Income Tax Appellate Tribunal - Indore
Mohd. Atique, Bhopal vs Assessee on 21 March, 2012
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IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER
And
SHRI R.C. SHARMA, ACCOUNTANT MEMBER
IT(SS) A Nos. 310 to 316/Ind/2012
A.Ys. 2001-02 to 2007-08
Mohd. Atique
Bhopal
PAN - AGWPA 6383N :: Appellant
Vs
ACIT 3(1)
Bhopal :: Respondent
IT(SS) A Nos. 295 to 299/Ind/2012
A.Ys. 2001-02 to 2004-05 & 2006-07
Mohd. Shafique
Bhopal
PAN - ANIPS 2739K :: Appellant
Vs
ACIT 3(1)
Bhopal :: Respondent
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IT(SS) A Nos. 285 TO 287/Ind/2012
A.Ys. 2002-03 to 2004-05
ACIT 3(1)
Bhopal :: Appellant
Vs
Mohd. Yusuf
Bhopal
PAN - AAVPU 4612R :: Respondent
Assessees by Shri H.P. Verma and
Miss Sakshi Verma
Respondent by Shri Darshan Singh
and Shri R.A. Verma
Date of hearing 8.11.2012
Date of pronouncement 31.1.2013
O R D E R
PER JOGINDER SINGH, judicial member
This group of 15 appeals is filed by different assessees and the Revenue challenging the respective orders dated 21.3.2012, 21.3.2012 and 27.3.2012 of the learned first appellate authority, Bhopal on various grounds as contained in the grounds of appeal of the respective appeals. In the case of Mohd. Atique the assessee has also filed additional grounds for A.Ys. 2002-03 to 2007-08 challenging the order passed u/s 153C on the plea that the order is 3 illegal, invalid and untenable in law. In the case of Mohd. Atique, following common grounds have been raised :-
(i) That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in not accepting the documents filed as additional evidence before him.
(ii) On the facts and in the circumstances of the case, the learned CIT(A) was not justified in making the determination of income at Rs.3,87,640/- against the returned income of Rs.1,68,088/-.
(iii) That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in not accepting the agricultural income shown by the assessee at Rs. 6,86,548/-
and in treating the same as income from other sources and consequent addition of the same.
(iv) That, on the facts and in the circumstances of the case, the learned CIT(A) was not justified in not allowing the deduction u/s 24 at 30% of the house property, rental receipt shown by the assessee at Rs. 33,000/-by treatingthe same as income from other sources and thus consequent addition."
2. During hearing of these appeals, in the case of Mohd. Atique, the assessee has challenged the action u/s 153C of the Act. The learned counsel for the assessee invited our attention to the recorded reasons for taking action u/s 153C of the Act by submitting that the documents were impounded u/s 133A of the Act, therefore, such action is without jurisdiction. It was pleaded that no return was filed by the assessee, therefore, no assessment 4 was made prior to proceedings under consideration meaning thereby that no proceedings were pending in the case since no original assessment was made. A plea was also raised that no adverse material was found in search, consequently, no action u/s 153A of the Act could be taken. On the other hand, the learned CIT DR strongly defended the proceedings u/s 153C/153A of the Act. Reliance was placed upon the decision of the Special Bench in the case of Allcargo Logistics Limited v. DCIT; 20 ITJ 45 (Mum) (SB). Our attention was invited by the learned CIT DR to section 292B of the Act.
3. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee was having main source of income from agriculture. In addition to it, the assessee was also engaged in the business of real estate and transportation business. The assessee did not file return of income u/s 139 of the Act. A search and seizure action u/s 132(1) of the Act was carried out in Mohd. Shafique group wherein certain documents and information relating to the assessee i.e. Mohd. Atique were found. The assessee is the son of Shri Mohd. Shafique. The Assessing Officer issued notice u/s 153A after recording 5 reasons in response to which the assessee filed the return of income for various assessment years. The income returned by the assessee and assessed by the Assessing Officer is summarised as under :-
Sl.No. A.Ys. Income returned Assessed by AO.
Rs.
1 2001-02 1,68,088 8,87,640 2 2002-03 1,72,005 8,05,950 3 2003-04 2,48,908 11,07,220 4 2004-05 2,06,024 11,66,590 5 2005-06 49,67,512 60,70,890 6 2006-07 4,47,340 20,12,860 7 2007-08 1,46,350 67,64,680
4. Ground nos. 2 and 3 raised by the assessee are with respect to agricultural income shown by the assessee and determination thereof by the authorities below. The learned counsel for the assessee contended that the assessee is having own land as well as land taken on lease, therefore, there is no reason to disbelieve the reasonableness of agricultural income whereas the learned CIT DR defended the order of the learned CIT(A).
5. We have considered the rival submissions and perused the material available on record. We find that in response to notice u/s 6 153A the assessee filed its return of income disclosing agricultural income for various years under consideration. The stand of the revenue is that since the assessee filed the return showing agricultural income for various years for the first time, therefore, in real sense there is no income from agriculture and the Assessing Officer treated the agricultural income as income from other sources accordingly additions were made u/s 68 of the Act. The returned income as well as the assessed income are summarised as under :-
Sl.No. A.Y. Agri. income Agri. Amount of
on own land Income on addition made
lease hold by treating
land agricultural
income as
income from
other sources
1 2001-02 2,82,348 4,04,200 6,86,548
2 2002-03 3,02,841 4,42,900 7,45,741
3 2003-04 3,25,611 4,85,900 8,11,511
4 2004-05 3,59,766 5,50,400 9,10,166
5 2005-06 4,88,376 5,93,400 10,81,776
6 2006-07 8,12,536 7,31,382 15,43,918
7 2007-08 7,88,000 7,86,930 15,74,930
6. If the table reproduced in the impugned order/assessment order is analysed, we find that the assessee has shown agricultural income, per acre, ranging from Rs. 6200/- to Rs. 10,000/-, respectively in the impugned assessment years from agricultural 7 land (owned by the assessee) ranging from 45.54 acres to 78.80 acres and from the agricultural land taken on lease the net agricultural income comes to Rs. 6,146/- to Rs. 10,050/- (per acre) and after giving the lease rental as mentioned at page 4 (table no. 2 of the impugned order), the total agricultural income has been shown at Rs. 4,04,200/- to 7,86,930/- out of land of 87 acres to 93.58 acres in the respective assessment years. The Assessing Officer raised various queries and some persons were asked to be produced. Mohd. Laeek was produced for verification whose statement was recorded. The affidavit of Mohd. Laeek was filed. The Assessing Officer did not accept the claim of agricultural income on the grounds which have been mentioned in the assessment order and also summarised at page 6 of the impugned order. It is an undisputed fact that even as admitted in para 5.3 (page 7) of the impugned order the assessee furnished the copy of Khasra before the learned CIT(A) in support of agricultural income. Since this Khasra was not produced before the Assessing Officer, it was not admitted. The claim of the assessee was rejected for earning agricultural income on the ground that since the assessee is residing at Bhopal and engaged in business of transport and real 8 estate, evidence of expenses for earning agricultural income was also not produced, therefore, the claim was rejected. However, the fact remains that the assessee is owning agricultural land and also some land was taken on lease. The income shown as agricultural income was thus added u/s 68 of the Act. It is not the case that the Assessing Officer made inquiries from nearby land holders contradicting the claim of the assessee evidencing that neither any agricultural operation was done by the assessee himself nor such operation was got done with the help of labour, etc. Simply rejection of claim and making addition u/s 68 is not justified. Now the question arises whether agricultural production to the extent as has been claimed by the assessee can be made. The affidavit, filed by one of the persons, was rejected merely on the ground that it was not deposed before the Assessing Officer. We are of the considered opinion that if a false affidavit has been filed, it has its own repercussion. Instead of falsifying the affidavit, it was merely rejected on the ground that it was not filed during assessment proceedings. The assessee is basically an agriculturist for the last 40 years though having two trucks and also doing real estate business. So far as Khasra Khataunies are concerned, these are 9 documents issued by the land revenue department of the Government and cannot be disbelieved unless and until any adverse material is brought on record. The statement of Mohd. Atique was recorded u/s 133A and in reply to question no. 3 he has stated that he has income from agriculture and in reply to question no. 6, he has claimed that he is having 30 - 40 acres of agricultural land in own name and nearly 150 -250 acres of land by other members of the family. Nearly 200 acres of agricultural land was claimed to be taken on lease (paper book pages 33 to 35 supports the claim of the assessee). Vide statement dated 24.9.2006 (Annexure 5-10) question no. 8, Shri Atique Ahmed tendered in his statement that they are doing business for the first time but their main occupation is agriculture where they are not maintaining any account. In statement dated 26.9.2006 Shri Shafique Khan (father of the assessee) in reply to question no. 4 (Annexure 12) claimed that they are having a farm house on airport road since 1991 and the family is having about 150 acres of land and about 100 to 150 acres are taken on lease. These statements were neither falsified by the revenue nor any adverse material was brought on record, thus totality of facts indicates that the family is having agricultural 10 income. Even in the khasra (copy available on record) various crops have been shown by the assessee. It is pertinent to mention here that the assessee applied for getting a revolver licence and made an affidavit (LPS page 8) (pages 262 and 263) wherein various sources of income have been mentioned and categorically sworn that they are having agricultural land in village Lambakheda which is about 100 acres. All these documents cannot be falsified.
7. With reference to the evidence filed before the learned CIT(A) which he has not accepted on the plea that the same were not produced before the AO, as per our considered view, the assessee's right to file additional evidence is enumerated in the circumstances specified under rule 46A of the IT Rules but at the very same time, the CIT(A) has wide powers under which he may allow the appellant to produce additional evidence subject to the condition that due opportunity should be provided to the AO and for this proposition, reliance may be placed on the decision of the Allahabad High Court in the case of M/s Mrs Mohinder Kaur; 104 ITR 120 and Smt. Prabhavati S. Shah; 231 ITR 1. The powers of the CIT(A) are co-terminus to admit fresh evidence with the powers of the AO and these powers are stressed repeatedly by M.P. High Court as well as 11 Supreme Court in the case reported at 53 ITR 225 (SC) in the case of Kapur Coal Syndicate; 187 ITR 688 (SCC) in the case of Jute Corporation of India; 224 ITR 610 (SC) in the case of Nirbhay Ram Daluram and 166 ITR 484 in the case of Indermal Natwarlal. Where the additional evidence goes to the root of the matter, the same has to be accepted. There is no law that additional evidence should not be admitted. Only it has to be seen that the right of the other party to rebut the same should not be violated. In the instant case, copy of Khasra could not be obtained by the assessee when the case was going on before the AO. However, the same was acquired and filed before the CIT(A). Copy of such Khasra is also placed at pages 6 to 30 for the A.Ys. 2001-02 and 2002-03 and for the A.Y. 2004-05. In respect of Khasra for the a.Y. 2003-04, the same are placed at pages 7 to 30 and for the a.Y. 2005-06 at pages 7 to 31 and for the A.Ys. 2006-07 and 2007-08 at pages 7 to 56 of the paper book filed for the respective years. Copies of the purchase deeds showing purchase of land in the name of the assessee and other family members are placed at pages 81 to 184 of the paper book.
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8. Additional evidence is necessary for proper appreciation of the issue in appeal and for adjudication of substantial justice. Such evidence may ultimately turn out to be to the benefit of either tax payer or the Revenue. Even in the matters which were earlier decided, fresh evidence may be admitted, though it may have the effect of different inference because res judicata has no application to income tax proceedings. From record we find that the assessee has been allowed very short time by the AO to comply with a number of inquiries and to produce various persons before the AO. Less than a month's time was given by the AO in case of 44 appeals of group, therefore, some of the evidences were filed before the CIT(A) which he should have accepted and proper opportunity should have been given to the AO for commenting on such additional evidence.
9. It was contended by the learned counsel for the assessee that where all necessary materials are available, the Tribunal is not justified in remitting the matter back to the lower authorities and for this purpose, reliance may be placed on 13 Ram Gorsi Construction Ltd.; 308 ITR 290 (Mad.). The learned counsel for the assessee further submitted that the additional evidence is such that it cannot be rebutted, it is an exercise in futile to set aside for rebuttal and in this category, generally Government documents fall. Accordingly, it was requested that the issue may not be set aside where the additional evidence is not doubtful/not rebuttable.
10. In view of the above discussion and the documentary evidence placed on record with regard to the land owned by the assessee, we direct the Assessing Officer to allow agricultural income @ Rs. 6000/- per bigha. The Assessing Officer is directed to work out the actual holding of land by the assessee and his family members and to compute the agricultural income thereon by multiplying with Rs. 6,000/- per bigha per annum. In respect of the land taken on lease, the matter is restored back to the file of the Assessing Officer for determining the total land taken on lease after considering the additional evidence filed before CIT(A) as discussed hereinabove, and after allowing deduction on account of lease 14 rent paid by the assessee thereon, the Assessing Officer is to compute the agricultural income out of such lease hold lands. We direct accordingly. This conclusion is applicable to all the assessment years, under consideration.
11. A legal ground has been taken by the assessee with regard to framing of assessment u/s 153-C of the Act where the search was undertaken in the assessee's premises itself. As per the learned counsel for the assessee, the assessment should have been framed u/s 153A and since the assessment has not been framed u/s 153A but the Assessing Officer has wrongly mentioned section 153C, the assessment is null and void. We do not find any merit in this contention of the assessee insofar as such mistake is covered by the provisions of section 292-B of the Act. Accordingly, the legal ground taken by the assessee in the A.Ys. 2002-03 to 2007-08 is hereby dismissed.
12. For the A.Y. 2007-08 (Ground nos. 5 to 7) the additions have been made on the basis of entries made in the book marked as BS-
1. The total of such entries comes to Rs.50,21,800/- (cash from Bhai Jan Rs.17,09,800/- and cash paid Rs.33,12,000/-). From the assessment stage itself it has been explained by the assessee that 15 Bhai Jan is the nick name of Mohd. Atique. The cash book and books of accounts were impounded on 31.9.2006 (Annexure 22 and
21). The claim of the assessee is that these cash transactions were with respect to Navin Nav Yuvak (NN) and A.A. Real Estate (AA). It was contended that the assessee (Mohd. Atique) controls both the concerns and used to keep the cash of both the concerns with him. The claim of the assessee was rejected by the Assessing Officer. The learned first appellate authority in para 7.2 page 12 observed as under :-
"The printout submitted before me is prepared on computer just to support the theory that the expenses are entered in the cash book of the two concerns. The cash book submitted before the A.O. did not have these entries. This clearly shows that the printout of cash book submitted before me are not reliable. In view of the above, it is held that the addition of Rs.50,21,800/- for unaccounted expenditure is valid hence the same is confirmed."
The crux of arguments on behalf of the assessee is that the accounts were maintained on computer and the printout of the same was duly produced before the CIT(A). On the other hand, the ld. DR supported two orders of lower authorities. We have considered rival contentions and found that in the A.Y. 2007- 08 an addition of Rs.50,21,800/- was made. With reference to 16 the above, the addition made in respect of loose papers found wherein the cash payment of Rs. 17,09,800/- and cash receipt of Rs. 33,12,000/- was computed. The Assessing Officer has made the addition on the basis of entries in the book marked as BS-1. The total of such entries under two heads of receipt and payment was Rs. 50,21,800/- (17,09,800 + 33,12,000). It was also explained before the Assessing Officer that Bhai jan is the nick name of the assessee who is eldest son of Mohd. Shafiq and all known persons call him by that name. During the course of survey, cash book of M/s Navin Nav Yuvak (in short 'NN') and M/s A.A. Real Estate (in short 'AA') was also impounded u/s 133A on 21.9.2006. It was also explained that these were cash transactions with NN/AA. As the assessee, M/s Mohd. Atiqu looking after the work of both the concerns and also used to keep cash of both the concerns, these transactions were found recorded on the loose paper recovered from the premises of the assessee. However, the Assessing Officer inferred that these transactions are in the nature of expenses which were not found recorded in the respective books of these concerns. We find that the findings recorded by 17 the Assessing Officer to the effect that the cash book does not support entries in the papers is not correct insofar as copies of cash book of NN/AA were filed before the lower authorities. The assessee also filed reconciliation statement before the CIT(A). Without verifying the reconciliation statement and its correctness, the CIT(A) confirmed the addition made by the assessee. As per our considered view, the amount received as well as amount paid cannot be the income of the assessee. The total of these entries indicating receipt of cash was Rs. 17,09,800/- whereas total of such cash payment was Rs. 33,12,000/-. Thus, out of the total cash payment of Rs. 33,12,000/-, a sum of Rs.17,09,800/- itself was the receipt indicated on the same set of papers, therefore, as per our considered view, amount paid by the assessee in excess of what he has received, can be treated as his unexplained income. Thus, the maximum addition which can be made works out to be Rs. 16,02,200/- (Rs.33,12,000/- (-) Rs. 17,09,800/-). Accordingly, the Assessing Officer is directed to restrict the addition to the extent of Rs. 16,02,200/- in place of Rs. 50,91,800/-.
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13. The last ground pertains to not allowing deduction claimed u/s 24 at 30% of the house property rental receipt at Rs.33,000/- by treating the same as income from other sources and consequent addition to the total income. The crux of arguments on behalf of the assessee is that the rental income from various properties situated at Safia College Road, Jawahar Chowk, Jumerati, Bhopal was claimed to have been received. These properties were claimed to have been purchased on 31.1.1987 and permission for construction of the same was obtained on 28.12.2003. The crux of arguments is that the permission certificate (Government document) and affidavit of tenant were not accepted by the learned CIT(A) being additional evidence and especially when these were not produced before the Assessing Officer. On questioning from the Bench as to why these documents were not produced during the assessment proceedings, it was explained that since the tenants were evicted, could not be traced during the assessment stage. It was pleaded that the affidavits were filed. After considering the rival submissions, we are of the view that the purchase deeds, construction permission certificate and the affidavit of tenants clearly indicate that the assessee was having rental income. The 19 rental income shown in the A.Y. 2001-02 is Rs.33,000/-, 43,200/- (A.Y. 2002-03), Rs. 46,800/- (A.Y. 2003-04), Rs. 50,400/- (A.Y. 2004-05), Rs. 21,600/- (A.Ys. 2005-06 to 2007-08), therefore, deserves to be considered in the light of these materials which have been brought on record by the assessee. If the learned CIT(A) had any doubt, nothing prevented him to get the same verified either from the office of the Assessing Officer or by any other means to his satisfaction but that was not done. Even the Assessing Officer has not doubted or disputed the existence of buildings claimed to be rented out by the assessee.
14. We have considered the rival contentions and find from record that the assessee is in receipt of rental income from the following :-
Particulars A.Y. A.Y. A.Y. A.Y. A.Y.
2001-02 2002-03 2003-04 2004-05 2006-07
Nazar Ganj, 36,000 39,600 43,200 48,000 54,000
Laxmi Talkies,
Bhopal, Mohd.
Naved
-do- 9,600 9,600 9,600 9,600 9,600
Mohd. Nawab
Jawahar Chowk, 60,000 66,000 72,000 78,000 84,000
Jumerati,Bhopal
20
Mr.Baghmat
Pawaia
-do- 60,000 66,000 72.00 78,000 84,000
Pawan
Transport Co.
Total 1,65,800 1,81,200 1,96,800 2,13,600 2,31,600
The property at Jumerati was purchased in the year 1987 and permission for construction was obtained on 28.12.1993. Affidavits of tenants confirming payment of rent to the assessee were being submitted before the CIT(A) . These are in confirmations of assessee's plea already taken before the ld. A.O. These affidavits could not be presented before the ld. A.O. as during the assessment proceedings the tenants were evicted. The tenants could be located after efforts.
15. The additional evidence so filed by the assessee before the CIT(A) is necessary for proper appreciation of issue in appeal and for the cause of substantial justice. Such evidence may ultimately turn out to the benefit of either tax payer or the department. We also find that the assessee was also allowed very short time by the Assessing Officer to comply with a number of inquiries, submission of documents and production of various persons before the 21 Assessing Officer. The powers of the CIT(A) are co-terminus to admit fresh evidence with the powers of the Assessing Officer and these powers are stressed repeatedly by the Hon'ble M.P. High Court as well as the Hon'ble Supreme Court. For this purpose, reliance may be placed on -
1. CIT vs. Kanpur Coal Syndicate; 53 ITR 225(SC)
2. Indermal Natwarlal vs. ITO; 166 ITR 484 (MP)
3. ITO vs. Jute Corpn. of India Ltd.; 187 ITR 688 (SC)
4. CIT vs. Nirbhayram Daluram; 224 ITR 610 (SC) If the additional evidence is material in deciding the controversy and goes to the root of the matter, the same has to be accepeted as laid down in the case of CIT vs. Shiya Dawoodi Bohra Samaj (2008) 10ITJ 502 (MP) and CIT vs. Ku. Satya Setia; 143 ITR 486
16. There is also no law that the additional evidence should not be admitted. Only it has to be seen that the right of other party to rebut the same should not be violated as laid down by the Hon'ble M.P. High Court in the case of CIT vs. Sonibai Wahabbhai; 232 ITR
900.
17. In view of the above discussion, the issue with regard to allowing the deduction u/s 24 in respect of the income shown 22 under the head 'house property' is restored to the file of the Assessing Officer for deciding afresh after considering the additional evidence filed by the assessee before the CIT(A). The Assessing Officer is also at liberty to call for any other evidence which he thinks fit for deciding the issue and the assessee is also at liberty to file any evidence before him for proper adjudication and to substantiate his claim of rental income. We direct accordingly.
18. Now we shall take up the appeals in the case of Mohd. Shafique, following grounds have been raised :-
"01. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in not accepting the documents filed before him as the additional evidence.
02. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in confirming the finding of the assessing officer that there is no agricultural income of the appellant and in confirming the addition of Rs. 50,624/- as income from other sources in the hands of the appellant.
03. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in confirming the disallowance of deduction of 30% claimed by the appellant u/s. 24 of the IT Act against the rental receipts shown by the appellant and in treating the whole rental receipts as income from other sources of the appellant.
04. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in not accepting the income from Truck operation as returned by the appellant u/s. 44AE of the IT Act and in confirming the addition of Rs. 16,658/- by applying the N.P. rate of 8% on the Gross receipts as done by the assessing officer.
05. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in confirming the calculation of the long term capital gain at Rs. 13,69,402/- for each of the three minor sons in place of Rs. 77,849/- shown by the appellant and in confirming the addition of Rs. 38,74,659/- towards share of three minor sons in the capital gain.
06. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in not applying the provisions of sec. 112 of the IT Act on shares of long term capital gain included in the hands of the appellant and in charging the tax on the normal rate in place of 20% applicable in the case of the appellant.23
07. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in not accepting the opening cash balance of Rs. 5,00,000/- as on 01-04- 2000 and in confirming addition of Rs. 5,00,000/- in the hands of the appellant
08. On the facts and in the circumstances of the case, the Id. CIT{A) was not justified in confirming the act of the assessing officer of not giving the credit for TOS , while assessing the income of the appellant on the basis of gross receipts from different govt. undertakings."
19. So far as ground no. 1 is concerned, it is evident from record that the assessee filed some addition evidences before the CIT(A) but he did not accept the same on the ground that the assessee did not file the same before the learned Assessing Officer. In our view, if this was the ground for not accepting the additional evidences, it was open for the learned CIT(A) to have accepted the same and called for remand report from the Assessing Officer on the same but this course of action was not taken by the learned CIT(A). We, however, after considering the arguments advanced by the parties, accept these evidences for hearing.
20. So far as ground no. 2 is concerned, it is apparent from record that the assessee declared agricultural income for the first time which was declined by the Assessing Officer and the agricultural income was assessed as income from other sources. The learned CIT(A) also confirmed the action of the Assessing Officer on the plea 24 that no evidence in support of the agricultural income was submitted before him.
21. Before us, the learned counsel for the assessee submitted a copy of khasra in support of the claim of agricultural income. The learned CIT DR supported the orders of the authorities below.
22. After considering the rival submissions of the parties, we are of the view that since Khasra, which is a revenue record, was produced, Assessing Officer cannot disbelieve the same without controverting the entries made therein. As such, the authorities below were not justified in rejecting the claim of the assessee. In terms of our discussion on this issue in case of Mohd. Atique, the matter is restored to the Assessing Officer with the same direction.
23. So far as ground no. 3 is concerned, a similar issue has been dealt with by us in para 15, 16 & 17 above in the case of Mohd. Atique and since the facts are the same, following the reasoning given therein, we restore the matter back to the Assessing Officer for deciding afresh the assessee's claim of deduction u/s 24 in respect of income from house property shown by him. Accordingly, this ground is allowed for statistical purposes. 25
24. So far as ground no. 4 is concerned, it is noted from record that the assessee declared income from business of truck u/s 44AE of the Act. The Assessing Officer rejected the claim of the assessee on the plea that the assessee has not maintained any books of accounts, vouchers and bills, etc. He, therefore, estimated the profit @ 8% of the total receipts and made the addition of Rs. 16,658/-. On appeal also the assessee did not find any favour from the learned CIT(A) as in the opinion of the learned CIT(A) since the assessee is not the truck operator but has done the business of transportation under the contract, the case of the assessee was not covered u/s 44AE of the Act.
25. Before us, the learned counsel for the assessee submitted that though the trucks were run on contract basis but they were exclusively in possession of the assessee and the assessee was deriving income therefrom, the case of the assessee is clearly covered u/s 44AE of the Act. On the other hand, the learned CIT DR supported the orders of the authorities below with the submission that since the assessee is not the truck owner, no deduction u/s 44AE could be granted to him.
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26. Considering the rival submissions in the guise of the facts obtaining in this case, we find that the Assessing Officer has made additions by estimating net profit at 8% on the income received from operation of trucks. The assessee has claimed computation of income from truck operation u/s 44AE which was declined by the Assessing Officer. The facts of the issue in brief are that the appellant has declared his income from business of truck operation u/s 44AE. The Assessing Officer observed that the assessee has taken trucks on hire from Anand Transport Company, Bombay Transport Company and Ekta Transport with a purpose to execute contract for transport of goods. The Assessing Officer held that section 44AE is not applicable in the assessee's case since the assessee had not maintained any books of accounts and not produced bills and vouchers of expenses. He estimated profit @ 8% of the total receipt. After giving these findings he made the following additions in various years :-
A.Y. Amount of addition
(in Rs.)
2001-02 16658
2002-03
2003-04 20785
2004-05 437456
2006-07
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27. By the impugned order, the CIT(A) confirmed the Assessing Officer's action after having made the following observations -
" On examination it is found that the appellant is not a operator of goods carriage. Provisions of section 44AE apply only in case where an operator of goods carriage owns less than 10 goods carriage. The appellant is not a truck operator but has done the business of transportation under contract. He has taken trucks from third parties for this purpose. This shows that appellant's case is not covered by section 44AE. The appellant have not maintained books of A/c and bills and vouchers. In these circumstances the A.O. is justified to reject the book result and estimate the profit. The estimate of profit is done @ 8% which is also fair. In view of the above, the following additions are confirmed :-
A.Y. Amount of
addition (in Rs.)
2001-02 16658
2002-03
2003-04 20785
2004-05 437456
2006-07
2007-08
28. It was pleaded by the learned counsel for the assessee that the assessee was having two trucks, therefore, provisions of section 44AE are applicable benefit of which was not given by the lower authorities.28
29. We have considered the rival submissions and find from record that during the course of search various deposits were found in the bank account, which were explained by the assessee as out of business of truck operation. In the A.Y. 2004-05 a total sum of Rs. 1,45,83,387/- was found deposited in two bank accounts of the assessee. Such huge deposit cannot be said to be out of income of two trucks only. However, a categorical finding has been recorded by the learned CIT(A) to the effect that the assessee was a truck operator, doing business of transportation under contract by hiring trucks from others. Since the assessee was not owning the trucks of his own, but was hiring trucks from outside parties, therefore, provisions of section 44AE were not applicable. Now we shall deliberate on the reasonableness of profit rate applied by the Assessing Officer at 8%. The profit rate of 8% is applicable in case of contract receipts but here is a case of transportation. From the net profit declared on truck operation, we find that the assessee has shown net profit rate of 3.8% and 5.1% in the A.Ys. 2003-04 and 2004-05, respectively. In the A.Y. 2004-05 total receipts from transport business increased to Rs. 1,45,83,387/- as compared to transport receipt for the immediately preceding assessment year 29 2003-04 amounting to Rs. 32,47,740/-. In the A.Y. 2003-04, the assessee had shown net profit rate of 3.8% on the transport receipt of Rs. 32.47 lacs whereas in the A.Y. 2004-05, the assessee had shown transport receipt of Rs.145.83 lacs and NP rate of 5.1%.
Thus, it is clear that even after increase in transport receipts by more than four times, the assessee has shown better NP rate of 5.1% in place of 3.8% in the immediately preceding assessment year. Keeping in view the nature of the assessee's business, more than four times increase in turnover/receipts vis-à-vis better net profit rate shown by the assessee as compared to immediately preceding year, we think it appropriate to apply NP rate of 5.5% in the A.Y. 2004-05. Accordingly, the Assessing Officer is directed to re-work out the profit from transport business in the A.Y. 2004-05 by applying NP rate of 5.5% in place of NP rate of 8% applied by him. We direct accordingly.
30. So far as ground nos. 5 and 6 are concerned, it is noted from record that the assessee was co-owner of land admeasuring 25,765 sq.ft. situated at Ahmedabad Palace, Kohefiza. Bhopal, which was inherited by the assessee and co-partners. The same was sold 30 during the year under consideration and the assessee declared long term capital gains by claiming the market value as on 1.4.1981 at Rs. 100/- per sq.ft. However, the Assessing Officer, on the basis of sale value of some other land, he applied the fair market value as on 1.4.1981 at Rs. 17/- per sq.ft. On the appeal, the learned CIT(A) confirmed the action of the Assessing Officer.
31. Before us, the learned counsel for the assessee submitted that the assessee and his co-owners' land was on the main road leading to Ahmedabad Palace of Nawab and just opposite the flag house which was against the house of Nawab while the transaction cited by the Assessing Officer relates to the small piece of land far behind from the main road with a small service lane.
32. It was further contended by the learned counsel for the assessee that the assessee's plot was situated at most advantageous position on the main road, therefore, the Assessing Officer was not justified in comparing the value fetched by this transaction with the value of a plot which was not located on the main road but was on the small service lane and was not having advantageous position as that of the assessee. He reiterated that in 31 such circumstances, the most reliable method is to apply the cost inflation index backwards :-Index in FY 2005-06 497
Index in FY 1980-81(Actually FY 81-83) 100, say Calculation 1,15,35,000x100 497 = 23,20,925 Cost per sqft as on 1.4.1981 = 23,20,925 23,070 = 100.6 per sq.ft.
The cost of acquisition during FY 1981-82 taken by the assessee is correct and may kindly be so upheld. The addition may kindly be deleted.
33. On the other hand, the learned DR relied on the orders of the lower authorities and contended that the Assessing Officer was justified in adopting the fair market value as on 1.4.1981 by comparing the assessee's transaction with the sale transaction dated 23.10.1982 for plot of 1410 sq.ft. giving rise to the rate of Rs. 17.73 per sq.ft.
32
34. After considering the rival submissions, we find that the assessee was co-owner of land admeasuring 25765 sq.ft. situated at Ahmedabad Palace, Kohefiza. Bhopal. This property was acquired by the appellant and co-partners as inherited property It was sold during the year. While working out long term capital gain on sale of this land, the assessee claimed the fair market value as on 1.4.81 at Rs 100 per sq.ft. The A.O. adopted the fair market value as on 1.4.81 at Rs.17 per sq. ft. The Assessing Officer has adopted market value as on 1.4.1981 at Rs. 17/- per sq.ft. on the basis of sale transaction dated 23.10.1982 for the plot of 1410 sq.ft. sold for consideration of Rs. 25,000/- which resulted in rate of Rs. 17.73 per sq. ft. and accordingly worked out the long term capital gains at Rs. 95,85,816/- and the share of the assessee was worked out at Rs. 13,69,402/-. As the assessee has shown long term capital gains at Rs. 77,849/-, the Assessing Officer made addition of Rs. 12,91,553/-.
35. After applying rate of Rs. 17/- per sq. ft., the Assessing Officer has computed the addition on account of long term capital gains in the hands of 7 co-owners as under :-
33
1 Plot/area (in sq.ft.) 23.70 2 Cost of acquisition per sq.ft. as 17.00 on 1.4.1981 3 Total cost of acquisition as on 292.190 1.4.81 4 Year of Transfer 2005-06 5 Indexedncost of acquisition 1949184 6 Market value on the date of 500 transfer per sq.ft.
7 Total sale consideration 11535000 8 Capital gain 9585816 Share of capital gain of co-owners 1 Mohd Shakeel 1369402 2 Mohd Yusuf 1369402 3 Mohd. Umar 1369402 4 Mohd. Rafique 1369402 5 Mohd. Danish 1369402 6 Mohd. Rumman 1369402 7 Mohd. Shayan 1369402 Total 9585816 Therefore, as per above table, following additions were made in the relevant assessment year i.e. A.Y. 2006-07 as long term capital gain :-34
Name of persons Actual Capital gain Addition on capital shown account of gains LTCG 1 Mohd. Shakeel 1369402 77849 1291553 2 Mohd. Yusuf 1369402 77849 1291553 3 Mohd. Umar 1369402 77849 1291553 4 Mohd. Rafique 1369402 77849 1291553 5 Mohd. Danish 1369402 77849 1291553 6 Mohd. Rumman 1369402 77849 1291553 7 Mohd. Shayan 1369402 77849 1291553 Mohd. Danish, Mohd. Rumman & Mohd. Shayan are minors and father of these three minors is Mohd. Shafique.
36. In the case of Mohd. Danish, Mohd. Rumman & Mohd. Shayan, assessee submitted that all of the above are minors and having no income. Therefore, income of these minors i.e. Rs. 38,74,659/- (1291553 x 3) will be clubbed as income of their father Shri Mohd. Shafique.
37. The submissions of the assessee before the learned CIT(A) were as under :-
" The minor son's of the appellant Mohd. Danish, Mohd. Ruman and Mohd. Shayan and their 4 co-owners owned the plot at 23070 sq. ft. which they had received in Hiba from the appellant Sh. Mohd. Shafique. All the 35 co-owners estimated the market value as on 1.4.1981 at Rs. 100/- and worked out the share of long capital gain at Rs. 77849/- as the property was sold in theA.Y. 2006-07 for the considerationof Rs. 1,15,35,000/- which worked out to Rs. 500 per sq. ft. The ld. A.O. adopted the market value as on 1.4.1981 at Rs. 17/- on the basis of the sale transasction dated 23.10.1982 for the plot of 1410 sq. ft @ 17.73 sq.ft. i.e. for the consideration of Rs. 25,000/- and accordingly worked out the long term capkital gainat Rs. 95,85,816/- and the share of the minor son's of the appellant is Rs. 41,08,206/-. Since the appellant has shown the long term capital gain at Rs. 2,33,547/- the Assessing Officer made the addition of Rs. 38,74,659/- and taxed the same as in normal income. In this connection, it is submitted that the land of the appellant and his co owners was on the main road leading to Ahmedabad Palace of Nawab and just opposite of the flat house which was against the house of Nawab. While the transaction cited by theA.O. relates to the small patch of land far behind from the main road with a small service of land. In view of the above, both the transactions cannot be treated as identical and the market value as estimated by the A.O. at Rs. 17/- per sq.ft. in the year 1981 is too low. It is requested therefore the market value at Rs. 100 per sq. ft. be kindly accepted or the same be kindly increased suitably from Rs. 17/- per sq.ft. and the share of long term capital gain be kindly worked out and the addition of Rs. 12,91,553/- be kindly suitably reduced.
It is submitted that the A.O. has levied the income tax on the long term capital gain at the normal rate. But the same should be @ 20% as per provisions of sec.112 of the IT Act. The A.O. be kindly directed accordingly."
38. The action of the Assessing Officer was confirmed by the CIT(A) against which the assessee is in appeal before us. 36
39. We have considered the rival contentions, carefully gone through the orders of the authorities below and find from record that seven co-owners owned the plot of 23,070 sq. ft which they received in Hiba (gift) from their father, Mohd. Shafique. In the A.Y. 2006-07 this plot was sold for a consideration of Rs. 1,15,35,000/- which worked out to Rs. 500/- per sq. ft. While working out the long term capital gains, the assessee has estimated fair market value as on 1.4.1981 at Rs. 100/- and worked out the share of long term capital gains at Rs. 77,849/- since the property was sold in the A.Y. 2006-07. However, the Assessing Officer did not agree with the fair market value arrived at by the assessee as on 1.4.1981 and after comparing transaction with the sale transaction dated 23.10.1982 in respect of a plot of 1410 sq. ft. @ Rs. 17.73 per sq. ft. i.e. for consideration of Rs. 25,000/-, worked out the long term capital gain at Rs. 95,85,816/- wherein the assessee was having his share of Rs. 13,69,402/-. Thus, we find that as on 1.4.1981 the assessee has taken value of plot at Rs. 100/- per sq. ft. whereas the Assessing Officer has taken it at Rs. 17/- per sq.ft. by referring to an example which is not at all comparable. The comparable case taken by the Assessing Officer is of one Shri Gyas Hussal Saraf. 37 The plot was measuring 1410 sq. ft. only whereas the assessee's plot was of 23070 sq. ft. We also find that the assessee's plot was located by the side of Ahmedabad Palace, residence of erstwhile rural of Bhopal Estate whereas the comparable case taken by the Assessing Officer was far behind the palace. Furthermore, the assessee's plot was on the main road whereas comparable case taken by the Assessing Officer was far away from the main road served with small service lane. The assessee's land was just opposite the flag house whereas the comparable case taken by the Assessing Officer was not at all concerned with this. There is no dispute to the fact that the value of land is always determined as per its location whether on the main road or on service road, near to the land-marks or away from land-marks. Thus, we find that comparison made by the Assessing Officer was not proper and he has taken the value of plot which was situated at a very poor position as discussed hereinabove. Keeping in view the location of the assessee's plot which was on the main road, just opposite the flag house and by the side of Ahmedabad Palace residence of erstwhile rural of Bhopal Estate, the fair market value of this plot taken by the assessee at Rs. 100/- per sq. ft. as on 1.4.1981 was 38 quite justified. The application of method of cost inflation index backwards also supports the rate of Rs. 100/- per sq. ft. taken by the assessee as on 1.4.1981. Accordingly, the addition made by the Assessing Officer is hereby deleted.
40. With regard to addition of Rs. 5 lacs on account of opening balance claimed during the A.Y. 2001-02, the facts are that during the assessment proceedings the appellant submitted a cash flow statement in which the opening balance as on 1.4.2000 was shown at Rs. 5,00,000/-. The Assessing Officer asked the assessee to submit evidence in support of the same. In response the assessee submitted balance sheet and profit and loss of earlier years. The Assessing Officer was of the view that these balance sheets\and P&L account were prepared only after search with the purpose to explain some unexplained investments. Hence, the Assessing Officer rejected the claim of opening balance of Rs.5,00,000/- and made an addition of same amount to the total income.
41. By the impugned order, the CIT(A) confirmed the Assessing Officer's action and the assessee is in appeal before us. 39
42. We have considered the rival contentions, carefully gone through the material available on record and find that the addition was made in respect of opening cash balance of Rs. 5 lacs shown by the assessee as on 1.4.2001. The assessee has shown opening cash balance of Rs. 5 lacs for the year ending on 31.3.2001 which is reflectred in the receipts and payments account which is already on record. The assessee had income from rent, truck plying and agriculture from past more than 40 years. Earlier he was having income from transport business. He was obtaining contracts from the Government but he believed that since the tax has been recovered as TDS, he did not file his IT returns in the earlier years. However, he had sufficient income in the earlier years as well.
43. As discussed hereinabove, the assessee had agricultural land since last 40 years and also having substantial income from operation of trucks. The assessee was also having income from house property since last many years. Even though the Assessing Officer has not accepted the income from house property but the same was assessed as income from other sources by declining 40 deduction claimed u/s 24 but the fact remains that the assessee has declared income which was assessed by the Assessing Officer under different head. All these facts indicate that the assessee could have cash in hand of Rs. 5 lacs as on 1.4.2001. Accordingly, the Assessing Officer is directed to delete the addition of Rs. 5 lacs shown as opening cash balance.
44. So far as ground no. 8 is concerned, it is noted from record that the Assessing Officer did not give credit for pre-p-aid taxes and TDS against the tax payable. After going through the facts of the case, we are of the view that it is mandatory to give credit for pre- paid taxes and TDS against the tax payable and direct the Assessing Officer to do so after verifying the factual position.
45. In the case of Mohd. Yusuf, the Revenue has taken the following common ground for the A.Ys. 2002-03, 2003-04 and 2004-05 :-
"On the facts and in the circumstances of the case, the CIT(Appeal) has erred in deleting the substantive addition of Rs.66,24,490/- (A.Y. 2002-03), Rs.
26,86,989/- (A.Y. 2003-04), Rs. 6,58,332/- (A.Y. 2004-
05) made by the Assessing Officer."41
46. The brief facts of the case are that the assessee was a working partner of M/s Anand Transport Company. A search and seizure operation u/s 132(1) of the Act was carried out in the case of Mohd. Shafique group of cases. The assessee is the son of Mohd. Shafique. During the search and seizure operation u/s 132(1) documents relating to the assessee were found. After recording reasons, notice u/s 153C was issued. Again a notice u/s 142(1) read with section 153C of the Act was issued. The return of income was filed u/s 153C. The assessee, in response to notice u/s 153C, appeared before the Assessing Officer wherein he was asked to furnish certain details as given in the questionnaire u/s 142(1) of the Act. These details were submitted by the assessee. However, the Assessing Officer did not accept the same on the ground that this is the first year of filing of the return and before this year, the assessee had no income. The Assessing Officer held that since the only known person from the partners is Mohd. Yusuf, who was a working partner, the addition as discussed in the order of Anand Transport for the relevant assessment year was added to the total 42 income of the assessee on substantive basis whereas the addition was made on protective basis in the case of Anand Transport. On appeal, the learned CIT(A) observed that as held by him in the case of M/s Anand Transport Company, the income of the firm was to be assessed in the hands of the firm on substantive basis. He, therefore, deleted the additions made in the hands of the assessee on substantive basis. Against this finding of the learned CI(A), the Revenue is in appeal before us.
47. We have considered the rival submissions and are of the view that simply because the assessee was a working partner in M/s Anand Transport Company, it cannot be held that income earned by partnership firm M/s Anand Transport Company belonged to the assessee. No other material or evidence has been brought on record by the Assessing Officer for treating the income earned by firm as income of assessee in his individual capacity. Without bringing sufficient evidence on record, no addition could be made in the hands of the assessee on substantive basis. As the CIT(A) has confirmed the addition on substantive basis in the 43 hands of partnership firm M/s Anand Transport Company, we, therefore, confirm the order of the learned CIT(A) and accordingly dismiss this common ground of appeal for all the assessment years involved.
48. Finally, the appeals of the assessee are allowed in part, in terms indicated hereinabove whereas appeals of the Revenue are dismissed.
This order was pronounced on 31.1.2013
Sd/- sd/-
(R.C.SHARMA) (JOGINDER SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 31.1.2013
Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File Dn/-3030.11 2828 2829.1 6,7,8.10.\2 44