SHRI SANTABHAI PRABHUDAS PATEL, Nadiad V. THE INCOME TAX OFFICER, WARD-1, Nadiad

ITA 969/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0470 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 01-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: J P SHAH
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.969-970/AHD/2009 ASSESSMENT YEARS : 2003-04 & 2004-05 DATE OF HEARING:4.11.09 DRAFTED:9.11.09 SRI SANTABHAI PRABHUDAS PATEL, OPP. PATEL KHADKI, CHHATIYAWAD LIMDI, NADIAD PAN NO.ADUPP2200N V/S . INCOME TAX OFFICER, WARD-1, NADIAD PAN NO. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI J.P. SHAH AR REVENUE BY:- SHRI C.K. MISHRA, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA IN APPEAL NOS. CAB/IV-N-343 & 339/05-06 BY EVEN DATE 15-01-2009. THE ASSESSMENTS WERE FRAMED BY THE ITO, WARD-1, NADIA U/S.143(3) OF THE INCOME-TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS DATED 08-12-2006 AND 27-12-20 06 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. 2. THE ONLY COMMON ISSUE IN BOTH THE APPEALS OF THE ASSESSEE IS AS REGARDS TO THE ORDER OF CIT(A) IN CONFIRMING THE AGRICULTURAL INCOME BY ESTIMATING. FOR THIS, THE ASSESSEE AS RAISED GROUND NO.1 IN ITA NO.969/AHD/2009 AS UNDER:- 1. THE CIT(APPEALS) ERRED IN UPHOLDING AN ADDITIO N OF RS.1,27,505/- AS UNEXPLAINED INCOME AND NOT ACCEPTING IT AS AGRICULT URAL INCOME AS SHOWN BY THE APPELLANT AND IN ITA NO.970/AHD/2009 GROUND NO.1-3 AS UNDER:- ITA NO.969-970/AHD/009 A.YS. 2003-04 & 2004-05 SH. SANTABHAI P PATEL V. ITO WD-1, NADIAD PAGE 2 1. THE C.I.T.(APPEALS) ERRED IN ENHANCING THE DISA LLOWANCE TO RS.5,24,305/- FROM THE AMOUNT OF RS.4,22,264/- ADDED BY THE ASSES SING OFFICER. 2. THE C.I.T (APPEALS) ERRED IN NOT CONSIDERING THE EVIDENCE PRODUCED BEFORE HIM BY THE APPELLANT TO INDICATE THE PROOF OF CULTI VATION OF TOBACCO BY THE APPELLANT. 3. THE C.I.T.(APPEALS) MERELY ON THE BASIS OF ASSUM PTION AND PRESUMPTIONS MADE AN ADDITION OF RS.5,24,305/- ON ACCOUNT OF INC OME FROM UNDISCLOSED SOURCES BY NOT AGREEING TO THIS INCOME AS AGRICULTU RAL INCOME WHICH WAS SHOWN BY THE APPELLANT. THE FACTS BEING EXACTLY IDENTICAL WE ARE TAKING UP THESE TWO APPEALS TOGETHER AND ARE BEING DISPOSED OF BY CONSOLIDATED ORDER. 3. IN THE SECOND ROUND, THE ASSESSEE BEFORE THE CIT (A) SUBMITTED THE LAND HOLDING AS PER COPY OF 8A AND 7/12 STATEMENTS, THE LAND HOLDING OF THE ASSESSEE BEING 17.89 ACRES IN STEAD OF 6 HECTARE (HA) CONSID ERED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2003-04. THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME AT RS.3,64,300/- AND THE ASSESSING OFFICER ESTIMATED A T RS.1 LAC ON THE BASIS OF THE LAND HOLDING SUBMITTED BEFORE HIM. THE AO ALSO VER IFIED THE ASSESSEES LAND HOLDING ON WHICH THE AGRICULTURAL ACTIVITY TOOK PLACE AND H AS CONFIRMED THAT THE ASSESSEE IS HAVING 17.89 ACRES OF AGRICULTURAL LAND. IN THE FI RST ROUND THE CIT(A) HAS ESTIMATED THE AGRICULTURAL INCOME AT RS.2,64,300/- AND CONFIR MED THE BALANCE OF RS.1,27,505/- AS AGRICULTURAL INCOME EXPENSES. NOW, CIT(A) AFTER ESTIMATING THE AGRICULTURAL EXPENSES HAS ACCEPTED THE AGRICULTURAL INCOME AT RS .2,36,795/- AND THE BALANCE RS.1,27,505/- IS CONFIRMED AS INCOME FROM OTHER SOU RCES. IN RESPECT OF ASSESSMENT YEAR 2004-05 THE FACTS BEING SIMILAR THE ASSESSEE H AS DECLARED AGRICULTURAL INCOME AT RS.8,44,264/- AND ASSESSING OFFICER HAS ESTIMATE D AGRICULTURAL INCOME OF RS.4 LAC. THE BALANCE WAS TREATED BY THE ASSESSING OFFICER AT RS.4,22,264/- AS INCOME FROM OTHER SOURCES. THE CIT(A) AFTER CONSIDERING THE SAM E AGRICULTURAL LAND TREATED THE AGRICULTURAL INCOME AT RS.2,97,959/- AND THE BALANC E AT RS.5,39,305/- WAS TREATED AS INCOME FROM OTHER SOURCES BY GIVING FOLLOWING FINDI NG IN PARA-4 OF HIS APPELLATE ORDER:- 4. I HAVE CONSIDERED THE MATTER CAREFULLY. AT THE REMAND REPORT STAGE, ASSESSING OFFICER HAS VERIFIED THE SIZE OF THE LAND HOLDING OF THE APPELLANT AS WELL AS CROPS CULTIVATED ON IT WHICH ARE MENTIONED IN PARA 2 OF THIS ORDER. ASSESSING OFFICER HAS ALSO FOUND THE RECEIPT FROM S ATYALOK TOBACCO CO. TO BE RS.8,09,666/- AS CLAIMED BY THE APPELLANT INSTEAD O F RS.6,85,000/- NOTED BY ITA NO.969-970/AHD/009 A.YS. 2003-04 & 2004-05 SH. SANTABHAI P PATEL V. ITO WD-1, NADIAD PAGE 3 MY LEARNED PREDECESSOR. IT IS ALSO SEEN THAT IN THI S YEAR, APPELLANT HAD SHOWN TOTAL AGRICULTURAL RECEIPTS / SALES OF RS.11,63,893 /- AGAINST WHICH EXPENSES OF RS.3,41,629/- WERE CLAIMED TO BE INCURRED. THE AGRI CULTURAL INCOME OF RS.8,,64/- IN THE RETURN WAS THEREFORE, NET AGRICUL TURAL INCOME. THE ISSUE IS WHETHER AGRICULTURAL INCOME OF THIS MAGNITUDE WAS G ENUINE, WHEN IN THE PRECEDING YEARS, MUCH LESSER AGRICULTURAL INCOME HA D BEEN SHOWN AS EARNED BY THE APPELLANT FROM ALMOST THE SAME SIZE OF LAND. THE RISE IN AGRICULTURAL INCOME IS MAINLY ON ACCOUNT OF TOBACCO, WHICH WAS N OT GROWN IN THE EARLIER YEARS. THE AO HAS REPORTED TOBACCO CULTIVATION TO B E ON LAND SIZE 1-16-91 ONLY, AFTER VERIFICATION OF THE RECORDS. AS PER TH E DATA / STATISTICS COLLECTED BY THE ASSESSING OFFICER IN A.Y. 2003-04 FROM DIST. AU THORITIES AND AGRICULTURE DEPARTMENT OF KHEDA, WHICH IS MENTIONED IN THE ASSE SSMENT ORDER FOR A.Y. 2003-04, ON AN AVERAGE NET AGRICULTURAL INCOME PER HECTARE PER ANNUM FROM TOBACCO IS RS.43,708/-. IN VIEW OF THIS, THE NET A GRICULTURAL INCOME FROM TOBACCO WOULD NORMALLY BE OF THE ORDER OF RS.50,000 /- OR SO FROM THE SIZE OF LAND PUT UNDER TOBACCO CULTIVATION. ON BEING ASKED TO EXPLAIN THE DIFFERENCE DURING THE APPEAL HEARING, THE APPELLANT AND THE A. R. CLAIMED THAT TOBACCO CULTIVATION WAS ON 11-66-50 SIZE OF LAND. IN SUPPO RT OF THIS CONTENTION, REFERENCE WAS MADE TO EXTRACT OF 7/1 RECORDS FILED BEFORE MY LEARNED PREDECESSOR SHOWING CULTIVATION OF DANGER ( PADDY) AND TOBACCO ON AREA OF 11-66-50 ON BLOCK NO.15A. SINCE THIS WAS AT VARIAN CE WITH THE FIGURE REPORTED BY AO, CLARIFICATION WAS SOUGHT FROM THE ASSESSING OFFICER. THE A.O IN HIS REPORT DATED 13.01.2008 INFORMED THAT DURING THE OR IGINAL ASSESSMENT PROCEEDINGS FOR A.Y 2004-05, A COPY OF 7/1 FORM DAT ED 7.5.2004 FOR BLOCK NO.15A ADMEASURING 11 HECTARES, 60 ARES 50 SQ. METR ES HAD BEEN SUBMITTED, IN WHICH THE NAME OF PRODUCE WAS MENTION ED AS DANGER (PADDY) ONLY. LATER ON AT THE APPELLATE / REMAND STAGE, THE APPELLANT HAD PRODUCED A COPY OF 7/12 OF THE SAME LAND DATED 27.5.2004 SHOWI NG THE PRODUCE AS DANGAR / TAMAKU. AS PER AO, THE APPELLANT HAS OBT AINED ANOTHER 7/1 FORM SIGNED BY A DIFFERENT OFFICIAL FOR THE SAME PERIOD WITH NAME OF DIFFERENT AGRICULTURAL PRODUCE. AS PER AO, ONLY THE EVIDENCE PRODUCED AT THE TIME OF ORIGINAL ASSESSMENT STAGE SHOULD BE GIVEN WEIGHTAGE , AS THE DETAILS FURNISHED AT THE APPELLATE STAGE LACK CREDIBILITY. THE AO HAS ALSO FORWARDED COPIES OF 7/12 FORMS FILED ON TWO OCCASIONS. I AM IN AGREEMEN T WITH THE ASSESSING OFFICER THAT THE SECOND 7/1 FORM FOR BLOCK NO.215A FILED AT APPELLATE STAGE CANNOT BE RELIED UPON, WHEN FOR THE SAME BLOCK, AT THE TIME OF ORIGINAL ASSESSMENT, ONLY PADDY WAS SHOWN TO BE CULTIVATED. IN VIEW OF THIS, THE CLAIM OF APPELLANT REGARDING AGRICULTURAL INCOME OF RS.8, 09,666/- FROM TOBACCO CULTIVATION CANNOT BE BELIEVED. THE CLAIMED SALE PR OCEEDS OF TOBACCO FROM LAND HOLDING OF THE SIZE ONE HECTARE 16 ARES AND 91 S. METERS, BEING THE AREA UNDER TOBACCO CULTIVATION AS PER LAND RECORDS, ARE NOT COMMENSURATE AND ARE VERY MUCH ON HIGHER SIDE, AS PER DATA / STATISTICS COMPILED BY DISTRICT AUTHORITIES / AGRICULTURE DEPARTMENT OF KHEDA. THE SALE BILL OF SATYALOK TOBACCO CO. OR ITS CONFIRMATION ONLY SUBSTANTIATE T HE FACT OF SALE. THESE DO NOT SUBSTANTIATE CULTIVATION OF TOBACCO BY THE APPE LLANT HIMSELF. EVEN AFTER TAKING INTO ACCOUNT APPELLANTS ARGUMENTS REGARDING HIGHER REALIZATION ON SALE OF CULCUTTI TOBACCO, THE CLAIM REGARDING AGRICULTUR AL PRODUCE OF TOBACCO OF 29389 KGS. IS NOT SUBSTANTIATED. THE NET INCOME FRO M TOBACCO CULTIVATION AS PER DATA FROM DIST. AUTHORITIES OF KHEDA DISTRICT W OULD BE OF THE ORDER OF RS.50,000/- ONLY. THE ESTIMATED GROSS RECEIPTS OF A PPELLANT FROM AGRICULTURE ITA NO.969-970/AHD/009 A.YS. 2003-04 & 2004-05 SH. SANTABHAI P PATEL V. ITO WD-1, NADIAD PAGE 4 OTHER THAN TOBACCO WOULD THEREFORE BE RS.11,63,893 MINUS RS.8,09,666 I.E. RS.3,54,227. IN A.Y. 2003-04, THE APPELLANT HAD NO T SHOWN ANY AGRICULTURAL EXPENSES, WHEREAS IN A.Y. 2004-05, AGRICULTURAL EXP ENSES OF RS.3,41,629/- IN THIS YEAR WERE DUE TO TOBACCO CULTIVATION. IT MAY BE MENTIONED TAT THOUGH THE APPELLANT HAS CLAIMED AGRICULTURAL EXPENSES OF RS.3 ,41,629/-, THERE IS NO DOCUMENTARY EVIDENCE REGARDING THE SAME. SINCE THE CLAIM REGARDING TOBACCO CULTIVATION IS FOUND TO BE SUBSTANTIALLY NOT GENUIN E, CLAIM REGARDING AGRICULTURAL EXPENSES TO THIS EXTENT IS ALSO NOT RELIABLE. THE G ROSS SALE FOR PRODUCE OTHER THAN TOBACCO, AS WORKED OUT ABOVE, IS RS.3,54,227/- . AFTER ALLOWING AGRICULTURAL EXPENSES @ 30% (AS HELD IN A.Y. 2003-0 4 IN APPELLANTS CASE AT APPEAL STAGE), NET AGRICULTURAL INCOME FROM PRODUCE OTHER THAN TOBACCO WORKS OUT TO RS.2,47,959/-. AFTER ADDING NET AGRICULTURAL INCOME FROM TOBACCO CULTIVATION OF RS.50,000/-, THE TOTAL NET AGRICULTU RAL INCOME WORKS OUT TO RS.2,97,959/-. THUS, OUT OF NET AGRICULTURAL INCOME SHOWN OF RS.8,2,264/-, INCOME TO THE EXTENT OF RS.2,97,959/- IS HELD TO BE FROM AGRICULTURE AND BALANCE IS HELD TO BE FROM OTHER SOURCES. ADDITION OF RS.5,39,305/- IS REQUIRED TO BE MADE TO APPELLANTS INCOME, INSTEAD OF ADDITI ON OF RS.4,2,64/- MADE IN THE ASSESSMENT ORDER. THUS, ADDITION BY THE ASSESSI NG OFFICER OF RS.4,2,64/- IS DIRECTED TO BE ENHANCED TO RS.5,24,305/- ON ACCO UNT OF INCOME FROM UNDISCLOSED SOURCES BESIDES REGULAR INCOME OF RS.46 ,700/- AND AGRICULTURAL INCOME IS DIRECTED TO BE TAKEN AT RS.2,97,959/- 5. AFTER HEARING RIVAL CONTENTIONS AND GOING THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSING OFFICER HAS ADMITTED LAND HOLDINGS OF 17.89 ACRES AS PER THE COPIES OF 8A AND 7/12 EXTRACTS OF THE AGRICULTURAL LAND. WE FIND THIS FACT HAS BEEN ADMITTED BY THE ASSESSING OFFICER. WE FURTHER FIND THAT THE CIT(A) HAS SIMPLY DISCUSSED THE CONCEPT OF AGRICULTURAL CROP-P ATTERN IN THIS YEAR AND THE ASSESSEE HAD GROWN TOBACCO AND AS PER HIM NORMALLY THE CULTIVATION OF TOBACCO WILL NOT BE FOR AN AMOUNT OF RS.50,000/- FOR THE SIZE OF LAND TO BE NON-CULTIVATION BY THE ASSESSEE. WE FURTHER FIND THAT THE REALIZATION OF CIT(A) ON THE FACT THAT AGRICULTURAL PRODUCE OF TOBACCO OF 29389 KG. IS NOT SUBSTANTIATE D IS WITHOUT ANY BASIS. ACCORDINGLY, HE ESTIMATED THE AGRICULTURAL EXPENSES AT 30% AND WORKED OUT THE NET AGRICULTURAL INCOME ONLY AT RS.2,97,959/- WITHOUT A NY BASIS. HOWEVER, WE ARE OF THE VIEW, IN CASE OF AGRICULTURAL INCOME WHERE BOTH PAR TIES ARE UNABLE TO PRODUCE ANYTHING THEN WE CAN ONLY ESTIMATE. LD. COUNSEL FO R THE ASSESSEE ALSO FAIRLY AGREED THAT A REASONABLE AND FAIR ESTIMATE OF AGRICULTURAL INCOME AND FAIR DISALLOWANCE OUT OF THE SAME WILL MEET THE ENDS OF JUSTICE. ON THE OTH ER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. WE FIND THAT THE ASSESSING OFFICER HAS ACCEPTED AGRICULTURAL INCOME AT RS.4 LAKHS AND IF WE TAKE AN AVERAGE PRODUCTION PER ACRE PER ANNUM AT RS.50,000/ - IN CASE OF TOBACCO AND PADDY (DANGER), THEN IT WILL BE AROUND RS.9 LAC. IN THIS YEAR, THE ASSESSEE HAS DECLARED NET ITA NO.969-970/AHD/009 A.YS. 2003-04 & 2004-05 SH. SANTABHAI P PATEL V. ITO WD-1, NADIAD PAGE 5 AGRICULTURAL INCOME AT RS.8,44,264/- AND EVEN IF WE SEE THE EXPENSES AT 30% THE SAME WILL BE 2.70 LAC. THE AGRICULTURAL INCOME, IN ANY CASE, CAN BE ESTIMATED EASILY AT RS.6,30,000/- AND THE BALANCE AT RS.1.52 LAC CAN BE ESTIMATED AS INCOME FROM OTHER SOURCES. ACCORDINGLY, ASSESSING OFFICER IS DI RECTED TO RE-COMPUTE THE INCOME IN ASSESSMENT YEAR 2004-05 AS INCOME FROM OTHER SOU RCES AT RS.1.52 LAKHS. IN REGARD TO ASSESSMENT YEAR 2003-04, WE ARE OF THE CO NSIDERED VIEW THAT THE AGRICULTURAL INCOME AS DECLARED BY THE ASSESSEE IS QUITE REASONABLE AND WE ACCEPT THE SAME. THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IS ALLOWED AND THAT FOR ASSESSMENT YEAR 2004-05 IS PARTLY ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL ITA NO.969/AHD/200 9 IS ALLOWED AND THAT IN ITA NO.970/AHD/009 IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13/11/2009 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 13/11/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- IV, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD