EXPLAIN THE DEPOSITS. HOWEVER, THE ASSESSEE DID NOT COMPLY WITH THE NOTIC ES AND ASSESSING OFFICER THEREFORE, COMPLETED THE ASSESSMENT U/S 144 AND MADE ADDITION ON ACCOUNT OF UNEXPLAINED DEPOSITS. AGGRIEVED WITH TH E ORDER OF THE ASSESSING OFFICER THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) . LEARNED CIT(A), AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND A FTER OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER, DELETED THE ADDI TION AND THEREFORE, AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 3. LEARNED D. R., AT THE OUTSET, STATED THAT LEARNE D CIT(A) HAS WRONGLY ALLOWED RELIEF TO THE ASSESSEE HOLDING THAT THE AMO UNT DEPOSITED IN THE BANK RELATED TO AGRICULTURAL INCOME WHEREAS THE FACT REM AINS THAT NO EVIDENCE WAS PRODUCED EVEN BEFORE THE APPELLATE AUTHORITY. THE ASSESSEE WAS REPRESENTED BY HIS WIFE MRS. ANJALI RAHUL PRAKASH. AT THE OUTSET, SHE ARGUED THAT HER HUSBAND WAS ENGAGED IN THE AGRICULT URAL ACTIVITIES AND THE DEPOSITS MADE IN THE BANK ACCOUNT REPRESENTED RECEI PTS FROM AGRICULTURAL INCOME. SHE SUBMITTED THAT HER HUSBAND IS ENGAGED INTO RAISING OF EXOTIC VEGETABLES AND HAS BEEN EARNING AGRICULTURAL INCOME FROM LAND MEASURING ABOUT 40 ACRES. SHE FURTHER SUBMITTED THAT FOR LAS T SO MANY YEARS THE ASSESSING OFFICER HAD BEEN MAKING ADDITIONS ON ACCO UNT OF DEPOSITS IN BANK BUT EVERY TIME THE ADDITIONS WERE DELETED BY HIGHER AUTHORITIES. SHE FURTHER SUBMITTED THAT LEARNED CIT(A) HAS PASSED ELABORATE ORDER WHEREIN HE HAS DEALT WITH THE ENTIRE ISSUE AND SHE PLACED HER RELI ANCE ON THE ORDER OF LEARNED CIT(A). 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT AS NOTED BY LEARNED CIT(A) IN HIS ORDER, THE ASSESSEE HAD SOLD EXOTIC VEGETABLES LIKE BABY CORN, BROCCOLI CELERY, RED I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 3 CAPSICUM, YELLOW CAPSICUM, LETTUCE, ASPARAGUS ETC. AND THE ASSESSEE HAS ALSO RECEIVED A CERTIFICATE FROM GOVERNOR OF UTTAR AKHAND FOR ACHIEVEMENT IN GROWING THESE VEGETABLES. HE HAS FURTHER HELD THAT THE ASSESSEE WAS EXPERT IN CULTIVATION OF EXOTIC VEGETABLES AND HAD THE NEC ESSARY LAND FOR THIS CULTIVATION. WHILE ALLOWING RELIEF TO THE ASSESSEE LEARNED CIT(A) HAS EXAMINED THE EARLIER RECORD OF THE ASSESSEE REGARDI NG ADDITIONS DURING THE ASSESSMENT YEAR 2001-02 ALSO AND WHEREIN THE TRIBUN AL HAD ALLOWED RELIEF TO THE ASSESSEE. LEARNED CIT(A) HAS ALSO OBTAINED REMAND REPORT FROM THE ASSESSING OFFICER WHEREIN THE ASSESSING OFFICER HAS ACCEPTED THAT THE INCOME DEPOSITED IN THE BANK ACCOUNT REPRESENTED HI S AGRICULTURAL INCOME. IN THE REMAND REPORT HE HAS STATED THAT SIMILAR CLA IMS OF THE ASSESSEE WERE ALLOWED BY LEARNED CIT(A), HON'BLE TRIBUNAL AND HON 'BLE HIGH COURT. WE FIND THAT LEARNED CIT(A) ORDER IS QUITE EXHAUSTIVE AND SPEAKING ORDER. FOR THE SAKE OF COMPLETENESS, THE ORDER OF LEARNED CIT( A) ALLOWING RELIEF TO THE ASSESSEE IS REPRODUCED BELOW: IN PROCEEDINGS BEFORE ME FOR CURRENT ASSESSMENT YE AR THE ASSESSEE DECLARED AN INCOME OF NIL AND AN AGRI CULTURAL INCOME OF 67,48,033/-THIS INCOME WAS ASSESSED UNDER SECTION 143(1) WITHOUT MAKING ANY ADDITIONS. SUBSEQUENTLY A LETTER WAS ISSUED BY CIT HALDWANI TO THE ITO INFORMING BANK DE POSITS OF IN THE ACCOUNTS OF THE ASSESSEE. ASSESSEE HAS AGAIN PRODUCED COPY OF KHASHRA & KHATA UNI BEFORE ME IN A.Y. 2004-05 BEING AGRICULTURAL LAND O F 41.6 ACRES. THERE IS NO CHANGE IN LAND HOLDING FROM LAST YEAR. LAST YEAR ON THE SAME PIECE OF LAND SIMILAR AGRICULTURAL INCOME WAS HELD AS VALID AND ACCEPTED BY THE DEPARTMENT. AS REGARDS BANK DEPOSITS IT IS SEEN THAT THE ASSESS EE HAS TWO BANK ACCOUNTS ONE IN STATE BANK AND THE OTHER IN BA NK OF BARODA AND THE ENTIRE DEPOSITS ARE ON RECORD DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSMENT RECORD SHOWS THAT THE ASSESSEE HAS DISCLOSED ENTIRE DEPOSITS DURING ORIGI NAL ASSESSMENT U/S 143(3) ALTHOUGH NAME OF ONLY STATE B ANK IS MENTIONED. FURTHER THE ENTIRE INCOME HAS BEEN HELD TO BE I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 4 AGRICULTURAL THEREFORE THE DEPOSITS ARE NOTHING BUT RECEIPTS OF AGRICULTURAL INCOME. THE ASSESSING OFFICER DID NOT MAKE ANY INVESTIGATIO N INTO THE SOURCE OF THESE DEPOSITS BUT ADDED THEN AS INCOME F ROM UNDISCLOSED SOURCES STATING THAT THE AGRICULTURAL I NCOME OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AN D MATTER IS IN APPEAL AND THE BANK ACCOUNT IS NOT DISCLOSED DURING ASSESSMENT. DURING APPELLATE PROCEEDINGS THE BANK A CCOUNT WERE OBTAINED FROM THE ASSESSEE AND CONFRONTED TO T HE ASSESSING OFFICER. A.O. IN HIS REPORT HAS STATED AS UNDER:- 'KINDLY REFER TO YOUR DIRECTION GIVEN ON ORDER SHEE T REGARDING EXAMINING THE GENUINENESS OF DEPOSITS/RECEIPTS AS S HOWN IN THE SAVING BANK ACCOUNT MAINTAINED IN SBI, KICHHA FOR T HE PERIOD 01.04,2003 TO 31.03.2004 IN THE CASE OF SRI RAHUL P RAKASH FOR A.Y. 2004-05. IN THIS REGARD, A LETTER DATED 18.10. 2016 WAS SENT TO THE ASSESSEE REQUESTING FOR NARRATION OF DEPOSITS/RECEIPTS SHOW IN SBI, KICHHA. 2. IN THIS CONNECTION, THE ASSESSEE SUBMITTED HIS R EPLY DATED 31.10.2016 AS UNDER: 1. THE SOURCES OF CASH DEPOSITS AND RECEIPTS INTO T HE SAVINGS ACCOUNT IN STATE BANK OF INDIA AS WELL AS BANK OF B ARODA ARE RELATED SOLELY TO AGRICULTURAL SALES AND RECEIPTS. AS A LONG PERIOD OF THIRTEEN YEARS HAS ELAPSED THERE ARE NO RECORDS AVAILABLE WITH THE BUYERS FOR THEM TO BE ABLE TO PROVIDE CONF IRMATION OF SALES. YET, AS A JUSTIFICATION OF THE QUANTUM OF DE POSITS YOUR KIND ATTENTION IS DRAWN TO THREE ASPECTS: I. THE QUANTUM OF DEPOSITS INTO BANK ACCOUNTS IS SIMIL AR IN PRECEDING YEARS, OUT OF WHICH FOR TWO YEARS AY 2001-02 AND AY 2003-04, THE IMMEDIATELY PRECEDING YEAR, AN EXTENSIVE SCRUTINY HAS BEEN DONE WHEREBY STANDING CROPS HAVE BEEN PERSONALLY VERIFIED BY THE THEN ASSESSING OFFICER, STATEMENTS OF BUYERS, TRANSPORTERS, LABOUR CONTRACTORS AND GOVERNMENT BODIES ETC. HAVE BEEN RECORDED; AND CONFIRMATION OF SALES HAVE BEEN TAKEN ON RECORD AND VERIFIED; AND THEREAFTER AGRICULTURAL INCOME HAS BEEN UPHELD BY C IT I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 5 APPEALS, ITAT AND HON'BLE HIGH COURT. THE FOLLOWING TABLE SHOWS THE RETURNED AGRICULTURAL INCOME FROM A Y 2000-01 TO 2004-05 AND THE STATUS OF CASES: ASSESSMENT YEAR AGRICULTURAL INCOME PRESENT STATUS OF CASE 2000-01 RS. 11,99,000 ORDER U/S 147/144 SET ASIDE BY HON'BLE HIGH COURT 2001-02 RS. 47,30,000 APPEAL OF DEPARTMENT DISMISSED BY HON'BLE HIGH COURT 2002-03 RS. 91 LACS (APPROX.)* ORDER U/S 147/144 SET ASIDE BY HON'BLE HIGH COURT 2003-04 RS. 77,29,500 APPEAL OF DEPARTMENT DISMISSED BY HON'BLE HIGH COURT; FRESH ORDER U/S 147/144 ALSO DISMISSED BY CIT(A) 2004-05 RS. 67,48,033 APPEAL PENDING BEFORE CIT(A) *EXACT FIGURE NOT READILY AVAILABLE II, THERE IS NOTHING ON RECORD TO DISPROVE' THE CLA IM OF AGRICULTURAL INCOME. III. LAND OWNERSHIP HAS REMAINED UNCHANGED FROM YEAR 1991 TILL TODAY. THE FOLLOWING TABLE SHOWS LAN D HOLDINGS AS HELD IN THE CITED YEAR AS WELL AS TODAY. VILLAGE KHASRA NOS. AREA HELD IN ACRES DHADHA 219, 222 15.3 DHADHA 36 ETC. 8.5 I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 6 UHADNA* 142 2.7 PIPALIA 95 15.1 TOTAL 41.6 2. DURING THE CITED YEAR FY 2003-04 THE QUANTUM OF DEPOSIT INTO STATE BANK OF INDIA, KICHHA SAVINGS ACCOUNT IS RS.1,92,42,078.65 AND THE QUANTUM OF DEPOSIT INTO B ANK OF BARODA, KICHHA SAVINGS ACCOUNT IS 5,00,030. THE TOT AL DEPOSITS INTO BOTH BANK ACCOUNTS COME TO RS.1,97,42,108.65 A ND NOT RS.2,05,57,695 AS MENTIONED IN YOUR LETTER AS WELL AS THE ASSESSMENT ORDER. THESE TWO BANK ACCOUNTS WERE USED FOR RECEIVING PAYMENTS FROM BUYERS AND FOR DEPOSIT OF C ASH ACCRUED FROM COLLECTION OF FARM SALES PROCEEDS; AS WELL AS PAYING OUT CREDITORS FOR AGRICULTURAL INPUTS SUPPLIED AND FOR SERVICES AND INDIRECT EXPENSES INCURRED APART FROM PERSONAL WITH DRAWALS. 3. THE NET AGRICULTURAL INCOME OF RS.67,48,0 33 DURING THE YEAR HAS BEEN DERIVED FROM A TOTAL SALES OF RS.2,16 ,74,358, THE DIFFERENCE BEING THE DIRECT EXPENSES ON INPUTS SUCH AS FUEL, LAND RENT, SEED, FERTILIZER ETC. BESIDES INDIRECT E XPENSES INCURRED TO DERIVE THE NET INCOME. THE DEPOSITS INTO SAVINGS ACCOUNTS ARE LARGELY FROM SALES OF AGRICULTURAL PRODUCE GROWN ON FARM LANDS, OWNED AND LEASED. THE REMAINING DEPOSITS PER TAIN TO RECEIPTS FROM SUNDRY DEBTORS FROM THE PREVIOUS, YEA R ETC. YOUR SEEKING OF AN EXPLANATION OF THE SOURCES OF THE DIF FERENCE BETWEEN THE GROSS AND NET AGRICULTURAL INCOME IMPLI ES THE TREATMENT OF GROSS AGRICULTURAL RECEIPTS AS NET INC OME ITSELF. YOU WOULD APPRECIATE THAT GROSS RECEIPTS INCLUDE RECEIP TS FROM PREVIOUS YEAR'S DEBTORS; AND EXPENSES ARE PAID OUT FROM GROSS RECEIPTS AND ONLY THE RESIDUAL INCOME AFTER DEDUCTI NG PREVIOUS DEBTS AND EXPENSES INCURRED, DIRECT AND INDIRECT IS NET INCOME. A COPY OF PROFIT AND LOSS ACCOUNT AND SALES ACCOUNT FOR THE YEAR ARE BEING REPRODUCED BELOW AND WILL FURTHER CL ARIFY THE ASSERTIONS BEING MADE. PROFIT AND LOSS ACCOUNT FOR THE PERIOD 1.4.2003 TO 31.3.2004 PARTICULARS PARTICULARS OPENING STOCK 0.00 SALES ACCOUNT 2,16,74,358.00 I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 7 PURCHASE ACCOUNT 79,51,690.90 DIRECT INCOMES 0.00 - DIRECT EXPENSES 28,30,950.00 CLOSING ACCOUNT 0.00 GROSS PROFIT C/O 1,08,91,717.10 2,16,74,358.00 2,16,74,358.00 INDIRECT EXPRENSES 41,43,683.58 GROSS PROFIT B/T 1,08,91,717. 1 0 NET PROFIT 67,48,033.52 LOTA/ 1,08,91,717.10 TOTAL 1,08,91,717.10 SALES ACCOUNT FOR THE PERIOD 1.4.2003 TO 31.3.2004 ITEM SALES IN RS. EXOTIC VEGETABLES AND FRUIT 1,61,41,850 FODDER 10,30,508 INDIAN VEGETABLES 27,78,894 MANGOES 3,00,000 SUG ARCANE 5,30,781 SWEETCORN 7,37,325 WHEAT 1,55,UUU TOTAL 2,16,74,358 I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 8 FINDINGS OF ABOVE FACTS: 1.BASED ON ABOVE FACTS, IT IS CLEAR THAT ASSESSEE H AS AGRICULTURAL LAND OF 41.6 ACRES. 2. AGRICULTURAL ACTIVITY OF GROWING EXACT PLANTS WA S CONTINUING ON THE SAME LAND. 3. ASSESSEE WAS NOT OBLIGED FOR FILE RETURN OF INCO ME AS INCOME WAS BELOW TAXABLE. 4. BOTH CIT (A) & ITAT IN PREVIOUS YEARS HAVE CONTI NUOUSLY HELD THAT ASSESSEE IS OWNER OF THE LAND AND HIS INC OME IS AGRICULTURAL. 5. AO HAS MADE NO FRESH INVESTIGATION/BROUGHT MATER IAL ON RECORD TO DISPROVE THE FINDINGS OF THE CIT (A) & HO N'BLE ITAT. 6. NO FRESH EVIDENCE IS ON RECORD TO SHOW THAT ASS ESSEE DID NOT HAVE AGRICULTURAL INCOME AND THE SAME WAS NOT DEPOS ITED IN THE BOOKS ACCOUNT. 7. AGRICULTURAL INCOME IS DURING THE A.Y. 2004-2005 RS 67,48,033.THIS NET AGRICULTURAL INCOME OF RS. 67,48 ,033 DURING THE YEAR HAS BEEN DERIVED FROM A TOTAL SALES OF RS. 2,16,74,358 WHICH COMMENSURATE WITH THE INCOME UPHELD IN PREVIO US YEARS AS DISCUSSED ABOVE. 8. THIS IS COME HAS BEEN DEPOSITED/ WITHDRAWN FROM BANKS, STATE BANK OF INDIA, KICHHA RS. 1,92,42,078/- AND B ANK OF BARODA, KICHHA SAVINGS ACCOUNT 5,00,030. THE TOTAL DEPOSITS INTO BOTH BANK ACCOUNTS COME TO RS. 1,97,42,108.65/ - 9. I HAVE EXAMINED THE ISSUE IN DETAIL IN A.Y. 200 3-04 AND A.Y. 2005-06. IT HAS BEEN CATEGORICALLY HELD THAT THE ASSESSEE HAS AGRICULTURAL INCOME, AND THE PROCEEDS ARE DEPOSITED IN BANK ACCOUNTS AND THESE ARE FURTHER UTILIZED IN AGRICULTURAL OPERATIONS. 10.THE DEPARTMENT HAS ACCEPTED MY FINDINGS ON THE I SSUE AND NOT FILED ANY APPEAL ON THE QUANTUM IN THESE YEARS. I.T.A. NO.87 & 88/LKW/2017 ASSESSMENT YEAR:2004-05 9 11.BASED ON ABOVE FACTS AND DULY FOLLOWING ORDER OF MY PREDECESSOR IN 2002-2003 AND MY OWN ORDERS IN A.Y. 2003-04 AND A.Y. 2005-06. & ORDERS OF HON'BLE ITAT, I FIND THAT AO HAS NO CASE AGAINST THE ASSESSEE. 12.ADDITION MADE IS THEREFORE DELETED ON BEING NOT BASED ON ANY FACTS. 4.1 WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LE ARNED CIT(A) THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5. NOW COMING TO REVENUES APPEAL IN I.T.A. NO.88, THE PENALTY WAS IMPOSED FOR CONCEALMENT OF PARTICULARS U/S 271(1)(C ) OF THE ACT FOR THE DEPOSIT OF CASH IN BANK ACCOUNT. SINCE IN I.T.A. N O.87 WE HAVE CONFIRMED THE ORDER OF CIT(A) AND HAVE CONFIRMED THE DELETION MADE BY HIM THEREFORE, THE PENALTY IMPOSED U/S 271(1)(C) DOES NOT SURVIVE AND IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IN I.T.A. NO.88 IS DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 19/03/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:19/03/2018 *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