Income Tax Appellate Tribunal - Ahmedabad
Dhulabhai M.Patel, Baroda vs Assessee on 11 August, 2011
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'सी
सी'
सी अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
सव[ौी मुकुल कुमार ौावत, Ûयाियक सदःय एवं ौी ए.एन.पाहजा
ू , लेखा सदःय के सम¢ ।
BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER AND
SHRI A.N. PAHUJA, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.2919/Ahd/2009
( िनधा[रण वष[ / Assessment Year : 2003-04)
Shri Dhulabhai M.Patel बनाम/ The ITO
Rajat Villa Vs. Ward-5(4)
Opp.Pandya Marriage Baroda
Hall, Harni Jakatnaka
Baroda
ःथायी ले खा सं . /जीआइआर सं . / PAN/GIR No.: AJKPP 8903 A
(अपीलाथȸ /Appellant) .. (ू×यथȸ/Respondent)
अपीलाथȸ ओर से/Appellant by : Shri Jaimine Gandhi
ू×यथȸ कȧ ओर से/ Respondent by : Shri G.S.Souryawanshi, Sr.D.R.
सुनवाई कȧ तारȣख/
/ Date of Hearing : 11/08/2011
घोषणा कȧ तारȣख /Date of Pronouncement :
आदे श/O R D E R
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
This is an appeal at the behest of the Assessee which has emanated from the order of Learned CIT(Appeals)-VI, Baroda dated 13/08/2009. The only ground raised is reproduced below:-
"2. The Learned Commissioner (Ap0peals) erred in confirming the addition of Rs.2,00,000/- treating the receipt from agricultural income as income from undisclosed sources."ITA No.2919/Ahd/2009
Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -2-
2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act dated 21/02/2006 are that the assessee in individual capacity has furnished the income disclosing agricultural income at Rs.6,50,000/-, therefore, the taxable income was returned at Rs.NIL. As per the nature of business, it was found that the assessee is a builder as well as an agriculturist. It was noted by the AO that gross agricultural income at Rs.9,29,317/- was disclosed and claimed agricultural expense of Rs.2,79,317/-. As per AO, the assessee was asked to furnish 7/12 and 8/A, details of sale of agricultural produce and details of expenses to earn the agricultural income. Crop-wise agriculture income was informed as under:-
Crop Income
Tobacco Rs.3,86,192/-
Bor Rs. 15,000/-
Paddy (Parimal) Rs.1,12,500/-
Paddy (Girasar) Rs. 37,625/-
Maize Rs. 50,000/-
Wheat Rs. 65,000/-
Mango Rs. 63,000/-
Lemon Rs. 20,000/-
Sundiyu (Puda) Rs.1,45,000/-
Drum Stick Rs. 35,000/-
Totalagriculture income Rs.9,29,317/-
3. Vide an another information, further details were furnished as under:-
Date of Particular To whom Amount Mode of receipt sold payment 31.05.2002 Mango 4200 Various 63,000/- Cash Kg parties ITA No.2919/Ahd/2009 Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -3- 08.10.2002 Lemon 1000 Various 10,000/- Cash Kgs. parties 08.10.2002 Lemon 1000 Various 10,000/- Cash Kgs. parties 10.07.2002 Maize 1600 Various 25,000/- Cash Kgs. parties 03.09.2002 Maize 1600 Various 25,000/- Cash Kgs parties 16.09.2002 Sudhiya Various 79,500/- Cash 10600 Kgs. parties 27.09.2002 Sudhiya Various 65,500/- Cash 8730 Kgs. parties 13.091.2003 Bor 1500 Various 15,000/- Cash Kgs. parties 01.02.2003 Dangar Various 1,12,500/- Cash 22500 kgs. parties
04.02.2003 Dangar Pidy Suresh 37,625/- Cheque 7490Kg. R.Patel 15.02.2003 Wheat 65 Various 65,000/- Cash Quintal parties 15.02.2003 Drumstick Various 35,000/- Cash parties 22.06.2002 Tobacco Chandubhai 3,86,192/- Cheque 13768 Kgs. S.Patel Total 9,29,317/-
3.1. The assessee has also furnished the details of expenses as under:-
Particulars Amount
Diesel for Tractor and 80,000/-
Pumpset
Labour 1,20,000/-
Manura 65,000/-
Miscellaneous Expenses 14,317/-
Total 2,79,317/-
However, the AO was not convinced. In his opinion, the assessee was able to furnish the details of sale only in respect of agriculture ITA No.2919/Ahd/2009 Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -4- receipts of Rs.4,23,817/-. According to AO, the sale of agriculture products to the tune of Rs.5,05,500/- could not be established. In respect of the said balance agriculture produce, the supporting evidences were not acceptable to the AO, hence the said amount was taxed as "income from undisclosed sources". The matter was carried before the first appellate authority.
4. After hearing the submissions and on perusal of the evidences filed, ld.CIT(A) has granted part relief vide following paragraph:-
"4.3. I have carefully considered the assessment order and the contentions of the appellant. It is an admitted fact that in the 7/12 extract, only the main crops tobacco and paddy are indicated but during the course of assessment proceedings it was claimed that incidental crops such as drumstick, mango, bor etc., are also grown with the same agricultural facilities and that for such sundry crops, the sale receipts are only by cash and in support thereof self generated vouchers were produced. It is also seen that in the preceding year the appellant had shown gross receipt of Rs.5.8 lacs of which Rs.3.33 lacs were received through cheques and Rs.2.47 lacs by cash. The A.Y. 2003-04 was also a scrutiny assessment and the claim of agricultural income was not disturbed by the Assessing Officer. While on the hand, the ground reality and the common practices suggest that the sale of such incidental crops to small vendors who are illiterate and they have no bank accounts would be in cash on the other hand, it is also admitted that such receipts can be easily inflated. Considering the facts of the case, the past trends of the agricultural income, the prevalent market practices in my view it would be fair to restrict the disallowance to Rs.2,00,000/-. The ground is thus partly allowed."
5. We have heard both the sides. We have also perused the compilation filed before us containing the explanations furnished before ITA No.2919/Ahd/2009 Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -5- the authorities below along with the cogent material. This is a small issue to decide whether the Revenue authorities have correctly estimated the agriculture income of the assessee. Undisputed fact is that the assessee has substantial land holding and in support furnished the 7/12 Extract as well as 8/A Extract. It was stated that the tobacco to the extent of Rs.3,86,192/- was sold to one Shri Chandubhai S.Patel and the payment was received through cheque. It was also informed that paddy of Rs.37,625/- was sold to one Shri Suresh R.Patel and the amount was received through cheque. The other agriculture produce such as, lemon, mango, maize, etc. were sold in cash stated to be to various parties, admittedly names were not available to the assessee. In respect of the cash sales, the Revenue authorities have doubts and therefore the AO had estimated the addition at Rs.5,05,500/-, however, the same was restricted to Rs.2 lacs only by the CIT(A). At this juncture, it is worth to mention that undisputedly the addition was purely on an estimation. The main contention of the assessee was that basically he happened to be an agriculturist, however, also started some construction business at Vadodara. That project was in nascent stage during the year under consideration. Meaning thereby the assessee was stated to be purely an agriculturist and he had no other resources of income. It is vehemently argued that the AO's allegation was absolutely wrong and ill-founded that the assessee had other resources of income alleged to be "income from undisclosed sources" . It was vehemently pleaded that the assessee had no resources or scope of earning any other income except the agriculture income. In support of this argument, a decision of ITAT Delhi Bench "A" pronounced in the case of Pradeep Batra vs. IAC ITA No.2919/Ahd/2009 Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -6- [1991] 39 ITD 406 (DELHI) has been cited, wherein it was held as under:-
"Following the decision of the Kerala High Court in the case o/K.J. Joseph v. ITO [1980] 121 ITR 178 it is clear that by providing for inclusion of agricultural income for rate purposes, the Assessing Officers have not been given the powers to assess and determine the agricultural income. Levy of tax and determination of agricultural income for the purposes of taxation is within the competence of the State Legislature and, therefore, it is unimaginable that the Assessing Officers would get the power of determination of agricultural income under the provisions of the Act for the purposes of taxation..
In a case where the only source of income is agricultural income, the Assessing Officer is not competent to determine the income from agriculture. However, where the ITO has reason to believe that the assessee had made investment, it would be open to him to put to test the claim of the assessee that the investment made is out of income from agricultural operations. At that time the Assessing Officer would be at liberty to determine the income for the limited purpose of considering the claim of the assessee explaining the source of investment. In such eventuality the Assessing Officer would not be acting without jurisdiction as determination of income from agriculture would be for determining the income assessable under the provisions of Act for the purposes of which it would be necessary to compute the agricultural income.
In the instant case, Assessing Officer had determined the agricultural income of the assessee at less than what had been disclosed by the assessee. The assessee had not been found to have made any investment nor had the assessee claimed to have made any from the agricultural income. Considering the facts and circumstances of the instant case, the Assessing Officer had no power to determine the income from agriculture. The addition made by the Assessing Officer in the process of determining the agricultural income was uncalled for and was liable to be deleted."
6. Since the Respected Coordinate Bench has taken a view, following a decision of Hon'ble Kerala High Court, that in cases where the only source of income is the agricultural income, therefore it would not be open to AO to put to test the claim of the assessee in respect of the said ITA No.2919/Ahd/2009 Shri Dhulabhai M.Patel vs. ITO Asst.Year - 2003-04 -7- agricultural income. In the said decision, a decision of Hon'ble Punjab & Haryana High Court of Jaswant Rai vs. CWT [1977] 107 ITR 477 (P&H) and an another decision of Hon'ble Kerala High Court in the case of K.J. Joseph vs. ITO [1980] I21 ITR 178 (Ker.) has also been cited. In the light of the totality of the circumstances of the case and considering the evidences in respect of sale of agricultural land and the agricultural holding , it is justifiable to hold that the agricultural income as shown by the assessee was more or less an acceptable correct agricultural income for the year under consideration. We have also noticed that from the side of the Revenue, there was no denial of the fact that in the past as well the assessee's substantial agricultural income, as disclosed vide income tax return filed, were also accepted by the Revenue Department. In view of this, as also under the totality of the circumstances of the case, natural justice do warrant to reverse the findings of the authorities below. Therefore ground raised by the assessee is allowed.
7. In the result, the appeal of the Assessee is allowed.
Sd/- Sd/-
( A.N. PAHUJA ) ( MUKUL Kr. SHRAWAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 31/ 10 /2011
Order pronounced in the court
Sd/- Sd/-
(AM) (JM)
AKG MKS
31.10.11
टȣ.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS
ITA No.2919/Ahd/2009
Shri Dhulabhai M.Patel vs. ITO
Asst.Year - 2003-04
-8-
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-VI, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation.......................18.10.2011
2. Date on which the typed draft is placed before the Dictating Member 18.10.2011.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S...31.10.11
6. Date on which the file goes to the Bench Clerk............... 31.10.11
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................