Shri Maganlal P. Patel (HUF),, RAJKOT-GUJARAT v. The Income Tax Officer, Ward-5(2),, RAJKOT-GUJARAT

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH SMC RAJKOT BEFORE SHRI A.L. GEHLOT (AM) I.T.A. NO. 1352/RJT/2010 (ASSESSMENT YEAR 2003-04) SHRI MAGANBHAI P PATEL (HUF) VS ITO WD.5(2) C/O KALPESH S DOSHI & CO RAJKOT CHARTERED ACCOUNTANTS 411 COSMO COMPLEX MAHILA COLLEGE CIRCLE RAJKOT 360 001 PAN : AACHP8903R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KALPESH DOSHI RESPONDENT BY: SHRI AVINASH KUMAR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A) RAJKOT DATED 14-10-2010 FOR THE ASSESSMENT YEAR 20 03-04. FOLLOWING GROUNDS ARE RAISED IN THE APPEAL: 1. THAT THE LEARNED CIT(A) HAS WRONGLY ASSESSED I NCOME FROM AGRICULTURE ACTIVITIES OF RS.1 19 918/- AS INCOME FROM UNDISCLOSED SOURCE. 2. THAT THE FINDING OF THE LEARNED CIT(A) ARE NOT JUSTIFIED IN LAW AS WELL AS FACTS OF THE CASE AND REQUIRED TO BE DEL ETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E DECLARED AGRICULTURAL INCOME OF RS. 2 28 990 IN THE RETURN OF INCOME FILE D. ON EXAMINATION BY CALLING FOR INFORMATION U/S 133(6) OF THE ACT THE ASSESSING OFFICER FOUND THAT A PARTY M/S NARENDRA TRADING COMPANY TO WHOM THE AGRICULTURAL G OODS WERE CLAIMED TO HAVE BEEN SOLD FOR RS.1 19 918 DENIED OF HAVING PUR CHASED THE GOODS. THE ASSESSEE CONTENDED THAT HE MAINTAINED BOOKS OF ACCO UNT AND THAT THE AGRICULTURAL PRODUCE WAS SOLD TO THE SAID PARTY AS PER THE PREVAILING PRACTICE OF THE MARKET THROUGH COMMISSION AGENT AN AUTHORISED MARKET YARD THE ITA NO.1352//RJT/2010 2 AGRICULTURAL PRODUCE MARKET COMMITTEE (APMC). THE FARMERS FROM VARIOUS PLACES COME THERE AND GIVE THEIR AGRICULTURAL PRODU CE TO THE COMMISSION AGENTS AND SALE IS EFFECTED THROUGH THE MARKETING YARD. T HEREFORE THE PARTIES SELLER AND BUYER DO NOT COME INTO DIRECT CONTACT WITH EACH OTHER FOR CARRYING OUT THE TRANSACTION. THE ASSESSING OFFICER REJECTED THE AS SESSEES CONTENTION AND MADE ADDITION OF RS.1 19 918 BEING THE AMOUNT OF SALE OF AGRICULTURAL PRODUCE TO THE SAID PARTY. THE CIT(A) CONFIRMED THE ADDITION BY O BSERVING THAT THERE HAS BEEN SUDDEN INCREASE IN THE AGRICULTURAL INCOME OF THE A SSESSEE FROM RS. 46 480 TO RS.2 28 990 WHEREAS THE STATUS OF HOLDING OF LAND O F THE ASSESSEE IS SAME AS COMPARED TO LAST YEAR. IT WAS ALSO OBSERVED BY THE CIT(A) THAT AT THE MOST PROPORTIONATE INCOME CAN BE ASSUMED WHICH MAY INCRE ASE TO RS.75 000. 3. I HAVE HEARD THE LEARNED REPRESENTATIVE OF THE P ARTIES RECORD PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT M/S NARENDR A TRADING CO DENIED OF HAVING PURCHASED GOODS FROM THE ASSESSEE IN ITS REP LY TO NOTICE U/S 133(6) OF THE ACT. THE ASSESSEE MAINTAINED BOOKS OF ACCOUNT. A COPY OF THE PROFIT & LOSS ACCOUNT AND BALANCE-SHEET AS ON 31-03-2003 HAS BEEN PLACED ON RECORD. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THERE WA S NO AGRICULTURAL PRODUCE. THE CASE OF THE ASSESSING OFFICER IS THAT THE PARTY M/ S NARENDRA TRADING CO TO WHOM THE ASSESSEE SOLD AGRICULTURAL GOODS DENIED OF HAVI NG BOUGHT THE AGRICULTURAL PRODUCE FROM THE ASSESSEE. UNDER THE CIRCUMSTANCES IT IS A CASE OF ESTIMATION OF AGRICULTURAL INCOME FOR THE YEAR UNDER CONSIDERA TION. ON PERUSAL OF COPY OF PROFIT & LOSS ACCOUNT AND KHET UPAJ SHOWS THAT THE TOTAL AGRICULTURAL PRODUCE SOLD WAS RS.2 29 464 AGAINST WHICH THE ASSESSEE HAS CLAI MED EXPENSES OF RS.473.10 WHICH MEANS THE ASSESSEE HAS SHOWN GROSS AMOUNT OF AGRICULTURAL RECEIPT AS INCOME WITHOUT SHOWING RELATED EXPENSES. AT THE TIME OF HEARING THE LD.AR FILED A COPY OF THE ORDER OF THE ITAT RAJKOT ITA NO.420/RJT/2006 ORDER DATED 28-02-2007 WHEREIN AGRICULTURAL EXPENSES IS H ELD TO BE AT ABOUT 30%. I AM THEREFORE OF THE VIEW THAT TO THE EXTENT OF 30 % THE ADDITION IS SUSTAINABLE. AS STATED ABOVE IT IS A CASE OF ESTIMATION AND IF WE APPLY THE 30% EXPENDITURE RATIO TO THE TOTAL AGRICULTURAL RECEIPTS THE NET A GRICULTURAL INCOME WOULD BE 70% OF ITA NO.1352//RJT/2010 3 THE TOTAL AGRICULTURAL RECEIPTS WHICH COMES TO RS.1 60 624 (70% OF RS.2 29 464) WHEREAS THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME OF RS.2 28 990. THUS THE ADDITION OF RS.68 366 (RS.2 29 464 RS.1 60 624) IS CONFIRMED. THE ASSESSEE GETS A RELIEF OF RS. 51 552. 4. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-02-2011. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER RAJKOT DT : 11 TH FEBRUARY 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-IV RAJKOT 4. THE CIT-III RAJKOT 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT RAJKOT