Income Tax Appellate Tribunal - Bangalore
Shri Chandrappa Busenahalli , ... vs Assistant Commissioner Of Income Tax ... on 8 June, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC-A" BENCH : BANGALORE
BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND
SHRI LALIET KUMAR, JUDICIAL MEMBER
ITA No. 849/Bang/2018
Assessment Year : 2013-14
Shri Chandrappa Busenahalli,
The Assistant Commissioner
No. 55/AC, 3rd Cross,
of Income Tax,
8th Main, Vasanth Nagar, Vs.
Circle - 1 (3)(1),
Bangalore - 560 052.
Bangalore.
PAN: AKHPB6707E
APPELLANT RESPONDENT
Appellant by : Shri Balram R. Rao, Advocate
Respondent by : Shri D.K. Jha, Addl. CIT (DR)
Date of hearing : 22.05.2018
Date of Pronouncement : 08.06.2018
ORDER
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee which is directed against the order of ld. CIT(A)-3, Bangalore dated 14.02.2018 for Assessment Year 2013-14.
2. The grounds raised by the assessee are as under.
"1. The Learned CIT (Appeals) erred in upholding the Order of the Assessing Officer in the manner in which he did.
2. The Learned CIT (Appeals) as well as the authorities below erred in disallowing the claim of Rs.18,28,286/- being agricultural income under the head income from other sources.
3. The Learned CIT (Appeals) as well as the authorities below failed to consider the certificate from Lakshmi Ranganatha Arecanut Processing Centre, wherein it was certified that the said party had purchased arecanut to extent of Rs. 20,80,000/-.
4. The Learned CIT (Appeals) failed to appreciate the fact that a farmer can withhold the sale of agriculture products and can sell the same stock in a particular time when there is good price.ITA No.849/Bang/2018 Page 2 of 6
5. The Learned CIT (Appeals) erred in upholding the disallowance of agricultural income under the head income from other sources by relying on the published report in the farmer's web portal as a yard stick to assess the Appellant's agricultural income.
6. The Learned CIT (Appeals) failed to consider the evidences with regard to agriculture land holding such as RTC of lands and other such records to prove his claim.
7. The Learned CIT (Appeals) failed to consider the judgement of Hon'ble High Court of Rajasthan in the case of CIT, Bikaner vs Ramashwar Lal Dudi dated 15/03/2010 in D.B Income Tax Appeal No. 78/2009.
8. The Learned CIT (Appeals) erred in upholding the interest levied under section 234A & 234B amounting to Rs.46,032/-Rs.2,07,144/- respectively.
9. For these and other such grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed."
3. It was submitted by ld. AR of assessee that the assessee has claimed that there is agricultural income of Rs. 23.55 Lakhs but the AO has held that agricultural income of Rs. 5,26,714/- only is acceptable and on that basis, he held that balance income of Rs. 18,28,286/- is income from other sources and made addition. He also submitted that as per the noting of AO in page 10 of assessment order, the assessee was having land area of 21.14 acres under cultivation of arecanut, 4.51 acres under cultivation of paddy and 2 acres under cultivation of Ragi total of 28 acres. He placed reliance on a judgment of Hon'ble Karnataka High Court rendered in the case of S.L. Basavaraj (HUF) Vs. ACIT as reported in 61 taxmann.com 367 (Karnataka), copy available on pages 44 to 50 of paper book. He drawn our attention to Para 20 of this judgement and pointed out that it is noted by the Hon'ble High Court in this para that in the case of N.G. Pai, the AO had estimated the yield of arecanut per acre at 14 Quintals and after calculating the average sale price at Rs. 10,000/- per quintal and after deduct of 1/3rd of such sale proceeds as expenses, the balance was taken as the total agricultural income of the said assessee-N.G. Pai and by such calculation, the income per acre would come to Rs. 93,200/- per acre. He further pointed out that in para 24 of the same judgement, it is ITA No.849/Bang/2018 Page 3 of 6 stated by the Hon'ble High Court that the yield at the rate of Rs. 93,200/- per acre as in the case of N.G. Pai ought to have been taken for the additional area of 11 acres which was added after assessment year 1998-99 in which case the income of the assessee would have come to approximately the same amount as had been declared by the assessee in his books of account for the relevant assessment year 2003-04. He submitted that in the present case also, the agricultural income of assessee should be computed on the same basis at least. The ld. DR of revenue supported the order of CIT(A).
4. We have considered the rival submissions. First of all, we reproduce paras 20 to 24 of this judgement of Hon'ble Karnataka High Court rendered in the case of S.L. Basavaraj (HUF) Vs. ACIT (supra). The same are as under.
"20. The contention of learned counsel for the appellant is that for the same year 2003-04, in the case of N.G. Pai, the Assessing Officer had estimated the yield of arecanut per acre at 14 Quintals, and after calculating the average sale price at Rs. 10,000/- per quintal, a deduction of 1/3rd expenses was made, and the balance was taken as the total agricultural income of the said assessee - N.G. Pai. By such calculation, the income per acre would come to Rs. 93,200/-. According to Sri Shankar, if the books of account of the assessee had to be rejected, then the yield per acre should have been estimated by the Assessing Officer for the total area at the same rate of Rs. 93,200/- per acre, as had been done in the case of N.G.Pai by the same Assessing Officer for the same assessment year 2003-04 around the same time when the assessment order in the case of the present assessee had been passed. Accordingly, if such method of calculation was also adopted in the case of the appellant, the agricultural income would come over Rs. 25 lacs, whereas the assessee has claimed agriculture income of only about Rs. 22 lacs as per the books of account maintained by him. In the alternative, it is submitted by learned counsel for the appellant that even if Rs. 12 lacs and odd as income declared by the assessee for certain parcels of land was not to be accepted and Rs. 7,93,350/- was to be assessed as agricultural income for the relevant assessment year on the basis of income for the same parcels of land for assessment year 1998-99, then for the additional two plots of land totalling to about 11 acres, the Assessing Officer ought to have taken the yield per acre at Rs. 93,200/- (as had been done in the case of N.G. Pai) and not Rs. 50,000/- per acre, in which case an addition of about Rs. 4,78,950/- would be there (i.e. Rs.10,25,200/- minus Rs. 5,46,250/-) which would approximately come to the same amount of Rs. 4,89,019/- which has been reduced by the Assessing Officer in the case of the assessee for the assessment year 2003-04.ITA No.849/Bang/2018 Page 4 of 6
21. On the other hand, Sri K. V. Aravind, learned counsel for the respondent-revenue has submitted that the Assessing Officer had adopted the income declared by the assessee for the assessment year 1998-99, in which year the price of arecanut was higher than the price in the assessment year 2003-04 in question, and after calculating the agricultural income of the assessee on such basis, the Assessing Officer has accepted the other addition with regard to fallen arecanut trees, tender coconuts, etc., as declared by the assessee in his books of account. He, thus, justifies that the Tribunal has rightly accepted the calculation made by the Assessing Officer, and submits that the question of law in this regard be answered in favour of the revenue and against the assessee.
22. Having gone through the record, what we notice is that the Assessing Officer has, after rejecting the books of accounts of the assessee, accepted certain portion of the accounts submitted by the assessee (i.e., with regard to fallen arecanut trees, tender coconuts etc.) and then proceeded to calculate the agricultural income on the basis of the agricultural income declared by the assessee for the assessment year 1998-99. It is not understood as to why the income declared for the year 1998-99 was chosen by the assessing officer for calculating the income for the assessment year 2003-04. From the record it appears that for a closer assessment year 2001-02 the agricultural income declared by the assessee was Rs. 20,41,000/-, which has also been affirmed by the Tribunal. It is thus not understood as to why the said estimation for the assessment year 2001-02 was not taken for consideration for the assessment year in question i.e., 2003-04 in which year there was a marginal increase of about Rs. 1.5 lacs only and was an assessment year which was closer to the assessment year in question, than the year 1998-99.
23. After rejecting the books of accounts of the assessee taking up one method of calculation from one particular assessment year and then accepting a part of the own accounts of the assessee, cannot be accepted to be a method of calculating the income of the assessee. After the books of account are to be rejected for valid reasons, a consistent method of estimation of income is then to be adopted by the Assessing Officer, which has not been done in the present case. An Assessing Officer cannot be permitted to choose one method for assessing one part of income on the basis of anyone particular earlier assessment year, and another part on the basis of some other estimation and the third part as per the books of account as maintained by the assessee. After rejecting the account books, the Assessing Officer may have the freedom to choose a method for estimating the income of the assessee, but there has to be consistency of such method maintained for calculation of the entire income of the assessee.
24. As we have already noticed above, the Assessing Officer, after rejecting the books of accounts of the assessee, could have made the calculation of agricultural income as had been done in the case of ITA No.849/Bang/2018 Page 5 of 6 N.G. Pai, by the same Assessing Officer for the same assessment year, which was calculated at the yield of 14 Quintal per acre and the price of arecanut at Rs. 10,000/- per quintal, in which case the income of the assessee would be over Rs. 25 lacs, which is much higher than claimed by him. If the said calculation was not to be adopted, then even if the income for certain parcel of land which was there in 1998- 99 was taken at Rs. 7,93,350/- yet the yield at the rate of Rs. 93,200/- per acre (as in the case of N.G. Pai) ought to have been taken for the additional area of 11 acres (which was added after assessment year 1998-99) in which case the income of the assessee would have come to approximately the same amount as had been declared by the assessee in his books of account for the relevant assessment year 2003-04. The Tribunal has, without giving any cogent reason, set aside the order of the Appellate Commissioner and restored the order of the Assessing Officer, even though the Tribunal has noticed that the agricultural income for a closer assessment year 2001-02 was Rs. 20,41,000/- which has been affirmed by it, yet the same has not been taken to be a material basis for arriving at an income of the assessee for the assessment year in question i.e., 2003-04, where the assessee had disclosed his agricultural income of Rs. 21,93,569/- which was merely Rs.1.5 lacs more than the income accepted two years earlier in 2001-
02."
5. As per the above paras reproduced from this judgement of Hon'ble Karnataka High Court, it is seen that the Hon'ble High Court has approved the income of Rs. 93,200/- per acre on the area under cultivation of arecanut. In the present case, it is noted by AO on page no. 10 of assessment order that assessee is having 21.14 acres under cultivation of arecanut and if we consider the same yield in the present case also, which is Assessment Year 2013-14, then income of Rs. 19,70,248/- (21.14 Acres multiplied by Rs.10,000/- 93,200/- per Acre)should be out of arecanut cultivation. In addition to that, there is 4.51 acres under paddy cultivation and 2 acres under Ragi cultivation. In respect of paddy, the AO has considered gross income of Rs. 58,500/- and in respect of Ragi, he has considered Rs. 19,500/- as gross income and after deducting expenditure of 63.3% as have been done by the AO, the net income from cultivation of paddy and Ragi comes to Rs. 28,626/-. In respect of cultivation of these two items, no argument was advanced by ld. AR of assessee and hence, infer that the assessee accepts the working of AO regarding these two items i.e. paddy and Ragi but hold that in respect of cultivation of arecanut, income should be accepted at Rs. 19,70,248/- @ Rs. 93,200/- per acre for 21.14 acres and in this manner, the total agricultural income should be accepted at Rs.
ITA No.849/Bang/2018 Page 6 of 619,98,874/-. We order accordingly and direct the AO to accept the agricultural income of Rs. 19,98,874/-.
6. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/-
(LALIET KUMAR) (ARUN KUMAR GARODIA)
Judicial Member Accountant Member
Bangalore,
Dated, the 08th June, 2018.
/MS/
Copy to:
1. Appellant 4. CIT(A)
2. Respondent 5. DR, ITAT, Bangalore
3. CIT 6. Guard file
By order
Senior Private Secretary,
Income Tax Appellate Tribunal,
Bangalore.