Income Tax Appellate Tribunal - Pune
Seemantini S. Pathare, Pune vs Department Of Income Tax on 26 November, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
Before Shri G.S.Pannu, Accountant Member,
and Shri R.S.Padvekar, Judicial Member.
ITA.No.263/PN/2011
(Asstt. Year : 2007-08)
ITO, Ward-9(3),
Pune. .. Appellant
Vs.
Dr.Seemantini S.Pathare,
Sector No.27A/134,
Pradhikaran,
Nigdi,
Pune - 411044. .. Respondent
PAN: AAKPP0824F
Assessee by : Shri Kishor Phadke
Department by : Smt.Vinita Menon
Date of Hearing : 26.11.2012
Date of Pronouncement : 23.01.2013
ORDER
PER R.S.PADVEKAR, JM:
This appeal has been filed by the Revenue challenging the impugned order of CIT(A)-V, Pune, dated 13.12.2010 for A.Y. 2007-08.
2. Ground No.1 reads as under:
"1. Whether on the facts and circumstances of the case, and in law the Ld. CIT(A) was justified in allowing the assessee's claim of having agricultural income of Rs.11,03,410/- from floriculture when AO has held the same as business income and not an agricultural income and also the similar income is covered under definition of Agriculture under explanation 3 to section 2(1A) introduced by the Finance Act 2008 w.e.f. 01/04/2009."2
3. The assessee is in the business of producing and selling Floricultural produce i.e., carnation flowers. The assessee filed return of income for A.Y. 2007-08 declaring nil income. The Assessing Officer rejected the claim of the assessee that Floriculture/horticulture activity is a part of agricultural activity. The Assessing Officer made addition of Rs.11,03,410/- in respect of the income from Floriculture treating the same as non-agricultural income. The Ld. CIT(A) decided the issue in favour of the assessee and held that the income from Floriculture falls within the definition of Agriculture. Now the Revenue has challenged the finding of the CIT(A) before us.
4. We have heard the parties. The Ld. Counsel submitted that the issue stands covered in favour of the assessee by the decision of the coordinate Bench of ITAT in the case of K.F.Bioplant Pvt. Ltd. vs. ITO in ITA.No.1110/PN/2011. He further submitted that in the case of DCIT vs. Best Roses Biotech (P) Ltd., 144 TTJ (Ahd) 645, the Hon'ble Tribunal has held that the income earned from Floriculture activity of growing rose plants on leasehold agricultural land falls within the definition of the agricultural income. He pleaded for confirming the order of the CIT(A) on the issue whether Floriculture is a part of agricultural activity. We have also heard the Ld. DR.
5. We find that in the case of Best Roses Biotech (P) Ltd. (supra), ITAT Ahmedabad Bench has held that the growing of roses is a part of agricultural operations. In the same way, in the case of K.F.Bioplant Pvt. Ltd. (supra), the ITAT Pune Bench has held that Floriculture/Tissue culture comes within the definition of agriculture. We, therefore, following the decision of the coordinate benches, uphold the order of the CIT(A) on this issue whether income earned from Floriculture is income from agricultural activity. Accordingly Ground No.1 is dismissed.
5. Ground No.2 reads as under:
"2. Whether on the facts and circumstances of the case, and in law the Ld. CIT(A) was justified in deleting the addition of 3 Rs.9,75,000/- on account of introduction of capital by the assessee from unexplained sources and in ignoring the fact that the assessee has changed her explanation from introduction of capital from sales proceeds, (at the time of assessment proceedings) to that of from her personal savings and from her husband's savings (during appellate proceedings)."
7. The Assessing Officer made the addition of Rs.9,75,000/- in respect of the addition to the capital account by the assessee. The Assessing Officer has observed that the assessee has made addition of Rs.9,75,000/- to the capital account but no specific head or source of addition has been given by the assessee. The assessee submitted before the Assessing Officer that the said addition to the capital account is made out of sale proceeds. The Assessing Officer was not impressed with the explanation of the assessee and he treated Rs.9,75,000/- as income from unexplained sources and made addition to the total income of the assessee. Before the Ld. CIT(A), the assessee stated that she has introduced sum of Rs.1,75,000/- from her personal savings account with ICICI Bank and remaining amount of Rs.8,00,000/- has been received by her as a gift from her husband. The assessee filed the copy of statement of Bank Account of her husband as well as confirmation letter. The CIT(A) was satisfied with the explanation of the assessee and he deleted the addition of Rs.9,75,000/- by accepting the explanation of the assessee. Now the Revenue is in appeal before us.
8. We have heard the parties. It appears that so far as explanation of the assessee is concerned, there was a mistake in mentioning the figures but that was not the issue before the Ld. CIT(A). We further find that assessee filed the copy of the bank extracts in respect of her bank as well as her bank account maintained with ICICI Bank and also filed the confirmation letters. The Ld. CIT(A) considered the withdrawals from ICICI Bank as well as the confirmation letter given by Mr.Soumitra Ramesh Pathare, spouse of the assessee, and deleted the addition. After considering the overall facts as well as evidence before us, we are of the opinion 4 that the Ld. CIT(A) has rightly deleted the addition of Rs.9,75,000/- at the source of introduction of said capital as explained by the assessee. We find no reason to interfere with the order of the Ld. CIT(A) on this issue. Accordingly, the same is confirmed. Ground No.2 is dimissed.
9. Ground No.3 reads as under:
"3. Whether on the facts and circumstances of the case, and in law the Ld. CIT(A) was justified in admitting the additional evidence in respect of difference in opening and closing balance of capital account without giving the A.O. an opportunity to submit his say on such additional evidence."
10. We find that Assessing Officer made the addition of Rs.14,93,500/- towards the difference found in the opening balance of the capital account. The Assessing Officer has observed that as on 31.03.2006, the credit balance to the capital account of the assessee was Rs.5,54,948/-. However, as observed by the Assessing Officer, the assessee has taken the capital account balance as on 01.04.2006 at Rs.20,48,448/-. The assessee stated before the Assessing Officer that there were two capital accounts, one was relating to her medical profession and another was from agricultural activity and hence, the balance was not tallying. The Assessing Officer made the addition by stating that on verification of the earlier return of income i.e., for 2006-07, nowhere the assessee has mentioned that she was having agricultural income. The Assessing Officer made the addition of Rs.14,93,500/- treating as income from unexplained sources. The assessee carried the issue before the Ld. CIT(A). The assessee stated before the Ld. CIT(A) that she was carrying on her medical practice upto 31.03.2006 and she filed her capital account from the medical practice in which the capital balance was shown at Rs.5,54,948/-. However, during the same year she commenced her agricultural activities and separate Balance Sheet was prepared for agricultural activities which was also duly audited. The capital balance in that audited Balance Sheet as on 31.03.2006 was Rs.20,48,448/-. She further stated that since there was a loss in the agricultural 5 activity, the same was not reflected in the return of income but the computation attached with the return of income clearly indicated about the agricultural activity undertaken during the year. She stated that due to two separate Balance Sheets, one for her medical practice and another for agricultural activity, there was a discrepancy in the capital account. The Assessing Officer has not considered the balance in the capital account of agricultural activity which was of Rs.20,48,448/-. The Ld. CIT(A) was convinced with the explanation of the assessee as well as the reconciliation given and he deleted the addition. The only grievance of the Revenue is that the Ld. CIT(A) should not have admitted the additional evidence. We find that no additional evidence is filed but the reconciliation of the two capital accounts have been filed. We find no merit in Ground No.3. Accordingly same is dismissed.
11. In the result, Revenue's appeal is dismissed.
Pronounced in the open court on this the 23rd day of January, 2013.
Sd/- Sd/-
( G.S.PANNU ) ( R.S.PADVEKAR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
gsps
Pune, dated the 23rd January, 2013
Copy of the order is forwarded to:
1. The Assessee
2. The ITO, Ward-9(3), Pune.
3. The CIT(A)-V, Pune.
4. The CIT-V, Pune.
5. The DR "B" Bench, Pune.
6. Guard File.
By Order
//TRUE COPY//
Private Secretary,
Income Tax Appellate Tribunal,
Pune.