PATEL KALUBHAI ARJANBHAI (HUF),AHMEDABAD V. THE ITO, WARD-7(2)(1), AHMEDABAD

ITA 2037/AHD/2024

AI Insights

The case involves Patel Kalubhai Arjanbhai (HUF), who appealed against the order of the Commissioner of Income Tax (Appeals), Kolkata, which had confirmed the addition of Rs. 5,36,211 to the assessee's income as 'income from other sources' for the Assessment Year 2017-18. The assessee had declared agricultural income, which was partially accepted by the Assessing Officer based on the assessment of the previous year, which the assessee contested was an ex parte assessment and not a valid basis for the current year. The Tribunal noted that the assessee had provided ample evidence of agricultural activities and income, which was not adequately considered by the lower authorities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314397 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J L BHATIA
• Assessee Lawyers: RUPESH R. SHAH

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2037/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Patel Kalubhai Arjanbhai (HUF) Bunglow 235, Lane 12, Satyagrah Chhavni, Satellite, Ahmedabad – 380015, Gujarat बनाम/ Vs. Income Tax Officer Ward 7(2)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAEHP0886R (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Rupesh R. Shah, AR. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri J L Bhatia, Sr. DR Date of Hearing 13/02/2025 Date of Pronouncement 08/05/2025 O R D E R The present appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax(Appeals), ADDL/JCIT(A)-6, Kolkata (in short ‘the CIT(A)’) under Section 250 of the Income Tax Act, 1961 (in short ‘the Act’) dated 04.11.2024 pertaining to Assessment Year 2017-18. 2. The grounds raised in the appeal by the assessee are as under: “1. ADDL/JCIT (A)-6 KOLKATA erred in law and on facts hurriedly passed order under S.250 without seeing that appellant has filed form Number 1 under DTVSV 2024 precluded appellant from the above scheme order may be kept as status quo for getting benefit of DTVSV 2024. ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 2 – 2. Appellant has produced various documents before AO and CIT(A) therefore there is no cause to disbelieve an agricultural Income may be accepted in toto on merits when appellant HUF has no other source of Income. 3. That your appellant reserve right to amend/ alter/ modify any ground or grounds during the pendency of the appeal.” 3. Ld. Counsel for the assessee clarified that the above ground raised by the assessee was in the background of the case that when the appeal was pending before the Ld. CIT(A), the assessee had applied for settlement of the dispute under the Vivad se Viswas Scheme, 2024 (‘VSV’) and had submitted the said fact to the Ld. CIT(A) also ,but ignoring the same he had proceeded to decide the appeal on merits. That subsequently after passing of the order of the Ld. CIT(A), the assessee’s application for settlement of dispute was approved by the department in Form No.2 furnished to it, requiring the assessee to pay the disputed taxes thereon as per the Scheme. In the light of these facts, therefore, the assessee had raised the above ground challenging the order of the Ld. CIT(A) deciding the case on merits as opposed to dismissing it as withdrawn for the purposes of the facilitating statement of assessee’s dispute as per VSV Scheme. However subsequently, Ld. Counsel for the assessee pointed out that the assessee failed to pay up the disputed taxes and, therefore, assessee’s application for settlement of the dispute in the Scheme failed. Ld. Counsel for the assessee, therefore, stated that the above ground raised before us was of no consequence in the light of the aforestated facts and the assessee would, therefore, wish to challenge the order of the Ld. CIT(A) on merits itself. ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 3 – 4. He pointed out that in the case of the assessee the agricultural income disclosed by the assessee was not accepted completely and part of it, therefore, added to its income as ‘income from other sources’ and subjected to tax. This was, in turn, confirmed by the Ld. CIT(A) and the Ld. Counsel for the assessee stated that he would, therefore, agitate the confirmation of addition made on account of treating the agricultural income returned by the assessee as ‘income from other sources’ before us. 5. Drawing our attention to the facts of the case, Ld. Counsel for the assessee contended that for the impugned the year, the assessee had declared agricultural income of Rs.10,88,685/-, which was accepted only to the extent of Rs.4 Lacs and the balance of Rs.5,36,211/- added to the income of the assessee merely on the premise that in the immediately preceding year i.e. A.Y. 2016-17 ,in scrutiny assessment the declared agricultural income of the assessee of Rs.10,88,685/- was finalized taking it to be only Rs.4 Lacs and making addition of the balance of Rs.6,88,685/-. Thus, he pointed out that merely on the basis of assessment framed in the case of the assessee in A.Y. 2016-17, the AO had accepted the same Rs.4 lacs to be genuine agricultural income in the impugned year and rejected balance agricultural income to the tune of Rs.5,36,211/-. 6. Ld. Counsel for the assessee pointed out that the assessment framed was completely unjustified ignoring all the factual submissions made by the assessee before the AO to the effect that in the preceding year i.e. A.Y. 2016-17, the assessment had been ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 4 – made ex parte and, therefore, that assessment cannot form basis in the impugned year. Ld. Counsel for the assessee stated that it was pointed out to the AO that the assessee HUF owned 50 Bighas of land at Mota Bhamodara Taluka Savarkundla Dist: Amreli as well as 6 Bighas of agricultural land at Ahmedabad and had 450 mango trees and was growing seasonal crops in the monsoon i.e. groundnut and cotton etc. That even though, it was not required to maintain books of accounts, the assessee HUF was maintaining books of accounts. It had been filing its income tax return for the past many years returning agricultural income therein which had been accepted in scrutiny assessment also. That for the year ended 31.03.2013 to the immediately preceding year i.e. year ended 31.03.2016, the assessee had returned agricultural income after deducting expenses to the tune of Rs.6,15,775/-, Rs.8,89,878/-, Rs.3,76,367/- & Rs.10,88,685/-. Ld. Counsel for the assessee pointed out that the assessee has substantiated his explanation with furnishing documents of agricultural holding by way of 7/12 account, agricultural sale bills, books of accounts maintained by it, bank book, cash book, agricultural income ledger and agricultural sale ledger as also copies of purchase bills. He stated that despite furnishing all details and information and despite differentiating the assessee’s case of the preceding year and pointing out why the agricultural income accepted therein would not form the basis for the impugned year, the AO ignored all the submissions and simply followed the pattern applied for framing assessment in the immediately preceding assessment year. ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 5 – 7. He further pointed out that all these facts were brought to the notice to the Ld. CIT(A) also. Before him, all letters filed by the assessee to the AO alongwith all the documentary evidences were furnished and which he pointed out are reproduced in his order also. That the Ld. CIT(A), noting the contentions of the assessee, however, went on to confirm the addition, agreeing with the basis adopted by the AO stating that it is common sense that land holding remaining the same over the years there is no much scope increase in the volume of agricultural activity and consequential income. 8. Ld. Counsel for the assessee contended that both the authorities below had been grossly unjust with the assessee in not accepting the agricultural income returned despite all the evidences and explanation furnished to them that too without finding any infirmity in the same. 9. The Ld. DR, however, contended that the Ld. CIT(A) had noted the fact of the AO having not made any independent enquiry during the impugned year and, therefore, had gone on to make the same himself during appellate proceeding. But, he pointed out, the assessee did not respond to the queries raised by the Ld. CIT(A) and, therefore, he was left with no choice but to confirm the addition made by the AO in the hands of the assessee. 10. I have heard the rival contentions and have gone through the orders of the authorities below and I do not find any merit in the order of the authorities below in treating the income returned by the assessee to the extent of Rs.5,36,211/- as its ‘income from ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 6 – other sources’. Undoubtedly, the authorities below had drawn on the assessment made in the case of the assessee in immediately preceding assessment year to disbelieve agricultural income to this extent as being genuine. But it is a fact on record that the assessee had pointed out why the agricultural income assessed in the immediately preceding year cannot form the basis for the impugned year also, pointing out that it was an ex parte assessment, framed without hearing the assessee. The assessee had also pointed out with documentary evidences as to how the entire agricultural income returned by it was justified, showing that it owned sufficient agricultural land, approximately 50 Bighas, on which it had 450 mango tress and also growing seasonal crops in the monsoon i.e. groundnut and other crops. The assessee had also stated to have maintained complete books of accounts, recording transactions of all the agricultural activities carried out by it, duly supported with documents and had furnished the same to the Revenue authorities also. Copies of sales bills and purchase bills were also furnished to the Revenue authorities alongwith the copy of cash book, bank book and ledger and sale of agricultural products. It is amply evident that the assessee had demonstrated with evidence, the genuineness of agricultural income returned by it and had also demonstrated that the basis adopted by the Revenue authorities for treating only Rs.4 Lacs of income as arising from agricultural activities was not correct since the assessee had not participated in the assessment proceeding in the immediately preceding assessment year. I have noted that even the Ld. CIT(A) has appreciated this fact and attempted to make enquiry of his own during appellate proceeding but I find that the queries raised by ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 7 – him are completely off the mark and have nothing to do with the agricultural income returned by the assessee. This is evident from para 5.4 of his order wherein the queries raised by the Ld. CIT(A) are noted to be in relation to the cash deposited in his bank account and cash expenses incurred by it for the number of members in the family etc. As is evident, all the queries raised by the Ld. CIT(A) pertain to the cash transactions. They appear to be directed to enquire into the genuineness of certain cash transactions or probably the source of cash deposit in the Bank, but this was not the issue in the present case, which the Ld. CIT(A) had noted, was not enquired into by the AO i.e. relating to agricultural income returned by the assessee. There is not a single line inquiring about the persons to whom the agricultural crops were sold or any direction to produce them before him for examination or any such enquiry. The Ld. CIT(A)’s order, therefore, confirming the addition on account of the fact that the assessee did not respond to enquiry conducted by him during appellate proceeding is completely mis-directed. 11. Therefore, noting the fact that the assessee had furnished explanation regarding genuineness of agricultural income, duly supported with documentary evidences, and had also demonstrated as to why the assessment framed in A.Y. 2016-17, the immediately preceding year, be not taken as the basis for determining the agricultural income for the impugned year and both the Revenue authorities, despite two opportunities before them i.e. one during assessment and the other during appellate proceedings, have failed in their duty to verify the same and point out any infirmity therein, I see no reason to sustain the addition ITA No. 2037/Ahd/2024 [Patel Kalubhai Arjanbhai (HUF) vs. ITO] A.Y. 2017-18 - 8 – of Rs.5,36,211/- as ‘income from other sources’, disbelieving assesses claim of the same being agricultural income, I, therefore, direct deletion of the addition made of Rs. 5,36,211/- in the hands of the assessee treating the agricultural income as ‘income from other sources’. 12. In the result, the appeal filed by the assessee is allowed. This Order pronounced on 08/05/2025 Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 08/05/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "