Income Tax Appellate Tribunal - Chandigarh
Sh. Jeewan Kumar Goyal, Ludhiana vs Dcit, Ludhiana on 6 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
'SMC' BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA No. 794/CHD/2016
Assessment Year: 2007-08
Shri Jeewan Kumar Goyal, Vs The DCIT,
1011/5, Deep Nagar, Circle-VII,
Civil Lines, Ludhiana.
Ludhiana.
PAN: AAVPG4320N
(Appellant) (Respondent)
Appellant by : Shri Ashwani Kumar
Respondent by : Shri S.K.Mittal, DR
Date of Hearing : 02.02.2017
Date of Pronouncement : 06.02.2017
O R D E R
This appeal by assessee has been directed against the order of ld. CIT(Appeals)-3 Ludhiana dated 04.03.2016 for assessment year 2007-08, challenging the addition of Rs. 14,75,000/- made by Assessing Officer by treating the agriculture income as 'income from other sources'.
2. I have heard ld. Representatives of both the parties and perused the material on record.
3. The ld. counsel for the assessee did not press ground No. 3, same is dismissed as not pressed. 2
4. The only issue involved is whether agriculture income could be treated as 'income from other sources'.
5. Brief facts of the case as per assessment order are that the computation chart shows that assessee has declared a sum of Rs. 12,49,420/- as agriculture income. Vide letter dated 29.10.2009 the assessee was required to give location of the land, proof of the ownership, total area under cultivation the crops sown and the expenses as also the net agriculture income out of the agriculture operations. Vide letter dated 06.11.2009 the assessee submitted that it has 3.5 acre of land under cultivation and he has cultivated ' Musly Seeds' during the year under consideration. It was further submitted that a sum of Rs.2,25,000/- was spent and the net agriculture income of Rs. 12,49,420/- was earned out of the agricultural operations. In order to verify the veracity of the agricultural produce as claimed, an inquiry was made from the office of the Sub-Register Jagraon who was required to provide the copy of the 'Khasa Girdarwri' which gives the details of Crop Sown/Harvested by the land owner on the agriculture land during the specified period. The scrutiny of the 'Khasra Gardawari' revealed that actually the crops of Potato or Rice or Wheat were grown on the said land owned by the assessee during the year under consideration, Accordingly the assessee was confronted with this 'Khasa Girdawri' and given show cause notice to explain as to why addition of Rs. 3 14,75,000/- may not be made to its taxable income on account of unaccounted income introduced in the garb of Agricultural income. Vide reply dated 27.11.2009 it was submitted that he failed to mention in the earlier letter dated 06.11.2009 that' Musly Seeds' were cultivated in assessee's land at village Jainpur also. The assessee also filed an affidavit stating therein the cultivation of land at village Jainpur and Gorsain Kadarbaksh and also having spent some amounts for the cost of improvement of the plots.
5(i) The Assessing Officer has observed that :
i) The assessee never denied that 'Musli seeds' we r e not g r o wn in Village Gorsain K a d a r b a k s h wh i c h h a s b e e n p r o v e d t o t a l l y f al s e i n t h e f a c e o f t h e ' K h a s r a G i r d a wa r i ' o b t a i n e d J r o m. t h e r e v e n u e a u t h o r i t i e s a n d wh i c h t h e a s s e s s e e wa s c o n f r o n t e d .
ii) Assessee's changed version is clearly an af t e r t h o u g h t a n d is only an unsuccessf ul a t t e m p t t o wr i g g l e o u t o f t h e s i t u a t i o n a r i s i n g out of its f alse statement to the effect that he has cultivated 'Musli seeds' in village Gorsain Kadarbaksh.
iii) Even o t h e r wi s e no details have been
furnished wi t h regard to the area under
cultivation, the expenses f or the agricultural o p e r a t i o n s u c h a s t i l l i n g , s o wi n g h a r v e s t i n g to make the produce marketable.
iv) No evidence in the f orm of Bill vouchers has been f urnished with regards to the expenses of the seeds.
v) A n af f i d a v i t wa s a l s o f i l e d a t t h e l a t e r s t a g e o f t h e a s s e s s me n t p r o c e e d i n g s a n d t h e s a m e 4 is inconsequential because it has been f iled s u o - mo t o a n d a s s e s s e e wa s n e v e r a s k e d f o r t h e s a me a n d c o n t a i n s n o t h i n g m o r e t h a n a s e l f s e r v i n g s t a t e me n t . M o r e s o a n af f i d a v i t i s n o t e v i d e n c e p e r s e i n v i e w o f t h e we l l accepted legal position.
vi) An inf ormation was called f or from the PAU, Ludhian a, a pio neer institu tion in the f ield of a g r i c u l t u r e , t o k n o w wh e t h e r c u l t i v a t i o n o f 'Musli seeds' is economically viable in Punjab. The head of the D e p a r t me n t , D e p a r t me n t of A g r o n o my has v e r if i e d that cultivation of Musli seeds is not recommended in Ludhiana District.
In view of the facts and legal position discussed in foregoing making a statement about the agricultural income at village Gorsain and then backtracking when confronted with the record of revenue authorities and making another statement, failure to produce any documentary evidence for having the agricultural income and the report of the agricultural authorities, if seen in totality in light of the decision of the Hon'ble supreme Court in the case of Durga Parshad More, the conclusion is inescapable that the assessee has introduced the unaccounted income in its books of accounts in the garb of agricultural income and as such the source of investment in the capital accounts is not explained, same is, therefore, held to be unexplained income of the assessee. Accordingly an addition of Rs. 14,75,0007- was therefore made to the taxable income of the assessee by the Assessing Officer.
5
6. The assessee filed additional evidences before ld. CIT(Appeals) which were not available at the time of assessment proceedings;
i) Affidavit of Shri Amrik Singh S/o Shri Harbhajan Singh
ii) Bank certificates of Punjab National Bank, Model Town, Ludhiana.
7. The ld. CIT(Appeals) admitted these additional evidences and directed the Assessing Officer to examine these additional evidences with reference to assessee's claim of genuineness of agriculture income. The Assessing Officer submitted his remand report which is quoted in the appellate order in which the Assessing Officer has reported that Shri Amrik Singh S/o Shri Harbhajn Singh, Resident of village Talwara has attended proceedings before him and his statement was recorded under section 131 of the Act 'on oath' in which he has confirmed that he had cultivated Safed Musli and Stevia in village Gursian on the land owned by the assessee in assessment year under appeal. Copy of the statement was forwarded with the remand report. The Assessing Officer as regards verification of the second evidence, issued notice to the Manager, Punjab National Bank, Model Town, Ludhiana who had sanctioned loan to assessee for cultivation of safed musli and in confirmation to the above, he has enclosed copy of the application/sanction letter and bank statement of 6 account maintained by assessee for the period from 01.01.2006 to 08.12.2012. The Assessing Officer, therefore, requested that appeal may be decided on merits.
8. The ld. CIT(Appeals) in view of the remand report of the Assessing Officer further directed the Assessing Officer that "since he has admitted additional evidences and you (A.O.) have accepted the assessee's claim that musli seeds were cultivated on 3.5 acres of land owned by him, in these circumstances, assessee's claim that he has earned agriculture income from 3.5 acres of land owned by him is prima-facie correct. However, the report of the Assessing Officer is silent regarding quantum of agriculture income earned by the assessee from this land".
9. The Assessing Officer in view of the above directions of the ld. CIT(Appeals) further submitted his remand report which is also reproduced in the impugned order in which the Assessing Officer reported that "Assessee furnished the details of sales of agriculture produce vide various bills. The assessee also filed account of agriculture income. The bills submitted were regarding sale of safed musli. The purchase and sale bills have been produced but the person to whom sale was made, have not been produced". The Assessing Officer as per his search on internet and website noted that expenses per acre have been taken at Rs. 2,50,000/- and earning 7 at Rs. 6,50,000/- , meaning thereby showing profit of Rs. 4 lacs per acre. The Assessing Officer, however, reported that expenses shown by the assessee are lesser therefore, Rs. 4 lacs per acre income could be considered.
10. The ld. CIT(Appeals), however, did not accept contention of the assessee as well as of the Assessing Officer and dismissed appeal of the assessee. His findings in para 3.7 of the order are reproduced as under:
" 3.7 I have carefully considered the submissions of the appellant and facts of the case on record. The following facts emerge from records :-
(a) The assessee has 3.5 acres of land at village Gorsain Kadarbaksh, wherein the assessee has claimed to have cultivated 'Safed Musli'. As per 'khasra Gidawari' of this land, Potato, Rice, Wheat and Stevia was cultivated on this land.
The revenue record donot show cultivation of any 'Safed Musli' on this land.
In this regard, the additional evidence was filed in the form of Bank loan of Punjab National Bank from where a loan of Rs. 5 lakh was taken by the appellant. As per bank statement of PNB, as on 01.04.2006 loan outstanding of PNB was Rs. 1,87,190/- and as on 31.03.2007 it was Rs. 1,42,455/-. During remand proceedings, on 26.11.2012, the assessing officer recorded a statement of one Sh. Amrik Singh of village TaSwara, who in his statement stated that he was doing agriculture activities on the village land at a salary of Rs. 8,000/-per month. He stated that he cultivated stevia and 'Safed Musli' on the land. The assessing officer while recording the statement did not askjiim how one single person carried agricultural activities which are labour intensive. 8 The statement is recorded in English. No specific questions were asked in the statement regarding agricultural activities. The assessee has stated that agriculture income was earned from sale of 'Safed Musli'.
The revenue records show production of Potato, Rice, Wheat, Stevia, while as per statement of Sh. Amrik Singh, Stevia and Safed Musli was cultivated. As per details submitted by the assessee agricultural income was earned from the sale of 'Safed Musli' only. No sale of Rice, Potato, Wheat or Stevia has been reported by the assessee in the details submitted by him.
(b) Subsequently the assessee stated that he was owner of agricultural land at village Jainpur and cultivated ' Safed Musli' on 2.75 acres of land at village Jainpur. As per the report of Patwari 'Sfed Musli' was cultivated on this land, however this land is covered with "Chardiwari", as reported in the revenue records.
(c) As regards purchase of seeds, the assessee has claimed that two quintals of seeds were purchased in cash for Rs. 80,000/- on 28.05.2004.
(d) The expenses were incurred on agricultural activities, as per bills brought on record, as under ;
i) PVC Pipes : Rs. 43,260/- on 29.03.2005
ii) Fertilizer Rs. 7,000/- on 20.08.2006
Rs. 36,856/- on 25.07.2006
iii) HDPE Pipes Rs. 720/- pm 01.05.2004
iv) Cartons Rs. 9000/- on 31.03.2005
v) Centrifugal
Agri sub-pump Rs. 8000/- on 01.05.2004
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Except purchase of fertilizer no expenditure was incurred on agricultural activities during F.Y. 2006-07.
(e) The appellant has claimed that he sold Rs. 2,95,000/-
tubes of Musli @ Rs. 5 per tube during the month of July, 2006. The addresses of the parties to whom sales were made are not specific or complete, they don't contain Home No. etc.
(f) As per revenue records, it is said that 'Safed Musli' was cultivated during the year in village Jainpur on 2.75 acres of land.
As per report of Punjab Agriculture University, Ludhiana obtained by the assessing officer, 'Safed Musli' is not recommended for cultivation in Ludhiana District. As per Booklet on 'Good Agricultural practices for 'Safed Musli' issued by ICAR - Directorate of Medicinal and Aromatic Plants Research Boriavi Anand-Gujarat, planting of 'Safed Musli' is done during the month of June-July depending on the onset of monsoon. The best time for planting based on sprouting percentage of the dormant buds is during 25th June to 5th July. The crop is ready for harvest after four months of planting in October. Roots are allowed to remain in the soil and harvested in the month of March - April by digging the roots.
The whole agricultural activity is labour intensive, the assessee did not use any labour for cultivation. The land in Ludhiana District is not suitable for cultivation of 'Safed Musli', even then the assessee did its cultivation, that too without incurring expenditure on cultivation except the fertilizers and no expenditure on labour.
While the product is planted in the months of June-July, the assessee has sold the Tubes of Safed Musli' during the month of July itself. Tubes of 'Safed Musli' will be ready only in the months of February or March for sale. It is not known how the produce was sold in the month of July which was the planting time and not the harvesting time 10
(g) The whole discussion brings out the issue that the assessee has just introduced his own funds into his books by giving the name of agricultural proceeds. Even though, the assessee was owner of some agriculture] land, but he himself has stated that during the year he earned agricultural income from the sale of 'Safed Musli only. The above stated facts bring on record that 'Safed Musli' could not have been produced or sold by the assessee as claimed by him. The plea of the assessee that he earned agricultural income is rejected and addition of Rs. 14,75,000/- made by the Assessing Officer is confirmed".
11. After considering rival submissions, I am of the view addition is wholly unjustified. The assessee claimed to have cultivated musli seeds in the agricultural land field. The assessee, as regards the details noted in the khasra girdawari explained that Musli Seeds were cultivated in assessee's land at village Jainpur and Gursain Kadarbaksh. The assessee filed affidavit of Shri Amrik Singh who was summoned by the Assessing Officer in the remand proceedings and in his statement recorded under section 131, he has confirmed to have cultivated the land of assessee for Safed Musli. The assessee also filed evidence from the Punjab National Bank who have reported to the Assessing Officer that they have sanctioned loan to the assessee for cultivating Safed Musli. The Assessing Officer, therefore, in principle accepted the claim of the assessee of cultivating Safed Musli in the agricultural land. The ld. CIT(Appeals), however, directed the Assessing Officer to report the 11 quantum of agriculture income earned by the assessee and in his forwarding letter, as noted in para 3.5 of the impugned order, ld. CIT(Appeals) also mentioned that Assessing Officer has accepted the assessee's claim that Musli Seeds were cultivated on 3.5 acres of land owned by the assessee. The ld. CIT(Appeals), therefore, noted that in these circumstances, the assessee's claim that he has earned agriculture income from 3.5 acres of land owned by him is prima-facie correct. The Assessing Officer was, therefore, directed to report quantum of agriculture income earned by the assessee. The Assessing Officer in his further remand report reported to the ld. CIT(Appeals) that as per the calculation, the profit per acre may be considered at Rs. 4 lacs. Ld. CIT(A) in his findings also noted that as per report of Patwari "Safed Musli" was cultivated on 2.75 acres of land at village Jaunpur. It support explanation of assessee made before Assessing Officer.
11(i) The Assessing Officer in his further remand report reported to the ld. CIT(Appeals) that as per the calculation, the profit per acre may be considered at Rs. 4 lacs. The assessee also furnished copy of the notices issued by Assessing Officer, details of agriculture income, copy of the details of agriculture income earned on selling safed musli supported by copies of the sale bills. The sale consideration of three bills were received through cheque and sale consideration of two bills were 12 received through cash. The amount have been deposited in the bank account of the assessee. These evidences on record in the light of the remand report submitted by the Assessing Officer and finding of the ld. CIT(Appeals) while remanding the matter to the Assessing Officer accepting the agriculture income of the assessee clearly proved that assessee earned agriculture income on account of cultivating safed musli. When Assessing Officer accepted claim of the assessee and ld. CIT(Appeals) found claim of the assessee to be prima- facie correct, there should not be any reason to reject the claim of the assessee. The ld. CIT(Appeals) merely going into the details of khasra girdawari and also the report of Punjab Agriculture University that safed musli is not recommended for cultivating in region of Ludhiana, rejected claim of the assessee. Reasons given by ld. CIT(Appeals), would not have much relevance as against the evidences brought on record, particularly when Assessing Officer and Ld. CIT(Appeals) himself have accepted the claim of the assessee of earning agriculture income on account of cultivation of safed musli. The assessee has also filed details of earning agriculture income in preceding assessment year as well as in subsequent assessment years, therefore, it is admitted fact that assessee had a history of earning agriculture income.
1311(ii) On the face of the material on record as discussed above, I am of the view, authorities below were unjustified in taking the agriculture income as 'income from other sources'. I, therefore, set aside orders of authorities below and hold that assessee earned agriculture income on cultivating and selling Safed Musli. The addition is, therefore, uncalled for. Same is accordingly deleted.
12. In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court.
Sd/-
(BHAVNESH SAINI) JUDICIAL MEMBER Dated : 7 t h February,2017.
'Poonam' Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT,DR Assistant Registrar, I TAT Chandigarh