SHREESALASAR AGRICULTURE & REALCON PVT. LTD., RAIPUR,RAIPUR V. INCOME TAX OFFICER, WARD-1(1), RAIPUR, RAIPUR

ITA 211/RPR/2024

AI Insights

The case involves Shreesalasar Agriculture & Realcon Pvt. Ltd., which appealed against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, Delhi. The appeal was directed against the order passed by the Assessing Officer (A.O) under Sec. 143(3) r.w.s. 144B of the Income-tax Act, 1961, which disallowed agricultural income of Rs.37,77,300 and added it as unexplained cash credit under section 68. The assessee argued that the agricultural activities were conducted by a contractor, Shri Bhoumik Chouhan, who also confirmed these activities. However, the A.O and the CIT(Appeals) found the evidence provided insufficient to substantiate the claims, leading to the dismissal of the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35804 (ITAT-RAIPUR)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 25-11-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 13-05-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: YOGESH SETHIA
• Keywords: Unexplained cash credit; Principle of natural justice; TDS; Bogus
• Section: 143(3); 143(2); 68; 133(6); 44AD

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No.211/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2020-21 Shreesalasar Agriculture & Realcon Pvt. Ltd. 220-221, 2nd Floor, Station Road, Arihant Complex, Raipur-492 001 (C.G.) PAN: AAUCS5977K .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(1), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Yogesh Sethia, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 25.11.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 29.11.2024 2 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 28.03.2024, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 26.09.2022 for the assessment year 2020-21. The assessee company has assailed the impugned order on the following grounds of appeal: “1. On the facts and circumstances of the case and in law, learned Commissioner of Income Tax (Appeals) has erred in upholding order of learned Assessing Officer disallowing agricultural income of Rs.37,77,300/- and adding the same as unexplained cash credit under section 68 of the of the Income-tax Act, 1961 without considering the facts of the case properly and judicially. 2. On the facts and circumstances of the case and in law, learned Commissioner of Income Tax (Appeals) has erred in upholding action of learned Assessing Officer overlooking confirmation of Shri Bhoumik Chauhan obtained under section 133(6) of the Act and making the addition arbitrarily without affording adequate opportunity to appellant and without following the principles of natural justice. 3. The impugned order is bad in law and on facts. 4. The appellant reserves the right to add, alter, omit all or any of the grounds of appeal with the permission of the Hon'ble appellate authority.” 2. Succinctly stated, the assessee company which is engaged in the business of trading in agricultural activity, animal husbandry and forestry 3 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 activities, had filed its return of income for A.Y.2020-21 on 05.10.2021 declaring an income of Rs.2,960/- along with agriculture income of Rs.37,77,300/-. Thereafter, the assessee company revised its return of income on 09.10.2020 declaring its total income at Rs.2,959/- along with agriculture income of Rs.37,77,300/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, the A.O observed that the assessee company as per documents placed on record had claimed to have sold paddy of Rs.8,77,008/- to Shri Bhawar Lal Sen through banking channel and vegetables of Rs.37,78,202/- in cash in the local market. The assessee in order to support its aforesaid transactions had filed before the A.O the copy of the ledger account and the bank statement. The A.O, on a perusal of the documents, observed that the assessee company had claimed to have given the work of cultivation on a contract basis to Shri Bhoumik Chouhan, Prop.: M/s. Chauhan Construction. The A.O observed that the assessee company in lieu of services provided by M/s. Chauhan Construction had claimed to have made payment of Rs.7,60,000/- on which tax amounting to Rs.7,600/- was deducted at source. The A.O called upon the assessee company to place on record the copy of the “agreement” that it had executed with Shri Bhoumik Chauhan for contract of agricultural activities, but the assessee 4 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 company claimed that no such “agreement” was executed with any person. Further, the A.O called upon the assessee company to furnish, viz. (i) details of transportation of vegetables from the agricultural land; (ii) vehicles registration numbers that were used for transportation; (iii) details of the agricultural produce with quantity; (iv) expenditure incurred for transportation and sale; and (v) details of the persons who were engaged for sale of agricultural produce in the local market. However, the assessee company submitted before the A.O that the agricultural produce was not transported and was sold at the land itself. It was also stated by the assessee company that it had not borne any transportation charges. 4. The A.O issued notice u/s.133(6) of the Act to Shri Bhoumik Chouhan (supra), and called upon him to substantiate based on documentary evidence the transactions that it had entered into with the assessee company. For the sake of clarity, the notice issued by the A.O u/s. 133(6) is culled out as under: 5 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 5. In response to the aforesaid notice issued by the A.O u/s. 133(6) of the Act, Shri Bhoumik Chouhan (supra) submitted before him the following particulars: “1. Shri Bhournik Chouhan is the proprietor of M/s. Chouhan Construction (Govt & Pvt. Civil Contractor). 2. During the year under consideration, I have done agriculture activity of paddy and ridge gourd for Shree Salasar Agriculture & Realcon P Ltd, Raipur. I have worked for agriculture on 33.00 ares land at Brahmni, Mahasamud for the above company. I have received Rs.7,60,000/- from above company for which tax of Rs.7.600/- was deducted. 3. I have done contract work for Cobra Instalaciones for Rs.82,524/-. 4. Regarding bills and voucher of seeds, fertilizer, pesticides etc, I informed to you that I have incurred above expenses for growing of agriculture products for Shree Salasar Agriculture & Realcon Private Limited. I have submitted my return of income u/s.44AD of the Act on presumptive basis for above financial year 2019-20, so I have not kept and maintained 6 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 any books of account and expense bills and vouchers. Due to above I am unable to produce the above bills and vouchers before you. 5 I have not made any agreement with Shree Salasar Agriculture & Realcon Pvt Ltd. The copy of bill submitted to the company is enclosed.” 6. However, the aforesaid explanation of Shri Bhoumik Chouhan (supra) did not find favour with the A.O. The A.O was of the view that the claim of the assessee company that Shri Bhoumik Chauhan (supra) had carried out agricultural activities and operations was false and misleading as there was no agreement between the two parties. It was also observed by the A.O that no evidence to support the claim of having carried out agricultural activities a/w. supplementary bills and vouchers, viz. purchase of seeds, fertilizers, pesticides, payment of labour charges, water bill and electricity bill etc. were produced which would substantiate his claim of having carried out the agricultural activities on the agricultural land of the assessee. Accordingly, the A.O held the agricultural income of the assessee company of Rs.37,77,300/- as unexplained cash credit u/s. 68 of the Act and made an addition of the same. Also, the A.O observing that the assessee company had claimed late fees on GST of Rs.720/- and appeal fees of Rs.11,000/- in its profit and loss account which were not an allowable expenditure, thus, made an addition of Rs.11,720/-. Thus, the A.O vide his order passed u/s.143(3) r.w.s. 144B of the Act, dated 26.09.2022, after inter alia, making the aforesaid additions determined the 7 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 income of the assessee company at Rs.37,91,979/-. For the sake of clarity, the observations of the A.O are culled out as under: “3.8. On going through the particulars of the bill, it is seen that Shri Bhoumik Chouhan has submitted the bill to the assessee company for development of balance area 12 acre in agriculture farm, total farming area of 33 acre at Brahmni (Elevation, Leveling and Convert in plot), plucking and miscellaneous repairing and servicing (Brahmani. Mahasamund) and for agriculture land development at Motipur Area (Amleshwar, Patan). The bill as submitted by Shri Bhoumik is reproduced as under: 3.9 However, Shri Bhoumik Chouhan did not provide copy of supplementary bills and vouchers like evidence in support of purchase of seeds, fertilizers, pesticides, payment of labour charges, water bill, electricity bill etc. for verification through 8 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 which it can be ascertained that agricultural activity was carried by him for the agricultural land. During the assessment proceedings, Shri Chouhan has replied that I have submitted my return of income u/s.44AD of the Act on presumptive basis for above financial year 2019-20, so I have not kept and maintained any books of account and expense bills and vouchers. Due to above I am unable to produce the above bills and vouchers before you. It may be noted that without these bills related to purchase of seeds, pesticides, electricity bills, water bills, fertilizers, payment of labour charges etc and also without any contract for doing agricultural work, how Shir Chouhan had arrived at an amount of Rs.7,60,000/- that he had made for cultivation of the agricultural land of the assessee company and raised the bill during the financial year 2019-20. 3.10 On further verification of bill, it is also seen from the heading of the bill that M/s. Chouhan Construction is created for construction, costing & estimation. The proprietorship firm is specialized in civil works including residential/commercial and multi-storied buildings, drain, Culvert, underground and over head tanks etc. and no where it is mentioned that M/s. Bhoumik Construction is doing or specialized in agricultural work or agricultural related works. 3.11 It is also seen that Shri Bhoumik Chouhan has his source of income from civil contract work i.e. doing contract work for Corba Instalaciones for Rs.82,524/- which also matches to the heading of bill of M/s. Chouhan Constriction. 3.12 In course of assessment proceedings, the assessee submitted the daily summary ridge gourd for the financial year 2019-20. The same is reproduced as under: 9 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 10 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 11 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 Verification of daily sales summary of ridge gourd for the financial year shows that the assessee has sold ridge gourd from 5th April, 2019 to 21st March, 2020 i.e. almost throughout the financial year. The average sale throughout the financial year was between 2100 kg to around 2850 kg. Further, the average price throughout the financial year was Rs.18/- to Rs.20/-. It is also noticed that the sales were made in a gap of every 04 to 05 days throughout the financial year. If per day sale is taken by taking into consideration the quantity of sale, average sale per day between 5thApril, 2019 to 21st March_2020 is approximately 500 kg and also maintained constantly throughout the financial year which seems to very much artificial and bogus. It clearly shows an afterthought to substantiate the unaccounted money or unexplained cash. 3.13 If we go by the submission for sales of ridge gourd during the financial year particularly the daily sales summary, it shows that cultivation was done throughout the financial year and it was produced in a huge quantity. It is also seen from the bill of M/s. Chouhan Construction that Shri Bhoumik has raised the bill on 02.05.2019 for an amount of Rs.7,60,000/- to the assessee company i.e. almost at the start of the financial year. This is to state that since the agricultural activity of the assessee company was carried out throughout the financial year then how Shri Bhoumik has raised the bill before the assessee company on 02.05.2019 without knowing the future expenses to be incurred by him 12 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 for cultivation work during rest of the financial year i.e. on future expenses to be incurred particularly on purchase of pesticides, seeds, number of labourer required for cultivation work, expenses to be incurred for payment to labourers, electricity units to be consumed for raising of water and its subsequent electricity bills, water bills etc. Since production/plucking of ridge gourd, as narrated above, is approximately 500 kg per day and was carried out on almost 33 acres of land, it requires huge number of labourers to make cultivation and also the process requires continuous hiring or engaging of labourers for maintenance of the climber like trees and plucking of 500 kg of ridge gourd every day for sale. It is not a process that you purchase and put seeds on the land once in a year and it grows and automatically provide you vegetables throughout the year. This also proves that it is purely bogus and an afterthought of the assessee company to substantiate the unaccounted money or unexplained cash. 3.14 In response to the show cause notice, the submission of the assessee company is that it had not done cultivation on its own, had given the above cultivation work to a contractor and had paid the contract amount through banking channel and also deducted tax at source on such payment, the contractor had submitted a written submission in response to notice u/s.133(6) of the Act, hence requested not to make any variation to the total income. In this regard, this is to state that no documentary evidence like contract agreement, supplementary bills and vouchers in support of purchase of seeds/ fertilizers/ pesticides, details of payment made to labourers/ electricity charges/ water charges etc. was provided for verification (all are narrated above). Hence, the written submission of the assessee company, in response to show cause notice, is not accepted. 04. In view of the above, it is clear that the claim of agricultural activities and operations carried out by Shri Bhoumik Chouhan stands proven as false and misleading as there was no agreement between the two parties, no evidence in support of making agricultural activities and without the supporting supplementary bills and vouchers. Hence, the claim of the assessee that it had derived agricultural income from sale of vegetable stands bogus based on documentary evidences. Therefore, the claim of exempt agricultural income earned by the assessee is hereby rejected and addition is hereby made u/s 68 as unexplained cash credit. The assessee furnished inaccurat3 particulars of its income and therefore, 13 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 penalty proceedings u/s270A is hereby initiated for furnishing inaccurate particulars of income. 05. It is also seen that the assessee company has claimed late fees on GST of Rs.720/- and appeal fees of Rs.11,000/- in the Profit & Loss Account which were not a allowable expenditure. Hence, the same are disallowed and added to the declared income of the assessee. Add: Rs.11,720/-” 7. Aggrieved, the assessee company carried the matter in appeal before the CIT(Appeals). As regards the addition of Rs.37,77,300/- made by the A.O u/s.68 of the Act as an unexplained cash credit, the CIT(Appeals) upheld the same, observing as under: “6.0 Decision 6.1 I have perused the impugned order, the grounds of appeal, the statement of facts and the submissions filed by the assessee in the present appeal. The GOA decision is as under: GOA 1 and 2: During the assessment proceedings and during the appellate proceedings no details substantiating the actual carrying out of agricultural activities and the transport and sale of actual agricultural produce has been furnished. Merely producing a Patwari certificate of agricultural activity on a piece of land does not absolve the assessee of furnishing the relevant details called for by the AO. In view of the specific observations of the AO that the claimed agricultural activity and the quantum of and regularity in sale of agricultural produce did not pass the test of natural science and human probabilities cast an onus on the assessee to lead specific evidence in support of the genuineness of agricultural activity, incurring and source of contemporaneous expenses on the activity, establishing by way of evidence trail the cutting of the agricultural produce and its transport on regular basis to the market. In absence of these I hold that the AO was right in rejecting the whole self-serving claims of the assessee. The fact that the so-called contractor at the very beginning of the year raised a bill of 7,60,000 and was paid after TDS does not absolve the assessee and the contractor to establish the agricultural activity by producing the relevant verifiable evidence. The mere fact of payment does not serve the purpose. This is even more so as the so-called contractor files return u/s 44AD and claims that there was no onus on him to 14 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 keep the vouchers etc. The so-called claim of not having the onus of maintaining books may if at all absolve the contractor in his case but the same does not come to the rescue of the assessee. The assessee has not been able to discharge the onus of establishing the actual performance of any agricultural activity, the genuineness of the so-called sub-contracting to Mr Bhaumik, the quantum of the produce, its actual transport to the market, the nature and source of expenses income incurred on seeds, labour etc. The addition of Rs.37,77,300/- as unexplained cash credit u/s 68 is hereby upheld and grounds no. 1 and 2 are dismissed.” 8. The assessee company being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 9. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 10. Shri Yogesh Sethia, Ld. Authorized Representative (for short ‘AR’) for the assessee, at the threshold, submitted that both the lower authorities had grossly erred in law and facts of the case in making/sustaining the addition of Rs.37,77,300/-. It was submitted by the Ld. AR that though the assessee company had filed before the A.O records of the revenue authority (Patwari record) which, thus evidenced the agricultural activities carried out by the assessee company on the subject land, but the same was not considered by the A.O. The Ld. AR submitted that the assessee company had given the work of cultivation on contract basis to Shri 15 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 Bhoumik Chouhan, Prop. of M/s. Chouhan Construction, who in response to notice u/s.133(6) of the Act issued by the A.O, had confirmed that he had carried out agricultural activities on the subject land. The Ld. AR submitted that as the agricultural produce were collected by the purchaser/buyer using their own mode of transportation, therefore, the assessee company could not produce the same. The Ld. AR on the basis of his aforesaid contentions submitted that as the assessee company had earned genuine agricultural income of Rs.37,77,300/-, therefore, there was no justification for the A.O to have held the same as unexplained cash credit u/s. 68 of the Act. 11. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 12. I have given thoughtful consideration to the contentions of the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. As the assessee company had despite sufficient opportunity failed to place on record any material which would evidence that agricultural activities were carried out on its agricultural land, therefore, the standalone reliance placed by the Ld. AR on the “Patwari Certificates” Page 102 of APB would not carry his case any further. At this stage, it would be relevant to point out that the assessee company despite specific direction by the A.O, had not produced before 16 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 him for verification the purchase bills of seeds, fertilizers, pesticides, details of payment made to labourers, electricity charges etc. Although the assessee company had claimed that it had given the work of cultivation on contract basis to Shri Bhoumik Chouhan, proprietor of M/s. Chouhan Construction, but I find that it had failed to lead any evidence which would substantiate the said claim. On a perusal of the record, it transpires that Shri Bhoumik Chauhan (supra), a Civil Contractor, who during the year under consideration was engaged in the business of construction, a fact which could be gathered from the return of income filed by him for A.Y.2020-21, wherein he had disclosed contract receipts from his said business for the services rendered to M/s. Cobra Instalaciones and had offered the income on the same on a presumptive basis u/s. 44AD of the Act. Also, I may herein observe that though the A.O had directed the assessee company to furnish the requisite details, viz. (i) details of transportation of vegetables from the agricultural land; (ii) vehicles registration numbers that were used for transportation; (iii) details of the agricultural produce with quantity; (iv) expenditure incurred for transportation and sale; and (v) details of the persons who were engaged for sale of agricultural produce at the local market, but it had failed to furnish the same. Further, the assessee company had failed to place on record any material which would evidence there was any transportation of agricultural goods, viz. paddy, gourd etc. that were claimed to have been 17 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 cultivated on the said piece of land. Also, it would be relevant to point out that the assessee company had failed to place on record any such material which would irrefutably evidence that agricultural activities were being carried out by the assessee company on the subject land. 13. Considering the totality of the facts involved in the present case, I finding no infirmity in the view taken by the A.O and the CIT(Appeals) who in absence of any supporting material had rightly rejected the claim of the assessee company of having earned an agricultural income of Rs.37,77,300/- during the year under consideration, thus, uphold the same. Thus, the Grounds of appeal Nos. 1 to 3 raised by the assessee company are dismissed in terms of the aforesaid observations. 14. Ground of appeal No.4 being general in nature is dismissed as not pressed. 15. In the result, the appeal of the assessee company is dismissed in terms of the aforesaid observations. Order pronounced in open court on 29th day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 29th November, 2024 ***SB, Sr. PS 18 Shreesalasar Agriculture & Realcon Pvt. Ltd. Vs. ITO, Ward-1(1), Raipur ITA No. 211/RPR/2024 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "