Smt Kanchanben S. Haria, JAMNAGAR V. The Income Tax Officer, Ward-1(3), JAMNAGAR

ITA 941/RJT/2010

• Counselvise Citation: 94124914 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 24-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: J C RANPURA
• Keywords: Rejection of books of accounts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 941 /RJ T/201 0 ASSESSMENT YEAR : 200 4 - 0 5 SMT KANCHANBEN S. HARIA RAJSHANTI METAL PVT LTD, B - 42, STU GIDC, JAMNAGAR PAN: AAHPA 4298 N V. ITO, WARD - 1 (3), JAMNAGAR DATE OF HEARING : 21 .0 6 .2013 DATE OF PRONOUNCEMENT : 10 .0 7 .2013 ASSESSEE BY : SHRI J C RANPURA, CA REVENUE BY : SHRI M K SINGH, DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST T HE ORDER PASSED BY THE CIT(A) , JAMNAGAR ON 08 . 0 4 .20 1 0 , ON THE FOLLOWING GROUNDS: - 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), JAMNAGAR [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN UPHOLDING THE ACTION OF AO IN REJECTING BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. THE REJECTION OF BOOKS OF ACCOUNT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND THE AO MAY KINDLY BE DIRECTED TO ACCEPT THE SAME. 3.0 THE LD. CIT(A) ERRED ON FACTS AS ALSO IN LAW IN RESTRICTING THE NET AGRICULTURAL INCOME OF THE APPELLANT AT RS.4,26,420/ - AS AGAINST THE ACTUAL NET AGRICULTURAL INCOME OF RS.7,86,417/ - AND THEREBY CONFIRMING THE ADDITION OF RS.3,59 ,997/ - MADE U/S 68 OF THE ACT. THE AO MAY KINDLY BE DIRECTED TO ACCEPT THE NET AGRICULTURAL INCOME AS PER RETURN OF INCOME. 3.1 THE LD CIT(A) IN HOLDING THAT AGRICULTURAL EXPENSES SHOULD BE AT 26% OF GROSS AGRICULTURAL RECEIPTS AS AGAINST ACTUAL AT 22.84% . THE AO BE DIRECTED TO ACCEPT AGRICULTURAL EXPENSE AS PER RETURN OF INCOME. 4.0 THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2 941 - RJT - 2010 SMT KANCHANBEN S HARIA 2. THE ASSESSEE IS AN INDIVIDUAL. HER MAIN SO URCES OF INCOME ARE INCOME FROM PROPERTY, AGRICULTURAL INCOME AND OTHER SOURCES. SHE FILED HER RETURN OF INCOME ON 31.08.2004 RETURNING TOTAL INCOME AT RS.6,90,220/ - IN ADDITION TO NET AGRICULTURAL INCOME AT RS.7,86,417/ - . THE ASSESSEE CLAIMS TO HAVE MAINT AINED THE BOOKS OF ACCOUNT IN WHICH NET AGRICULTURAL INCOME WAS CREDITED. THE ASSESSING OFFICER PROCEEDED TO VERIFY THE GENUINENESS OF THE QUANTUM OF NET AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. FOR THE DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER CONSIDERED A SUM OF RS.6,18,077/ - AS NON - AGRICULTURAL INCOME OUT OF TOTAL AGRICULTURAL INCOME OF RS.7,86,417/ - SHOWN BY THE ASSESSEE. ON APPEAL, THE LD CIT(A) HAS RESTRICTED THE QUANTUM OF NET AGRICULTURAL INCOME TO RS.4,26,420/ - WITH TH E FOLLOWING OBSERVATIONS: - 6. I HAVE CAREFULLY CONSIDERED THE ENTIRE ISSUE AND I HAVE GONE THROUGH THE ASSESSMENT ORDER. SO FAR AS REJECTION OF BOOKS OF ACCOUNTS IS CONCERNED, IT IS SEEN THAT THE AO HAS DISCUSSED THIS ISSUE IN DETAIL IN THE ASSESSMENT OR DER, IN WHICH HE HAS CLEARLY STATED THAT SALE OF AGRICULTURAL INCOME IS NOT SUPPORTED BY SALE BILLS AND ONLY ONE SALE BILL RELATING TO SALE OF GROUNDNUT WAS AVAILABLE. ALL OTHER DOCUMENTS ARE SELF PREPARED ON WHICH THERE IS NO SIGNATURE OF THE PURCHASER. E VEN THE EMPLOYEE OF THE APPELLANT HAD STATED THAT VEGETABLES WERE NOT BEING GROWN. THE EXPENSES CLAIMED AGAINST AGRICULTURAL INCOME EXCEPT TELEPHONE AND VEHICLE EXPENSES WERE NOT SUPPORTED WITH ANY EVIDENCE REGARDING INCURRING OF EXPENSES. THE EXPENSES WER E ALSO LOW AS COMPARED TO NORMAL EXPENSES. IT IS ALSO MENTIONED BY THE AO THAT UNDER SEC.131(1) BOOKS OF ACCOUNTS OF THE APPELLANT WERE CALLED FOR AND IT WAS ADMITTED BY T HE APPELLANT THAT BOOKS OF ACCOU NTS RELATING TO SOME OF THE YEARS WERE NOT READY. THE APPELLANT COULD NOT PRODUCE BEFORE THE AO ANY BOOK, REGISTER OR EVIDENCE TO SHOW THAT BOOKS OF ACCOUNTS RELATING TO AGRICULTURAL INCOME WAS BEING MAINTAINED REGULARLY. ALL THESE GOES TO SHOW THAT SO FAR AS AGRICULTURAL INCOME IS CONCERNED, ALLEGED BOOKS O F ACCOUNTS ARE NOT AT ALL RELIABLE AND, THEREFORE, THE AO HAS RIGHTLY REJECTED THE BOOKS OF ACCOUNTS. 3 941 - RJT - 2010 SMT KANCHANBEN S HARIA 7. COMING TO THE ASPECT OF AGRICULTURAL PRODUCE, IT IS SEEN THAT APPELLANT HAS SHOWN TO HAVE GROWN 24,500 KGS. OF GROUNDNUT AND AS PER THE AO THE SAME SH OULD HAVE BEEN ONLY 14800 KGS. IN THIS CONNECTION, THE APPELLANT HAS STATED THAT THE YIELD MAY GO UPTO 5000 KGS. PER HECTARE AND FOR THIS, CERTIFICATE OF DISTRICT AGRICULTURAL OFFICER, JAMNAGAR HAS BEEN PRODUCED. HOWEVER, IF THE CERTIFICATE IS SEEN, IT IS NOTICED THAT YIELD OF GROUNDNUT VARIES BETWEEN 987 KGS. TO 2500 KGS. PER HECTARE IN NORMAL CIRCUMSTANCES DEPENDING ON THE LEVEL OF MONSOON AND OTHER FACILITIES AVAILABLE WITH THE AGRICULTURIST. IN THE LAST COLUMN IT IS MENTIONED THAT MAXIMUM YIELD CAN BE U PTO 5000 KGS. PER HECTARE IF MECHANICAL CULTIVATION IS DONE WITH THE HELP OF CHEMICAL PESTICIDES ETC. SO FAR AS APPELLANTS CASE IS CONCERNED, IN THE WRITTEN REPLY ITSELF THE APPELLANT HAS ADMITTED THAT NO CHEMICAL FERTILIZERS WERE USED AND ONLY ORGANIC FE RTILIZER WAS USED IN AGRICULTURE. IN SUCH A SITUATION, THE YIELD CANNOT BE THAT HIGH. IN ANY CASE, THE TOTAL LAND HOLDING OF THE APPELLANT AS PER CERTIFICATE PRODUCED IS ONLY 20 ACRES 12 GUNTHA. THEREFORE, EVEN IF IT IS PRESUMED THAT BECAUSE OF BETTER IRRI GATION FACILITIES ON THE LAND THE APPELLANT COULD GET MORE YIELD THAN A NORMAL PERSON STILL THE YIELD CANNOT BE 5000 KGS. PER HECTARE IN SUCH CIRCUMSTANCES AT BEST BECAUSE OF BETTER AGRICULTURE FACILITIES THE NORMAL YIELD CAN BE HELD TO BE 20% MORE THAN BY THE MAXIMUM NORMAL YIELD IN GENERAL CONDITION, WHICH IS SHOWN TO BE 2500 KGS. PER HECTARE IN THE CERTIFICATE OF THE DISTRICT AGRICULTURAL OFFICER, JAMNAGAR, WHICH HAS BEEN SUBMITTED BY THE APPELLANT ALONGWITH HER SUBMISSIONS. THEREFORE, EVEN IN THAT SITUA TION, SINCE THE APPELLANT HAS GROWN GROUNDNUT ON 6 HECTARES OF LAND AS PER RECORDS, THE MAXIMUM YIELD OF GROUNDNUT CAN BE ONLY 18000 KGS. THUS THE YIELD OF 24500 KGS. SHOWN BY THE APPELLANT IS APPARENTLY INCORRECT AND ABNORMAL. SUCH YIELD IS IN FACT AN IMP OSSIBILITY. APPARENTLY THE YIELD OF 6500 KGS. OF GROUNDNUT IS SHOWN IN EXCESS BY THE APPELLANT. 8. COMING TO THE SALE OF VEGETABLES, IT IS SEEN FROM THE AGRICULTURAL RECORDS THAT VEGETABLE HAVE BEEN GROWN ONLY ON 1.61 ACRE AND SALE OF VEGETABLES HAS BEEN SHOWN AT RS.2,52,921. AS PER SUBMISSIONS OF THE APPELLANT, VEGETABLES WERE GROWN ONLY DURING THE WINTER SEASON AND NOT IN THE 4 941 - RJT - 2010 SMT KANCHANBEN S HARIA ENTIRE YEAR. THE AGRICULTURAL RECORDS I.E. 7/12 EXTRACT SHOWS THAT IN FACT VEGETABLE WERE GROWN BY THE APPELLANT. BUT CONSIDERING THE FACT THAT IT WAS ON 1.61 HECTARE AND THAT TOO ONLY IN ONE SEASON, THE PRODUCE WORTH RS.2,52,921 IS AN IMPOSSIBILITY. THE SAME CAN AT BEST BE ESTIMATED AT RS.2,00,000. THUS THE EXCESS PRODUCTION SHOWN BY THE APPELLANT IS AS UNDER: 6500 KGS. GROUND NUT RS.17.50 PER KG. RS. 1,13,750 EXCESS PRODUCTION OF VEGETABLES (2,52,921 - 2,00,000) RS. 52,921 COCONUT: ASSESSEE HAS STATED THAT IT HAS SOLD 81784 PIECES OF COCONUT ON 120 TREES GROWN IN HER FARM. APPELLANTS EMPLOYEE HAD STATED THAT NORMALLY 30 PIECES OF COCONUT IS GROWN FROM ONE TREE. AS PER THE APPELLANT, THE AVERAGE PRODUCTION PER TREE IS 681, WHICH IS IMPOSSIBLE. A COCONUT TREE AT BEST CAN GIVE 30 TO 60 COCONUTS PER TREE. THEREFORE, EVEN IF THE MAXIMUM YIELD IS TAKEN, THE YIELD WOULD BE ONLY 7200 PIEC ES OF COCONUT AND THEREFORE, THE YIELD OF COCONUT IS EXCESS BY ABOUT 74000 PIECES AND THE EXCESS SALE WOULD WORK OUT TO ABOUT RS.2,75,000. THUS, THE ACTUAL SALE / PRODUCE OF THE APPELLANT HAS TO BE WORKED OUT AS UNDER: GROSS SALES SHOWN RS. 10,17,914 LESS: EXCESS PRODUCTION AS SHOWN ABOVE: (1,13,750 + 52,921 + 2,75,000) RS. 4,41,671 ACTUAL SALE OF AGRICULTURAL PRODUCE RS. 5,76,243 THE AO HAS ADOPTED EXPENSES @ 40% BASED ON ITAT, AHMEDABAD BENCHS ORDER. HOWEVER, ITAT, RAJKOT BENCH HAS HELD IN T HE CASE OF MAHESHBHAI B. KIYADA (HUF) IN ITA NO.487/RJT/2006 AND IN THE CASE OF MINESH JADVBHAI PATEL IN ITA NO.142/RJT/2007 THAT AGRICULTURAL EXPENSES SHOULD BE ESTIMATED 26%. THEREFORE, OUT OF THE ABOVE, AGRICULTURAL EXPENSES SHOULD BE ESTIMATED AT 26% A ND AGRICULTURAL INCOME SHOULD BE WORKED OUT ON THAT BASIS. THE AO IS DIRECTED TO DO SO. THE BALANCE INCOME WILL BE TAKEN AS UNDISCLOSED INCOME OF THE APPELLANT AND TAXED ACCORDINGLY. 9. AN ISSUE HAS BEEN RAISED THAT IN EARLIER YEAR A HIGHER INCOME FROM AG RICULTURE HAS BEEN ACCEPTED BY THE DEPARTMENT AND THEREFORE, EVEN FOR THIS YEAR, THE SAME SHOULD BE ACCEPTED. HOWEVER, IT IS TO BE POINTED OUT THAT IN ALL 5 941 - RJT - 2010 SMT KANCHANBEN S HARIA THOSE YEARS ASSESSMENTS WERE COMPLETED U/S.143(1) AND THAT CANNOT BE THE BASIS FOR WORKING OUT INCOME IN THIS YEAR, BECAUSE THIS YEAR PROPER SCRUTINY HAS BEEN DONE. IT HAS BEEN NOTICED THAT AGRICULTURAL PRODUCE HAS BEEN INFLATED. AO IS, THEREFORE, ESTIMATED TO WORK OUT AGRICULTURAL INCOME AS STATED ABOVE. 3 . AGGRIEVED BY THE ORDER PASSED BY THE LD . CIT( A), THE ASSESSEE IS NOW I N APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS IN WHICH IT IS STATED THAT THE BOOKS OF ACCOUNTS HAVE PROPERLY BEEN MAINTAINED BY THE ASSESSEE IN WHICH REVENUES FROM AGRICULTURE AS WELL AS EXPENSES INCURRED IN THAT BEHALF HA VE BEEN FULLY RECORDED AND THEREFORE THE AO AS WELL AS CIT(A) OUGHT TO HAVE ACCEPTED THE NET AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. IT IS FURTHER CLAIMED THAT DEPARTMENT ITS ELF HAS ACCEPTED HIGHER NET AGRICULTURAL INCOME IN THE PAST IN THE CASE OF THE ASSESSEE. 4 . IN REPLY, THE LD . D EPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 5 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMI SSIONS. THE LD CIT(A) HAS GIVEN COGENT REASONS FOR ENDORSING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE TOTALITY OF AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS. THE LD CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER IN REJECTING THE BOOK RESULTS IN SO FAR AS THEY RELATE TO AGRICULTURAL INCOME. 6 . AS REGARDS THE ESTIMATION OF AGRICULTURAL INCOME, THE LD CIT(A) HAS GIVEN COGENT REASONS FOR NOT ACCEPTING THE NET AGRICULTURAL INCOME SHOWN BY THE ASSESSEE AT RS .7,86,417/ - . HE HAS DEALT WITH EACH AND EVERY SUBMISSION MADE BY THE ASSESSEE BEFORE HIM WHICH HAVE BEEN REITERATED BEFORE THIS TRIBUNAL ALSO. HOWEVER, THE ESTIMATION OF NON - AGRICULTURAL INCOME AT RS.3,59,997/ - APPEARS TO BE ON HIGHER SIDE. TAKING INTO ACC OUNT THE PAST RECORD OF THE ASSESSEE, THE SUBMISSIONS MADE BY THE ASSESSEE AND THE MATERIALS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE LD CIT(A), IT IS CONSIDERED APPROPRIATE TO RESTRICT THE ADDITION TO RS.2,00,000/ - OUT OF RS.3,59,997/ - CONFIRMED BY THE LD CIT(A) ON ACCOUNT OF ESTIMATION OF NON - AGRICULTURAL INCOME . WE ORDER ACCORDINGLY. 6 941 - RJT - 2010 SMT KANCHANBEN S HARIA 7. IN VIEW OF THE FOREGOING, T HE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 10 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K . SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 10 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT SMT KANCHANBEN S. HARIA, RAJSHANTI METAL PVT LTD, B - 42, STU GIDC, JAMNAGAR 2 . RESPONDENT - ITO, WARD - 1(3), JAMNAGAR 3 . CO NCERNED CIT - JAMNAGAR 4 . CIT (A) - JAMNAGAR 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT