Income Tax Appellate Tribunal - Delhi
Bhupendera Sharma (Huf), Noida vs Pr. Cit , Noida on 21 December, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
Before Sh. Saktijit Dey, Vice President
Dr. B. R. R. Kumar, Accountant Member
ITA No. 1058/Del/2022 : Asstt. Year: 2017-18
Bhupendera Sharma (HUF), Vs Pr. CIT,
E-9, Sector-41, Noida Noida,
Uttar Pradesh-201301 Uttar Pradesh-201301
(APPELLANT) (RESPONDENT)
PAN No. AAACA6163D
Assessee by : Sh. P. C. Yadav, Adv. &
Ms. Chandrima Choudhary, Adv.
Revenue by : Ms. Sapna Bhatia, CIT-DR
Date of Hearing: 10.10.2023 Date of Pronouncement: 21.12.2023
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by assessee against the order of ld. PCIT, Noida dated 16.03.2022.
2. Following grounds have been raised by the assessee:
"1. That the impugned order of learned PCIT u/s 263 of the Income Tax, 1961 is ille gal in ho lding tha t AO had accepted the version of the assessee without making any inquiry regarding the agricultural Income declared by the assessee particularly when the AO had made proper enquiries in this regard independently well as after consider ing the relevant evidence and material place d on record.
2. That the impugned order of learned PCIT u/s 263 of The Income Tax, 1961 is illegal and void-ab-inito in as much as she held that the assessing officer had accepted the version o f assessee without making any 2 ITA No. 1058/Del/2022 Bhupendera Sharma (HUF) enquiry regarding claim of agriculture Income particularly when the AO had made proper inquir ies in this regard during the course of assess ment proceedings.
3. That for the similar reasons, the PCIT was also legally wrong in placing reliance on the provisio ns of Explanation- 2 of section 263(1) in as much as proper enquiry was made by the AO.
3. The assessee is a HUF and has shown income from other sources and agricultural income. During the course of assessment proceedings, the assessee w as required to furnish the details as per the questionnaire issued. The assessee filed retur n of income on 26.03.2018 declaring total income of Rs.4,73,850/-. Later on, the case selected for sc rutiny through CASS to examine the large agricultural income of the assessee and notice u/s 143(2) was issued on 22.09.2018.
4. For the sake of ready reference, the operative portion of the Assessment Order is reproduced belo w:
"2. The a ssessee is a HUF and has shown income from other sources a nd agricultural i ncome. During the course of assessment proce edings, the assessee was required to fur nis h the de tails as per the questio nnaire issued. T he written submiss ions we re uplo ade d by the assessee and s ame has been place d o n record.
3. With the a bove remarks, the re turned income of the assessee is acce pted. Asse ssment is comple ted on returne d income of Rs.4,73,850/- . Charge interest u/s 234A & 234B o f the Income Tax Act, 1961, if applicable, issue notice of demand and challan. Give n c redit of pre paid ta xes."3 ITA No. 1058/Del/2022
Bhupendera Sharma (HUF)
5. The operative po rtion of the order u/s 263 is reproduced below:
" 2 .4 Aft e r p e ru s a l of t he a ss e s sm en t r eco rd , the f ol l ow i n g di s cr ep a n ci es a r e o bs e r v ed:
"1. Vi de w ri tt e n r epl y da t ed 2 4 .1 2. 2 0 1 9 , y ou r A R a s s er t ed t h at y ou had ex e cu t ed a g r e e me n ts o n 10 .0 4 .20 1 6 w i th f ou r p e r s ons n a m el y ( i ) S h. Du rga P ra s a d ( i i ) Sh . R a j en d ra Pr a s ad V e rm a ( Hi ) Sh . B a l v e e r Si n gh an d ( i v) S h. S h ri ra m a l l re si d e n ts o f Lu c kn ow , f o r c ont r ac t fa rmi ng and el a bo r a t ed t h e c omp on en t s/ p r o vi s i on s o f a n a g r e em en t. H ow e v e r , i t i s n ot i c ed f r om p e ru s a l o f a l l th e f ou r a g r e em en t s t h a t n o w h er e , e xa ct d e t a i l s of t h e l a nd ta k en ( si tu a t ed a t L u ck n o w ) on l eas e e. g . t h e kh a t a /kh a s r a n o . , l oc a t i on , a r e a et c . h a s be en f ou n d i nco rp o rat e d in t he a l l eg ed a g r e em e n ts ( on l y u na t t e s t ed cop y of St at em en t of kh a ta f ou nd a tt a ch e d wi th th e a g r e e m en t s) . S i m i l a rl y, th e t ot al am oun t fi x ed f o r t h e e n ti r e l a nd ha s n o t b e e n men t i on ed ( onl y ra t e pe r bi gh a m en ti on ed ) . Th e a g r e e m en t w a s e x ecu t ed f o r th r e e y ea r s 1 0 .0 4 . 2 01 6 to 3 1 .0 3 .2 0 1 9 , h o we v e r , no d o c u m en t a ry e vi d en ce w i th r eg a rd t o t e r m i n a ti on o f th e s e a g r e em en ts w a s fi l ed. Al so , th es e a r e n ei t he r r e g i s t e r ed e v en not n ota ri z e d. A c c o r di n g t o th e R e gi st ra ti on A ct , a l l t he s e a g r e em ent s a r e r equ i r ed t o b e r egi st e r ed , s i n c e, t h r ou g h t h es e , t h e t ena n c y ri gh t /l a n d a r e l e a s e d ou t to a t en a n t f or a p e ri od o f m o r e t han 1 1 m on th s . La st l y, y ou r si g na t u r e s w e r e n ot f ou nd a ffi x ed i n a n y o f th e a g r e e m en t s , w h i ch ma k e s th e s e s o- c al l ed a g r e em en t s n ot -b i n di n g on t h e op p osi te p a rt y , th u s i n op e ra ti v e . It s e em s t ha t a l l th e a g r e em e n ts a r e b ogu s . In vi e w o f t he a b o v e, i t a pp ea r s th a t y ou ha v e c h o s en th e r ou t e of a g ri cu l tu ra l i n com e t o l eg al i z e yo u r un di s cl o s ed and u n ex pl a i n ed i n co m e. Th e r e fo r e , the i ncom e o f R s. 9 8 , 67 ,9 0 0/ - sh ow n a s a g r i cul tu ra l i ncom e i s l i a bl e t o b e a dd ed i n y ou r i n c o me a s u n e xp l a i n ed i nco m e. Th e A O h a s f a i l ed t o e xami n e t h ese i s s u e s, d u ri n g th e a s se s s men t p r o c e edi ng s.
1 . In sup p o rt o f th e l a nd t a k en on l ea se , u na t t e st e d c op y of S ta t em en t o f K hat a w e r e fi l ed a l on gw i th th e a g r e e men t s , h ow e v e r , i t i s r ev e a l ed f ro m p e ru sa l o f th e s e St a t em en t of K h a ta t h a t t h e l a n d w e r e i n j oi nt 4 ITA No. 1058/Del/2022 Bhupendera Sharma (HUF) n am e w i t h ot h e r p e r s on s, w h e r e a s , t h e a g r e e m ent s w e r e ex e c ut e d w i t h, on l y on e p e r s on. Th i s c a st d ou bt o n t h e a u t h en ti c i t y of t h e i mpu g ned a g r e e m e n ts ; h o w e v er , t h e AO ha s fa i l ed t o e xa mi n e t hi s i ss u e, d u ri n g th e a s s es s m en t p r oc e e di ng s .
1 . I t i s st at ed b y y ou r AR , vi d e r epl y da t ed 2 0 .1 2 .2 0 1 9 t h a t y ou h a d a l so e x e cu t ed c ont r a c t fa r mi ng a g r e em ent w i th M/ s A v yu kt a In du st ri e s Pvt . Ltd . on 1 0 .0 5 .20 1 6 , f o r s a l e o f f re sh v eg et a bl e s . As p e r t h e det ai l s avai l ab l e on R e gi st ra r of C omp a n i es w e b si t e, t h e sa i d com p a n y h as b e en st ru c k off f ro m R O C . Fu rt h e r , a s p e r t h e d eta i l s a va i l a bl e on th e w eb si te o f R O C , th i s c o mp a n y i s n ot en ga g ed i n a n y ki n d o f a g ri cul tu ral a c ti vi t y . F u rt h e r, t hi s a g r e e men t i s a l s o n ei t he r r egi s t e re d n o r n ot a ri z ed . F u rt h e rm o r e , b a n k sta t em en t o f t h e c o mp a ny ( A/ c N o . 1 26 3 05 5 00 4 2 1 w i t h I C I C I Ba n k Lt d ) r e v ea l s sev e r a l cr ed i t en t ri e s of h ug e ca sh d e p os i t , wh i ch c e rt a i n l y c a n not b e t r e a t ed r e c ei p ts a g ai ns t s al e of v eg e ta b l e s ( p ur c h a s ed b y i t on bu l k ba si s ) . It i s a l so r e ve al ed f ro m th e ban k st a t em en t th a t p a y m en t s w e r e a l s o ma d e to y ou r s on n am el y S h . A b h i sh e k Ku m a r ( P A N - AR T PK 4 4 45 M) a n d y ou r w i fe S mt . Pr a t i b ha Sh ar ma ( P AN -A DJ PS 1 14 1 C) b y th e a b o v e s a i d c om pa n y. In vi ew o f t h e f o r eg o i ng di sc u ss i on , i t i s su ffi ci ent t o sa y t h a t t hi s c omp any i s a b ogu s c omp a ny a n d c r ea t ed onl y t o p r o vi d e t h e ent ri e s . Th i s ca s e wa s re qu i red t o b e enq ui re d i n de t a i l b ut t h e AO h a s n o t mad e p r o p e r v e ri fi c a ti on a n d i nq ui ry .
2. The s e f ou r a g r e em ent s w e r e ex e cu t e d on 10 . 0 4 .2 0 16 a n d c op y o f t h e L e dg e r a n d J ou rn a l V o uch e r r e v ea l ed th a t t h e fi r st p u rch a s e w a s m ad e b y M / s A vyu kt a Ind u st ri es P vt . L t d. f r om y ou on 1 0. 0 5 .20 1 6 ( th e d at e o f e x e c ut i on o f th e a g r e em en t w i t h i t) f o r R s . 2 9 ,0 0, 0 0 0/ -. It i s i n com pr eh e n si bl e w hi ch v eg e t a bl e s g r ew so e a rl y th a t w e r e sol d by y ou w i t h i n on e m on th of th e e x e cut i o n o f t h e a g r e em en t s . T hi s c a s t dou b t on the a u th ent i ci ty of the i mp ug ned a g r e e m en t s an d c ons e q u en tl y th e genu i n en es s of th e a l l eg ed a g ri c u l t u ra l i ncom e , h o w ev e r , th e A O h a s fa i l ed t o ex a mi n e th i s i s su e a nd t o ob t a i n t h e mon t h- w i s e a nd c r o p- w i s e p r od u c t i on a n d sa l e, du ri n g t h e a s s e ss m en t pr o c e ed i n gs [ Onl y tot a l qu a nt i t y men ti one d (u n i t not ment i on e d -5 ITA No. 1058/Del/2022
Bhupendera Sharma (HUF) w h et h e r qn t l . or t on) , sa l e p ri c e a n d to t a l sa l e o f th e c r op s w e r e fi l ed] .
1 . Vi d e di r e ct i o n u/ s 1 44 A d a t e d 1 2 .1 2 .2 01 9 , th e R a n g e h ea d a d vi s ed th e A O th at th e i nv es ti g a ti on b e n ot c on fi n ed t o t h e gu i d el i nes ( a s c ont ai n ed i n t h e s a i d di r ect i on s ) b u t d i r ec t ed t h e A O to ma k e a th o r ou g h a n d c omp r eh en si v e i nv e sti ga ti on, bu t t h e A O h a s f a i l ed t o c omp l y t o th e d i r e ct i on s a n d c om p l et ed th e a s s e s sm ent , i n a hu r ri e dl y man n e r, in s p i te of the f a ct th a t the fol l ow i n g det ai l s/i n fo rm a ti on / d o c um en ts as a s k ed by th e AO, h e r s el f, vi d e n oti c e u / s 1 4 2 (1 ) d a t ed 2 7 .1 1 .2 01 9 r e ma i n ed u n c om pl i ed w i t h by y ou e .g . (i ) t h e c op y o f a g r e em e n ts ( b a c k/ r e v er s e si d e) , (i i ) C o py of a l l bi ll s/ vou ch e rs /i n v o i c e s i n re sp e ct o f a ll pu rch a s e s , E x p en s e s a n d s al e s a n d ( Hi ) D et a i l s o f t h e G r e en/ P ol y hou s e bu i l t on t h e l ea s ed l an d a l ong wi t h d et a i l s o f ex p en s e s i nc u r r e d a n d d et a i l s o f t he sub s i d y r e c ei ve d . Th e s e de t a i l s w e r e vi ta l t o a s c e rta i n th e g en u i n e n e s s o f th e a g ri cul tu ral i n c om e , a s sh o w n by y ou a n d h a d di r e ct b ea ri n g on t h e a s s e ss m en t p r oc e e d i n gs.
1 . C op y o f L ed g e r a c c ou nt o f th e a s s es s e e i n th e b o ok s of M /s Av yu kta In du st ri e s Pv t . L td . r e v ea l ed t h a t en ti r e pa ym ent s h a v e b e e n re c ei v ed by y ou , ag ai ns t t ot a l pu rch a se o f R s. 1,1 7 , 50 ,0 00 / -, du ri ng AY 2 0 17 - 1 8. Fu rth e r , y ou a l s o a c kn ow l ed g ed t o h a v e r e c ei ve d th e en t i r e d u e pa y m en t s an d fi l ed c opi e s o f R e c ei pt / C onfi r ma t i on , i n th i s r eg a r d. H ow e v e r , c o py of b a n k st a t em en t of M /s A v yuk t a In d u st ri e s Pvt Lt d ( A/ c N o . 1 2 63 0 55 0 0 42 1 w i th I C I C I B a n k L t d .) r ev e a l ed th a t a c h e q u e n o . 0 28 7 68 da t e d 3 1 . 01 .2 0 17 f o r Rs . 1 0 ,00 ,0 0 0/ - w a s i s su ed i n t h e n am e of Sm t . P ra t i b h a Sh a r m a ( T o w h om o th e r p a ym en t s w e r e al s o bei ng ma d e b y M/ s A v yu k t a Ind u st ri es Pvt Ltd ) . Th i s c a st d oub t on t h e a u th ent i ci ty o f t h e bo o ks o f a / cs o f M/ s Av yu kta In d us t ri e s P vt Lt d a s w el l as g enu i n en e s s o f th e a g ri c u l t u ra l i n com e d e cl a r e d by y ou , bu t th e A O h a s f a i l ed t o ex a m i n e th i s i ss u e.
1 . Y ou h av e d ec l a r ed g r o s s a g ri cu l tu r a l i ncom e of R s . 1 , 12 , 4 2 ,70 0 /- , i n t he ITR h ow e v e r , a s p e r y ou r l edg e r a c cou n t i n t h e b o o ks o f M / s Av yu k ta i n du st ri es Pvt . L td . , th e g r o ss a g ri cu l tu ra l i n c om e c om e s t o R s . 1, 1 6 ,67 ,9 0 0/ - ( T ota l p a y m en t R s. 1,1 7 , 50 ,0 00 / - mi nu s f r ei g ht & 6 ITA No. 1058/Del/2022 Bhupendera Sharma (HUF) c a rt ag e R s . 8 2, 1 0 0 / - ). Th i s a p p a re n t a n om a l y ca s t d ou bt on t h e b o o ks o f a/ c s o f M / s A v yu kta In du s t ri e s P vt . Lt d . as w el l a s g en u i n ene s s o f th e a g ri cu l t u ra l i n com e d e cl a r e d by y ou b ut t h e A O ha s fa i l ed t o ob se rv e i t, du ri ng t h e a s s es sm e n t pr o c e ed i n g s.
2 .5 In vi e w of th e a b o v e, t h e a ss e s sm e n t o rd e r pa ss e d b y t h e IT O , W a rd- 1 ( 2 ) , N oi d a i s e r r on e ou s a nd pr ej u di c i a l t o th e i nt e r e s t of r e v en u e an d ma y b e ca n c el l ed or m od i fi ed b y i nv o ki n g th e p r o vi si on s o f s e ct i on 26 3 o f t h e In c om e T a x A ct , 1 9 61 ."
6. Owing to non-compliance of the assessee , the ld. PCIT passed the order u/s 263 holding as under:
"3 .1 On the facts of the prese nt case , it is evide nt that the AO accepte d the ve rsion of the assessee without making any inquiry or ve rific ation Thus, by acce pting the unsubstantiated, varying and disjointed claims of the as sesse e, failing to conduct detaile d and legitimate inquiries, the AO utte rly failed to conduc t meaning full inv estigations essential to determine the to tal income of the a ssessee. Hence , when the AO has failed to take notice o f all the relevant fa cts and has failed to e xamine the correctness or o therw ise of the claims and asse rtio ns by the assessee, it is evident that he has failed to apply his mind and dischar ge his duty as an assessing officer during the course of the assessment proceedings. Consequently, the assessment order , passed by the AO is re ndered erroneous in so far as it is prejudic ia l to the interest o f the re venue.
3.2 In view of a bove facts and circumstances , I find that the assessment o rder u/s 143(3) da ted 30.12.2019 passed by the assessing o fficer ITO Ward ( 1)(2) , Noida is e rroneo us in so far as it is prejudicial to the interest of revenue , since it is a case of no enquiry on the claims made by the assessee in his income tax Return."7 ITA No. 1058/Del/2022
Bhupendera Sharma (HUF)
7. Aggrieve d, the assessee filed appeal before the ITAT.
8. Heard the arguments of both the parties and peruse d the material available on record.
9. The assessee has filed ROI declaring an income of Rs 4,73,850/. The case o f the assessee was selec ted for limited scrutiny on the ground "large agricultural income" during the impugned year. The Assessing o fficer, after calling the requisite details from the assessee passed the order u/s 143(3) vide order dated 30.12.2019 accepting the re turned income.
10. Relevant dates which go to the root of the matter are as under:
Date Event Reference
10.04.2016 Assessee entered into agreement with Du rga P.NO. 28-72 OF PB
Prasad, Rajendra Prasad, Shri Ram, Balveer
Singh for contract farming.
10.05.2016 Assessee en tered into an agreement with M /s. P.NO. 159-164 OF PB Avyukta Industries for the sale of vegetables 26.03.2018 Assessee filed its ROI at Rs. 4,73,850/- P. NO. 1-2 OF PB 22.09.2018 Notice u/s 143(2) for limited scrutiny was P.NO. 9-12 OF PB issued to the assessee 06.09.2019 Notice u/s 142(1) along with the questionnaire P. NO. 13-14 OF PB was issued to the assessee 06.092019 Assessee filed its reply to the not ice of 142(1) P. NO. 15 OF PB 25.10.2019 Company to whom assessee sold the See ITAT order Pg-
agricultural proceeds has been struck off by ROC 09.12.2019 Assessee submitted it reply to the notice dated P.NO. 17 OF PB 27.11.2019 14.12.2019 A show cause notice was issued to the assessee P. NO. 19 OF PB pointing out discrepancies in the documentary evidences and also enquiring about the issue of striking off.
8 ITA No. 1058/Del/2022Bhupendera Sharma (HUF) 20.12.2019 Assessee filed its replies to the show cau se P. NO. 22-24 OF PB notice and cla rified about the issue of striking off of th e purchaser compan y. Assessee also clarified that first two land tenancy agreements were not materialized.
24.12.2019 Assessee filed second reply and clarified about Page No 25-27 the new tenancy agreement with the four land owners a ssessee a lso filed the audited balan ce sheet and other documents of Avyukta Industries Private Ltd.
30.12.2019 Assessment order u/s 143(3) was passed accepting the returned income.
21.02.2022 A show cause n otice u/s 263 was issued to the P. NO. 3 OF PB assessee by Ld. PCIT 09.03.2022 Another show cause notice was issued to the P.NO. 6 OF PB assessee by Ld. PCIT 16.03.2022 PCIT passed order u/s 263
11. Perusal of Page number 9 of the Paper book reveal that the case of the assessee was selected for limited scrutiny. It is settled position of law that scope of enquiry in the limited scrutiny case is very limited and the AO cannot travel beyond that. However, the Ld. PCIT has taken a view that as if it is a complete scrutiny case and the AO has failed to conduct some more enquirie s into the matter.
12. It is settled position of law that in the assessment proceedings the Assessing officer has to play dual role one is of an investigator and one is of an adjudicator. If w hile acting as an investigator he/she could no t conduct any enquiry then such order can be termed as erroneo us and prejudicial to the interest of revenue. Secondly, while acting as an adjudicator if the AO takes one of the plausible view then such an or der cannot be termed as erroneous and prejudicial to the interest of revenue. Malabar Indus tries 243 ITR 43(SC).
9 ITA No. 1058/Del/2022Bhupendera Sharma (HUF)
13. Perusal of show cause notice dated 14.12.2019, page number 19 of PB would prove that it is not a c ase where the order has been passed without conducting any enquiry.
14. During the course of assessment proceedings, the AO specifically inquired from the assessee into the is sue of earning of agricultura l income and in response to suc h inquiry, the assessee file d adequate replies and relevant documentary evidences in support of its claim. The AO accepted the genuineness of the assessee's claim and on the bas is of evidences furnished and then accepted the retur ned income of the assessee.
15. The observations made by the ld. PCIT and rebuttal thereof are tabulated hereunder with the remarks of the assessee for the s ake of co nvenience and ready refere nce.
Observation of PCIT Rebuttal Remarks Location and detail of land is Factually incorrect and already ITAT in the case of one of the not provided in the tenancy dealt with by the Hon'ble ITAT member of HUF namely Abhisek agreemen ts H Bench in one of the member Kumar has already discarded of assessee HUF this observation - See Page No
-5 Para-8 -agreement not registered Para-9 Page number -6 location and details of land missing.
Contract: Farming done with Company was in existence in ITAT in the case of Abhisek Avyukta Industries the impugned year and it was Kumar in ITA number- Company was s truc k off struck off on 25.10.2019, 1141/D/2022 order dated Company was no t engaged in Company Memorandum of 18.08.2023 has already dealt Agriculture activ ities Association ( Pg No - 170-179 with these aspec ts- See Page Agreement is neither of PB ) authorizes Company for number- 6 registered nor notarized agriculture activities Several credits of huge cash deposits 10 ITA No. 1058/Del/2022 Bhupendera Sharma (HUF) Agreements with Avyukta was PCIT has not brought any ITAT order - Page -7 executed on 10.04.2016 and material on record to show payments s tar ted coming from that the assessee has starte d 10.05.2016 ( within o ne month the cultivation of crops after the crops grown) 10.04.2016 Discrepancies in Ledger PCIT failed to apprec iate tha t ITAT order at Page -7 account of Avyukta and the assessee has in fact shown assessee vis -a - vis sale large amount of agricultural proceeds received receipts, means ra te of tax would effect assessee. The fact of the matter is that there was cash sa les a lso.
16. The ld. PCIT has directed the AO to conduct enquiry in the above mentio ned issues. It is submitted that under the provisions of section 263 it is incumbent upo n ld. PCIT to specifically point out as to what enquiries the AO has not conducted or conducte d in a perverse manner tha t can lead to a conclusion that the order has been erroneous and prejudic ial to the interest o f revenue. The ld. PCIT cannot direct the AO to conduct enquiries without specifying as to how that led to prejudice to the revenue.
17. Reliance is being placed on the following orders and judgments:
1. ITA No. 1141/Del/2022 A.Y. 2017-18 in the case of Abhis hek Kumar Vs. PC IT where in the facts of the case are similar and the appellant is a coparcener of the instant assessee.
2. ITO Vs. DG Housing Projects 343 ITR 329 where in it was held that the Commissioner cannot remit the ma tter for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order of Assessing 11 ITA No. 1058/Del/2022 Bhupendera Sharma (HUF) Officer is erroneous. Such finding that the order is erroneous is a condition precedent for exercise of jurisdiction u/s 263.
18. In the re sult, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 21/12/202 3.
Sd/- Sd/-
(Saktijit Dey) (Dr. B. R. R. Kumar)
Vice President Accountant Member
Dated: 21/12/2023
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR