Shri Arvindbhai Chhotabhai Patel, Dist.Anand v. The Income tax Officer,Ward-3(4),, Petlad

ITA 1070/AHD/2008 | 1998-1999
Pronouncement Date: 06-08-2010 | Result: Dismissed

Appeal Details

RSA Number 107020514 RSA 2008
Assessee PAN SEDIN1994A
Bench Ahmedabad
Appeal Number ITA 1070/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 11 day(s)
Appellant Shri Arvindbhai Chhotabhai Patel, Dist.Anand
Respondent The Income tax Officer,Ward-3(4),, Petlad
Appeal Type Income Tax Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 06-08-2010
Date Of Final Hearing 27-07-2010
Next Hearing Date 27-07-2010
Assessment Year 1998-1999
Appeal Filed On 25-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. N. PAHUJA AM) ITA NO.1070/AHD/2008 A. Y.: 1998-99 ARVINDBHAI CHHOTABHAI PATEL AT & PO BAMANGARO TAL ANKLAV DIST. ANAND VS THE INCOME TAX OFFICER WARD -3 (4) PETLAD PA NO. -- (APPELLANT) (RESPONDENT) APPELLANT BY SHRI JAIMINE GANDHI AR RESPONDENT BY SHRI K. M. MAHESH DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I BARODA DATED 17- 12-2007 FOR ASSESSMENT YEAR 1998-99 ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING T HE ADDITION ON ACCOUNT OF NOTIONAL INCOME OF RS.1 39 311/- BEING 18% OF RS.7 73 948/-. 2. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E TREATMENT OF AGRICULTURAL INCOME OF RS.50 000/- AS NON AGRICULTURAL INCOME. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. 3. BRIEFLY THE FACTS OF THE CASE ON THE ABOVE GROU NDS ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAD NOT FILED RETURN OF INCOME WHILE IT WAS GATHERED THAT THE ASSESSEE DECLARED RS.8 23 314/- U NDER VDIS SCHEME INCLUDING RS.49 366/- BEING COST OF PLOT OF LAND AT VILLAGE AKOTA AND DEPOSITS WITH PRIVATE PARTIES AS WELL AS BARODA DIS TRICT INDUSTRIES CO- OPERATIVE BANK. IN RESPONSE TO NOTICE U/S 148 OF TH E IT ACT THE ASSESSEE ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 2 FILED RETURN OF INCOME DECLARING AGRICULTURAL INCOM E OF RS.50 000/- AND INCOME FROM OTHER SOURCES AT RS.300/-. THE AO CALLE D FOR THE COPIES OF THE ACCOUNTS IN RESPECT OF THE DEPOSITS WITH PRIVAT E PARTIES AND PROOF OF DEPOSITS WITH THE BANK AND EVIDENCE IN SUPPORT TO A GRICULTURAL INCOME. FROM THE COPIES OF THE ACCOUNTS OF THE PRIVATE PART IES IT WAS NOTED BY THE AO THAT THE SAID ACCOUNTS HAD BEEN CLOSED IN 19 94 AND 1995. THE ASSESSEE EXPLAINED THAT AFTER THE CLOSURE OF THESE ACCOUNTS THE AMOUNTS RECEIVED FROM THE PARTIES HAD BEEN UTILIZED BY HIM FOR HIS PERSONAL AS WELL AS FAMILY PURPOSES. HE FILED AN AFFIDAVIT TO T HIS EFFECT. HOWEVER NO OTHER EVIDENCE TO JUSTIFY THE SAID CLAIM WAS FURNIS HED. IN RESPECT OF AGRICULTURAL INCOME HE FILED ABSTRACT OF 7/12 FORM BUT DID NOT PRODUCE ANY PURCHASE BILL OF VARIOUS IN-PUTS LIKE SEEDS FE RTILIZERS LABOUR CHARGES ETC. NOR ANY SALE BILLS FOR AGRICULTURAL PRODUCE. U NDER THESE CIRCUMSTANCES THE AO ESTIMATED THE INTEREST INCOME FROM SUCH AMOUNTS RECEIVED ON WITHDRAWAL OF DEPOSITS AMOUNTING TO RS. 7 73 948/- @ 18% BEING THE PREVAILING INTEREST RATE IN THE MARKET A T THAT TIME WHICH RESULTED INTO ADDITION OF RS.1 39 311/- AFTER ADJUS TING RS.300/- DECLARED BY THE ASSESSEE. FOR WANT OF ANY PURCHASE OR SALE B ILLS THE AO TREATED THE AGRICULTURAL INCOME OF RS.50 000/- AS NON-AGRIC ULTURAL INCOME AND ADDED TO THE TOTAL INCOME. 4. BOTH THE ADDITIONS WERE CHALLENGED BEFORE THE LE ARNED CIT(A) AND IT WAS SUBMITTED THAT INCOME TAX ACT PROVIDES FOR T AXING REAL INCOME AND NOT ANY NOTIONAL INCOME. IT WAS FURTHER SUBMITTED T HAT NO INTEREST HAD ACTUALLY BEEN RECEIVED DURING THE YEAR OR HAD BECOM E DUE DURING THE PERIOD. IT WAS SUBMITTED THAT THE AO HAS NOT BROUG HT AN IOTA OF PROOF THAT THE ASSESSEE HAD EARNED INTEREST INCOME. IT WA S FURTHER SUBMITTED THAT NO FURTHER ENQUIRY WAS MADE IN THE MATTER. THE REFORE THE ADDITION IS UNJUSTIFIED. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ACCOUNTS WERE CLOSED IN 1994 AND 1995 AND MONEY WAS AVAILABLE TO THE ASSESSEE. THE LEARNED CI T(A) NOTED THAT THERE ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 3 IS A DOUBT IN THE EXPLANATION OF THE ASSESSEE FOR UTILIZATION OF WHOLE OF THE AMOUNTS IN TWO YEARS PARTICULARLY WHEN THE ASSE SSEE IS PRIMARILY AN AGRICULTURIST AND HAVE AGRICULTURE INCOME. THE LEAR NED CIT(A) IN THE ABSENCE OF SUFFICIENT EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE DISMISSED T HE APPEAL OF THE ASSESSEE AS REGARDS INTEREST INCOME. THE LEARNED CIT(A) AS REGARDS AGRICULTURAL INCOME TREATING AS INCOME FROM OTHER SOURCES NOTED THAT POSSESSION OF AGRICULTURAL LAND HAS NO GROUND THAT THE SAID LAND HAS BEEN CULTIVATED AND EXPLOITED FOR AGRICULTURAL PURP OSES. IN THE ABSENCE OF ANY EVIDENCE OF SALE AND PURCHASE OF SEEDS AND PROD UCTS THE LEARNED CIT(A) DISMISSED THIS GROUND OF APPEAL OF THE ASSES SEE ALSO. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE FINDINGS OF THE AO ARE BASED ON PRESUMPTION ONLY AS REGARDS NOTIONA L INCOME WHICH CANNOT BE TAXED UNDER THE INCOME TAX ACT. HE HAS RE LIED UPON THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE C ASE OF B & A PLANTATIONS & INDUSTRIES LTD. VS CIT 117 TAXMAN 323 AND ORDER OF THE ITAT JODHPUR BENCH IN THE CASE OF ACIT VS LAXMI NAR AYAN MEHTA 76 TTJ 686 IN SUPPORT OF THE CONTENTION THAT NO ADDITI ON CAN BE MADE ON CHARGING NOTIONAL INTEREST. AS REGARDS AGRICULTURAL INCOME HE HAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS NOT DI SPUTED THAT THE ASSESSEE HAS AGRICULTURAL LAND. THE LEARNED CIT(A) ALSO ADMITTED THAT THE ASSESSEE IS PRIMARILY AN AGRICULTURISTS. THEREFORE THE ASSESSEE HAS NO OTHER SOURCE OF INCOME. THE AUTHORITIES BELOW WITHO UT BRINGING ANY EVIDENCE ON RECORD WERE NOT JUSTIFIED IN TREATING T HE AGRICULTURAL INCOME AS NON-AGRICULTURAL INCOME. 6. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE D ECLARED RS.8 23 314/- ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 4 UNDER VDIS SCHEME. THE AO ON VERIFICATION OF THE CO PIES OF THE ACCOUNTS OF THE PRIVATE PARTIES FOUND THAT THE ASSESSEE EARL IER INVESTED THE AMOUNTS WITH PRIVATE PARTIES AND THE SAID ACCOUNTS WERE CLOSED IN 1994 AND 1995. THE AO WANTED THE ASSESSEE TO FILE EXPLAN ATION AS TO WHETHER THESE AMOUNTS WERE DEPOSITED AFTER CLOSURE OF THE A BOVE ACCOUNTS. THE ASSESSEE FILED AFFIDAVIT TO THE EFFECT THAT THE AMO UNTS WITHDRAWN FROM PRIVATE PARTIES HAVE BEEN UTILIZED FOR PERSONAL AND FAMILY PURPOSES. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE AS SESSEE AND PRESUMED THAT THE ASSESSEE HAS MADE THE DEPOSITS WITH PRIVAT E PARTIES ETC. AND CALCULATED THE INTEREST ON THE AMOUNTS WITHDRAWN FR OM PRIVATE PARTIES AND CHARGED NOTIONAL INTEREST UPON THE SAME. HONBL E GAUHATI HIGH COURT IN THE CASE OF B & A PLANTATIONS & INDUSTRIES LTD. 242 ITR 22 HELD THAT THERE IS NO PROVISION IN THE INCOME TAX ACT EM POWERING THE ITO TO INCLUDE IN THE INCOME OF THE ASSESSEE INTEREST WHI CH WERE NOT DUE OR COLLECTED. HONBLE SUPREME COURT IN THE CASE OF RAM AN (A) & CO. 67 ITR 11 HELD THAT LAW DOES NOT OBLIGE A TRADER TO MAKE MAXIMISE PROFITS . IN THE INSTANT CASE THE ASSESSEE EXPLAINED THAT NO IN TEREST HAD ACTUALLY BEEN RECEIVED DURING THE YEAR OR HAD BECOME DUE DUR ING THE ASSESSMENT YEAR UNDER APPEAL. THE AO HAS NOT BROUGHT ANY EVIDE NCE ON RECORD TO PROVE THAT THE ASSESSEE IN FACT HAD EARNED INTEREST INCOME. THEREFORE IT WAS A PRESUMPTION OF THE AUTHORITIES BELOW THAT THE ASSESSEE MIGHT HAVE EARNED INTEREST ON THE AMOUNTS WHICH WERE RECEIVED BACK FROM THE PARTIES. SINCE THE AO TAXED NOTIONAL INTEREST IN TH E ASSESSMENT YEAR UNDER APPEAL THEREFORE BURDEN IS UPON THE AO TO P ROVE THAT THE INTEREST HAD BEEN DUE TO THE ASSESSEE OR THAT THE ASSESSEE H AS IN FACT RECEIVED THE INTEREST. ON THE OTHER HAND THE ASSESSEE EXPLA INED THAT HE HAS UTILIZED THE ENTIRE AMOUNT FOR PERSONAL AND FAMILY PURPOSES. THEREFORE THE FINDINGS OF THE AUTHORITIES BELOW ARE BASED UPO N PRIMARILY ON PRESUMPTION ONLY. ITAT JODHPUR BENCH IN THE CASE OF LAXMI NARAYAN MEHTA (SUPRA) CONSIDERED THE IDENTICAL ISSUE AND HE LD THAT WHEN THERE IS NO MATERIAL OR EVIDENCE TO SUPPORT CHARGING OF I NTEREST BY THE ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 5 ASSESSEE CHARGING OF ESTIMATED INTEREST ON NOTIONA L BASIS IS UNJUSTIFIED . THE DEPARTMENTAL APPEAL ON THIS QUESTION WAS ACCO RDINGLY DISMISSED. CONSIDERING THE ABOVE DISCUSSIONS WE AR E OF THE VIEW THAT AUTHORITIES BELOW WERE NOT JUSTIFIED IN CHARGING NO TIONAL INTEREST ON THE MATTER IN ISSUE. WE ACCORDINGLY SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.1 39 311/-. AS A RESULT GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. AS REGARDS GROUND NO.2 IT IS ADMITTED FACT THA T THE ASSESSEE IN RESPONSE TO NOTICE U/S 148 OF THE IT ACT DISCLOSED AGRICULTURAL INCOME OF RS.50 000/- AND RS.300/- FROM SOURCES. THERE IS NO OTHER INCOME EARNED BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HELD AGRICULTURAL LAND BECAUSE THE LEARNED CIT(A) NOTED THAT POSSESSION OF AGRICULTURAL LAND HAS NO GROUND FOR EARNING OF AGRI CULTURAL INCOME. THE LEARNED CIT(A) ALSO NOTED THAT THE ASSESSEE BY PROF ESSION IS PRIMARILY AN AGRICULTURISTS. THE ABOVE FACTS THEREFORE WOULD S HOW THAT THE ASSESSEE HAS DISCLOSED MAINLY AGRICULTURAL INCOME IN THE RET URN OF INCOME WHICH IS EXEMPT. SINCE THE ASSESSEE HAS ONLY AGRICULTURAL INCOME AND THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE ASS ESSEE HAS INCOME FROM OTHER SOURCES ALSO THEREFORE THERE IS NO REA SON TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW. ITAT AHMEDABAD BEN CH IN THE CASE OF GOPALBHAI V. BHOIWALA VS ITO IN ITA NO. 3008/AHD/20 09 DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. THE FIND INGS OF THE TRIBUNAL IN PARA 6 TO 8 ARE REPRODUCED AS UNDER: 6. THE ITAT SMC BENCH INDORE IN THE CASE OF ITO V. SMT. SHAHNAJ BANO; ITA NO.443/IND/04 IN WHICH THE TRIBUN AL VIDE ORDER DATED 7.01.2005 HELD IN PARA 8 AS UNDER: 8. AS REGARDS INVESTMENT IN FLAT THE AO HAS NOT B ROUGHT ON RECORD ANY SOURCE OF INCOME EXCEPT THE INCOME FR OM AGRICULTURE CLAIMED BY THE ASSESSEE. IF A PERSON HA S ONLY AGRICULTURAL INCOME AND NO OTHER INCOME THEN NO AD DITION CAN BE MADE TO THE TOTAL INCOME THEN NO ADDITION C AN BE ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 6 MADE TO THE TOTAL INCOME UNLESS AND UNTIL THE AO PR OVES THAT THE ASSESSEE HAS ANY OTHER SOURCE OF INCOME WHICH I S TAXABLE UNDER THE INCOME TAX ACT. THE AO HAS NOT BR OUGHT ON RECORD ANY MATERIAL OR EVIDENCE TO SHOW THAT THE ASSESSEE WAS HAVING ANY OTHER SOURCE OF INCOME EXCE PT AGRICULTURAL INCOME WHICH IS NOT TAXABLE. CIT(A) WA S THEREFORE JUSTIFIED IN DELETING THE ADDITION OF RS .3 45 356/- TO THE TOTAL INCOME MADE BY THE AO BECAUSE THE ASSESSE E HAS NO INCOME TAXABLE AND AGRICULTURAL INCOME IS NOT TA XABLE. 7. IN THE CASE OF NARENDRA BADJATIYA VS. ITO ITAT INDORE SMC-I IN ITA NO.537/IND/2006 IN A.Y. 2003-2004 H ELD IN PARA.6 AS UNDER:- 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. I FIND THAT THE ASSESSING OFFIC ER WITHOUT BRINGING ANY MATERIAL ON RECORD ESTIMATED THE EXPEN SES ON CULTIVATION. THE AO HAS NOT POINTED OUT AS TO WHICH OF THE EXPENDITURE IS NOT SUPPORTED BY BILL OR VOUCHER. TH E AO MERELY FOUND THAT THE EXPENSES ARE VERY LOW. THE AO USED THE EXPRESSION THAT IT IS COMMON KNOWLEDGE THAT THE EXPENSES ON CULTIVATION OF LAND ARE GENERALLY 40% O F THE GRASS PRODUCE. IN THE ABSENCE OF ANY SPECIFIC OR RE LIABLE MATERIAL ON RECORD AGAINST THE ASSESSEE THE AO IS NOT JUSTIFIED IN ESTIMATING THE EXPENSES ON CULTIVATION . THE AO INSTEAD OF MAKING THE ADDITION OF RS.58 000/- MADE THE ADDITION WRONGLY IN A SUM OF RS.67 000/-. THE ASSES SEE ADMITTEDLY APART FROM AGRICULTURAL INCOME THE ASSE SSEE HAS INCOME FROM HOUSE PROPERTY CAPITAL GAINS AND INTER EST ON FDR AND DEVIDED. THE INCOME FROM THESE SOURCES IS S PECIFIC AND ASCERTAINED. THEREFORE THE ASSESSEE WOULD HAVE BEEN LEFT WITH THE AGRICULTURE INCOME WHICH IS EXEMPT. T HEREFORE THE ORDER OF THE ITAT INDORE BENCH IN THE CASE OF SMT. SHAHNAZ BANO (SUPRA) IS CLEARLY APPLICABLE TO SHOW THAT THE ASSESSEE HAS ONLY THE AGRICULTURE INCOME BECAUSE TH E AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS INCOME FROM OTHER SOURCES ALSO. THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE (SUPRA) ARE CLEARLY APPLICABLE TO THIS CASE. CONSIDERING TH E ABOVE DISCUSSION AND THE FACT THAT ONLY AD HOC ADDITION I S MADE THERE IS NO REASON TO SUSTAIN THE ORDERS OF THE AUT HORITIES BELOW. I ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. ITA NO.1070/AHD/2008 ARVINDBHAI CHHOTABHAI PATEL VS ITO PETLAD 7 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISION OF THE TRIBUNAL IT IS CLEAR THAT ASSESSEE HAS APART FROM AGRICULTURAL INCOME AND HAS INTEREST INCOME ON THE FDR AND POSTAL MONTHLY INCOME FROM THE KNOWN SOURCES. T HE INCOME FROM THESE SOURCES ARE SPECIFIC AND ASCERTAI NED. THEREFORE THE ASSESSEE WOULD HAVE BEEN LEFT WITH T HE AGRICULTURAL INCOME WHICH IS EXEMPT. THE ABOVE DEC ISIONS OF ITAT INDORE BENCH IN THE CASE OF SMT. SHAHENAJ BAN O (SUPRA) AND NARENDRA BADJATIYA (SUPRA) ARE CLEARLY APPLICABLE TO THE ABOVE CASE. SICNE THE ASSESSEE HAS ONLY AGR ICULTURAL INCOME AND ASSESSING OFFICER HAS NOT BROUGHT ANY EV IDENCE ON RECORD THAT ASSESSEE HAS INCOME FROM OTHER SOURC ES ALSO THEREFORE THERE IS NOT REASON TO SUSTAIN THE ORDER S OF THE AUTHORITIES BELOW. WE ACCORDINGLY SET ASIDE THE ORD ERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.1 5 0 000/-. 9. CONSIDERING DISCUSSIONS WE DO NOT FIND ANY JUST IFICATION TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW TREATING THE AGRICULTURAL INCOME TO BE NON- AGRICULTURAL INCOME. AS A RESULT GROUND NO.2 OF TH E APPEAL OF THE ASSESSEE IS ALLOWED. 10. AS A RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED ON 06-08-2010. SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 06-0 8-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD