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The aforesaid appeals have been filed by the assessee against the impugned order dated 23/05/2019 & 21/01/2019, passed by the CIT(A)-

49, Mumbai, for the assessment year 2011-12 & 2012-13.

Nitta Jatiya (Alias Nita Jatia)

2. The only issue raised by the assessee is against the order of ld. CIT(A) confirming the disallowance of Rs.10,30,694/- as made by the AO @20% of agriculture income by treating the same as unexplained cash credit.

3. Facts in brief are that the assessee filed return of income on 25/07/2011 by declaring income of Rs.3,17,51,940/- which was processed u/s.143(1) of the Act. During the year, the assessee has shown agricultural income of Rs.51,53,470/- in the return of income from sale of mango and various other vegetables. The assessee owned land measuring 913.3 guntha equal to 22.82 acres in Panvel, District Raigad. The AO found during the course of assessment proceedings that part of the land was not fit for agriculture operation by referring to 7/12 extracts downloaded from official Maharashtra Government website. Accordingly, notice u/s.133(6) of the Act was issued to Director ISRO, SAC Ahmadabad, Gujarat to provide photographic images of the said lands from 01/04/2013 to 31/03/2016 which was given by ISRO, which states that only agricultural operation was carried out on 30% of the land where as the remaining land was not used for any agricultural activities and consequently , the case of the assessee was reopened u/s.147 of the Act by issuing notice u/s.148 dated 20/03/2018. During the assessment proceedings, AO noticed that assessee has shown agriculture income of Rs. 51,53,470/- and after claiming agricultural expenses , the net income was shown as 46,77,091/- which was confronted to the assessee along with the various documents collected by the AO from ISRO, Ahmedabad and accordingly, show-cause notice was issued on 22/12/2018 as to why agricultural income of Rs.51,53,470/- should not be treated as unexplained cash credit which was duly replied by the assessee by Nitta Jatiya (Alias Nita Jatia) submitting that the land was actually used for agricultural purposes and there are huge plantation of mango trees, however, the AO completely brushed aside the submissions of the assessee and relied on the report of Ward Inspector, ISRO in Ahmedabad and came to a conclusion that the land owned by the assessee was not having the agricultural activities on it and income of the assessee is coming from natural activity also which cannot be considered as agricultural activity by the assessee and accordingly, 20% of the gross agricultural income was disallowed and added to the income as unexplained cash credit which worked out to Rs.10,30,694/- by framing assessment u/s.147 r.w.s. 143(3) of the Act.

4. In the appellate proceedings, the ld. CIT(A) dismissed the appeal of the assessee after taking into consideration the contentions and various arguments made during the course of appellate proceedings by observing and holding as under:-

5.2. The submissions of the Learned Counsel have been carefully considered. It is the contention of the Learned Counsel that the sales offered by the appellant are fully supported by bills, challans etc. but there is no mention of the same in the assessment order, nor have they been produced during the appellate proceedings. It is the contention of the Learned Counsel that the onus is on the AO to prove that the assesses has unexplained cash credit which has not been discharged by the AO. But it is the assessee who has shown agricultural income to the tune of Rs.51,53,470/- and it is for her to prove that the same has been generated from agriculture. However, this is not proved. Then, it has to be presumed that it is the unexplained cash credit of the assessee. The Learned Counsel further relied on the order of the CIT(A) in the appellant's own case for AY 2014-15 wherein the AO has made an addition of 20% of gross agricultural receipts as unexplained expenditure u/s. 69C of the Act and the appeal was allowed by the CIT(A). The addition was made by the AO as the assessee had claimed a mere 2% of gross agricultural receipts as expenditure which is meager and negligible. According to the AO, the expenditure incurred to earn the agricultural income would be in the range of 20-30% and therefore made an addition of 20% as unexplained expenditure incurred to earn the agricultural income. The Ld. CIT(A) has allowed the appeal of the assessee on the ground that the AO had not gathered any evidences to Nitta Jatiya (Alias Nita Jatia) establish the incurrence of expenditure. The receipts of the assessee were not questioned. The AO did not find any evidences of incurrence of expenditure by the assessee and therefore the case fails as when there is no incurrence of expenditure there is no question of source of such expenditure. However, in the instant case, it is not the unexplained expenditure which has been brought to tax but is the unexplained cash credit. In fact, the claim of meager expenses by the assessee supports the contention of the AO in this year as it is probably a case of inflation of agricultural income. The assessee, in order to show high agricultural income, may be resorting to suppression of expenses. Incurring 2% expenses is highly improbable and unrealistic and earning Rs.51.53 lacs of agricultural income from 10.3, acres of land is also quite high. The assessee in her submissions has refuted the reports of the inspector that they do not carry the departmental seal and they are not signed by any witnesses. Other than refuting the reports, the assessee has not furnished any evidence for the crops grown and the agricultural income earned. It is for the assessee to substantiate as to how it is possible to earn Rs.51.53 lacs from 10.3 acres of land. The Learned Counsel for the appellant also submitted that some of the lands in the images provided by ISRO do not belong to the assessee. Be that as it may, it is for the assessee to prove not only the ownership of land but also the agricultural activity carried on in that land, the sales receipts for the produce and also the expenditure. In this case, there are two unrealistic/impractical features which are incurrence of expenditure of a mere 2% and unbelievably high yield of agricultural income from the land holding i.e. Rs.51.53 lacs from 10.3 acres. Unlike in the assessment year 2014-15, the AO for AY 2011-12 and 2012-13 had done enquiries and investigation and on the basis of the same had arrived at a reasonable addition of 20% of the agricultural income, The AO did not speculate to arrive at the addition but has based the addition on a sound footing on the basis of enquiries and investigation. The inspector's enquiry report, google earth images and the information provided by ISRO, Ahmedabad, all raise the suspicion about the extent of agricultural activity of the assessee. In such circumstances, it is for the assessee to substantiate that she had actually received Rs.51,53,470/- from the agricultural activity carried out by her. But unfortunately the assessee could not prove the same, either at the assessment level or during the appellate proceedings. The ownership of land by the assessee is not in dispute and certain agricultural activity is also evidenced. But if the agricultural activity has yielded Rs.51.53 lacs is not established. In view of the facts and circumstances discussed above, the disallowance of 20% of gross agricultural receipts is fair and reasonable and the same is upheld. This ground of appeal is DISMISSED.

5. After hearing the rival parties, in this case, we notice that undisputedly, the assessee is the owner of the land measuring 22.82 Nitta Jatiya (Alias Nita Jatia) acres in Panvel, District Raigad. We note that the 7/12 extracts downloaded from the official website of Government of Maharashtra has categorized 70% of the land as not fit for agricultural operation. However, it is also undisputed that there were substantial plantations of mango trees and also seasonable vegetables being grown in the said land. The only objection of the AO is that the assessee is having a farmhouse and income was received from the natural activity which is not agricultural activity as per the provisions of the Act and AO has merely acted on the basis of surmises and conjuncture in estimating 20% of the total receipt as unexplained cash credit without carrying out any further verification from the buyer/purchasers of these agricultural products/produce. The ld. CIT(A) affirmed the order of the AO on the ground that the assessee has incurred a very meager expenses of 2% on agricultural expenses and thus sustained the addition as stated hereinabove. In this case, we note that both of the authorities have failed to discharge their duties properly as none of the parties have brought any substantial material on record to prove that assessee has incurred expenses over and above what has been stated by the assessee. The AO has made a ground that some income received by the assessee was in the nature of non-agriculture and substantial too in nature, whereas ld. CIT(A) has gone on a different footing that assessee has incurred expenses to earn the said income which seems to be understated . Under these circumstances, we are not in a position to sustain the order of the ld. CIT(A) as the same appeared to be a guess work to sustain the addition made by the AO and therefore, we are inclined to set aside the order of first appellate authority and direct the AO to delete the addition of Rs. 10,30,694/-. Accordingly, the appeal of the assessee is allowed.