VISHNU SAUDAGAR KSHIRASAGAR,PUNE V. ITO WARD 5(2), PUNE, PUNE

ITA 2489/PUN/2024

AI Insights

The case involves Vishnu Saudagar Kshirsagar, who operates a wholesale plant nursery and claimed his income as agricultural, which is exempt from tax. The Assessing Officer treated his activities as trading of plants, leading to a taxable income assessment. The assessee's appeal to the Ld. CIT(A) was dismissed for want of prosecution as he failed to respond to notices. The Tribunal, considering the circumstances and the assessee's health issues, decided to allow the appeal for statistical purposes and restore the matter to the Ld. CIT(A) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24674 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: AMIT MUNOT
• Keywords: Business income
• Section: 142(1); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.2489/PUN/2024 Assessment year : 2020-21 Vishnu Saudagar Kshirsagar Flat No.21, B Wing, 3rd Floor, Ganeshkrupa APTS Punaj NA, Dhankawadi, Near K K Market, Pune – 411043 Vs. ITO, Ward-5(2), Pune PAN: BIHPK6257K (Appellant) (Respondent) Assessee by : Shri Amit Munot Department by : Shri Vishwas Mundhe Date of hearing : 19-02-2025 Date of pronouncement : 20-02-2025 O R D E R PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the ex-parte order dated 09.02.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21. 2. There is a delay of 212 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay which is due to the severe injury at L3 and L4 Lumber and for which the assessee was under treatment. The assessee has also filed a medical certificate to this effect. After considering the contents of the condonation application filed along with the affidavit and the medical report and 2 ITA No.2489/PUN/2024 after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication. 3. Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.34,00,640/- made by the Assessing Officer. 4. Facts of the case, in brief, are that the assessee is an individual and running Nursery in the name of Hare Krushna Nursery as proprietorship concern. The assessee filed his return of income on 19.12.2020 declaring Nil income after claiming the profit as exempt being agricultural income. The case was selected for scrutiny under CASS and notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee in response to which the assessee filed certain details. 5. During the course of assessment proceedings the Assessing Officer asked the assessee to explain the details of agricultural income claimed as exempt. It was explained by the assessee that he is one of the biggest Nursery of wholesale plant nursery in Pune stretched over an area of 2 acres and he sources the products not only from India but from all over the world. The assessee submitted certain purchases and sale bills of plants, pot, soil, seeding and fertilizer etc. It was also submitted that the land has been however on lease for which the assessee submitted 3 ITA No.2489/PUN/2024 the Rent agreement. Relying on various decisions it was argued that the income shown by the assessee being agricultural income, is exempt from tax. 6. However, the Assessing Officer was not satisfied with the submissions made by the assessee. He noted that the assessee has shown purchase of plants amounting to Rs.1,01,39,359/- in his Purchase Account. Further, purchase of fertilizer, seedlings and soil expenses are shown at Rs.14,60,754/- only. According to the Assessing Officer, since the bills produced by the assessee clearly proves that it has purchased various plants from different nurseries and later on sold to nurseries, therefore, these operations are nothing but trading of plants. The assessee has not brought on record any equipment which are used for tilling the land. Since according to the Assessing Officer, for earning the agricultural income, the assessee has to do certain basic operations like tilling, sowing, planting, weeding etc., whereas in the instant case the assessee has not done such activities, therefore, he treated the activities of the assessee as business activities. Since the assessee has shown 33.84% as G.P. value in the audit report, the Assessing Officer determined Rs.34,01,855/- as income of the assessee being 33.84% of the total sales of Rs.1,00,49,171/- by recording as under: “During the course of assessment proceedings it is seen that the assessee shown purchase of plants amounting to Rs.1,01,39,359/- in his Purchase Account. Also the purchase of fertilizer, seedlings and soil amounting to Rs.14,60,754/- only. Further, during the proceedings the assessee has given the copies of purchase bills from various Nursery such as Sarudhi Ros Nursery (22,800/-) Sidhi Nursery, Tukai Exotic, Mauryia Nursery (68,000/-) R.P Agro Services (2,45,140/-) and many more. A careful scrutiny of these bills clearly proves that the assessee has purchased various plants from these Nurseries and latter sold to various Nurseries. These operations clearly shows that the assessee is engaged in the trading of plants. Assessee has not brought on record any equipment which are used for tilling the land, although the assessee was asked the same in the 4 ITA No.2489/PUN/2024 questionnaire dated 02.11.2021 at point no 5(ix) asking for documentary evidence for depreciable assets. In order to earn agriculture income the assessee has to do certain basic operations like tilling, sowing, planting, weeding. Mere rendering of subsequent operations by themselves would not lead to inference of agricultural income. So tilling the land is a very primary function of agricultural income for which assessee has not filed any evidence, nor it can be inferred from the various details placed on record by the assessee. It is also be noted that out of total purchase of 1,36,46,569/- there are purchases of soil, plants, pots, fertilizers etc (1,01,39359). In these facts it is clear that the assessee has not been able to discharge onus regarding carrying out agricultural operation on the land of which the asseseee is not an owner but the lessee. Further assessee furnishes notes on his business activities vide response dated 09.03.2022 in which assessee admitted that assessee sold plants also to his customers. In view of same it is clear that the income earned by assessee is not wholly or exclusively by agriculture activities as per section 2 of the Income Tax Act. The material available on record shows that assessee involved majorly in trading of plants which are purchased outside his nursery. The proportionate value of purchases of plants and value of total sale as taken by the assessee in his books of accounts are taken as taxable income of the assessee from selling of plants which is equal to 55% of the total sale. Means an amount of Rs.1,00,49,171/- is taken sale proceeds received by assessee as sale of plants. The assessee shown 33.84% as G.P. value in his Audit Report of the year under consideration. In view of same Rs.1,00,49,171/- @ 33.84% which is equal to Rs.34,00,640/- is proposed as variation.” 7. Since the assessee did not appear before the Ld. CIT(A) / NFAC despite number of opportunities granted, the Ld. CIT(A) / NFAC dismissed the appeal for want of prosecution. 8. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal. 5 ITA No.2489/PUN/2024 9. The Ld. Counsel for the assessee at the outset submitted that the Consultant appointed by the assessee did not respond properly to the notices issued by the office of the Ld. CIT(A) / NFAC for which all these unfortunate events happened. He submitted that in the interest of justice, the assessee should be given an opportunity to substantiate his case by filing the requisite details before the Ld. CIT(A) / NFAC. 10. The Ld. DR on the other hand relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and submitted that despite four opportunities granted by the Ld. CIT(A) / NFAC, the assessee did not respond to any of the notices. 11. We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC. We find due to non- compliance to the various notices issued by the Ld. CIT(A) / NFAC, he was constrained to pass the ex-parte order dismissing the appeal of the assessee for want of prosecution and thereby sustaining the addition of Rs.34,00,640/- made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that in the interest of justice, the assessee should be given an opportunity to substantiate his case by filing the requisite details before the Ld. CIT(A) / NFAC. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby 6 ITA No.2489/PUN/2024 directed to make his submissions, if any, before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 12. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 20th February, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 20th February, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘SMC’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 7 ITA No.2489/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on 19.02.2025 Sr. PS/PS 2 Draft placed before author 19.02.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "