Shri Ravi V.Agarwal, Ahmedabad v. The Income tax Officer,Ward-11(4),, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI N S SAINI ACCOUNTANT MEMBER) ITA NO.2484/AHD/2009 (ASSESSMENT YEAR:- 2001-02) SHRI RAVI V AGARWAL 34 VISHWAKETU-II JUDGES BUNGALOW BODAKDEV AHMEDABAD V/S THE INCOME-TAX OFFICER WARD-11(4) AHMEDABAD [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI S N DIVATIA ADVOCATE RESPONDENT BY:- SHRI GOVIND SINGHAL SR. DR O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DA TED 16-06- 2009 FOR ASSESSMENT YEAR 2001-02. 2. GROUND NO.1AND 3 RAISED BY THE ASSESSEE READS A S UNDER: 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDI NG THE ADDITION OF RS.78 180/- WITHOUT CONSIDERING FULLY A ND PROPERLY THE EXPLANATION OFFERED AND EVIDENCE PRODUCED BY TH E APPELLANT. 3.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN WORKING OUT THE AGRL. INCOME AT RS.42 505/ -. 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT NOT TO HAVE HELD THE AGRL. INCOME AT R S.42 505/-. 3.3 THE OBSERVATIONS MADE AND THE CONCLUSION REACHE D A BY AO FOR WORKING OUT THE AGRL. INCOME AT RS.42 505 AR E UNWARRANTED AND SIMPLY PRESUMPTION AND SURMISE. 3. AS THE FACTS AND ISSUE INVOLVED IN THE ABOVE GRO UNDS OF APPEAL ARE COMMON THEY ARE DISPOSED OFF TOGETHER AS UNDER . 2 4. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT H AD SHOWN AGRICULTURAL INCOME OF RS.1 20 686/- IN THE RETURN OF INCOME. THE ASSESSING OFFICER WHILE SCRUTINIZING THE CLAIM OF A GRICULTURAL INCOME IN A Y 2004-05 HELD THAT SINCE THE APPELLANT WAS N OT THE OWNER OF AGRICULTURAL LAND QUESTION OF AGRICULTURAL INCOME DOES NOT ARISE. ON THE BASIS OF THE FINDING FOR A Y 2004-05 THE ASSES SING OFFICER REOPENED THE ASSESSMENT PROCEEDINGS FOR A Y 2001-02 AND TREATED THE AGRICULTURAL INCOME OF RS.1 20 686/- AS INCOME FROM UNDISCLOSED SOURCES. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) DECIDED THE ISSUE AS UNDER: 4. WHILE DECIDING THE APPEAL FOR A Y 2004-05 1 V IDE MY ORDER DATED 13-3-2009 HELD THAT THE APPELLANT DID N OT FURNISH WHETHER THE LAND IS IRRIGATED OR NOT THEREFORE OH THE BASIS OF THE STATISTICS AVAILABLE AT WEBSITE OF GUJARAT GOV T. FOR A Y 2004-05 THE PRODUCTION OF COTTON WAS ESTIMATED AT THE RATE FOR COTTON TOTAL I.E. THE AVERAGE OF COTTON IRRIGAT ED AND UNIRRIGATED. ACCORDINGLY IT WAS HELD .THAT SINCE 1 6.36.71 HECTARE OF LAND WAS UNDER CULTIVATION OF CROP THE YIELD OF COTTON WAS ADOPTED AT 494 KG / HECTARE & TOTAL PROD UCTION AT 8085 KGS. 'IN CONTINUATION OF OUR PREVIOUS SUBMISSIONS IN SUP PORT OF OUR CASE AS REQUIRED BY YOUR HONOUR SIR WE WOULD LIKE TO SUBMIT AS FOLLOWS: 1. THE ASSESSEE HAS PURCHASED TWO LAND .I.E. ONE LAND FROM OF NAGARBHAI AMTHABHAI PRAIA PAT] ON 15/01/2000 AND SECOND LAND ; : FROM AMRUTBHAI AMTHAHHDI-PRAIAPATI ON 15/5/2000. THE ASSESSEE HAS CULTIVATED COTTON CROP ON THE SAID LAND. THE COTTON CROP TAKES MAX. 6 TO 7 MONTHS FROM SEEDING T O HARVESTING WHICH IS DONE BY THE- ASSESSEE IN THE MONTH OF JUNE AND JULY 2000 AND THE SAID CROP HAS BEEN SOLD ON 09/03/2001 AND23/03/2001 AS PER THE COPY OF BILL EN CLOSED HEREWITH. 3 SIR WE WOULD LIKE TO CLARIFY THAT AFTER HAVING THE POSSESSION. I OF THE LAND THE ASSESSEE HAS-ACTUALLY CULTIVATED TH E LAND FOR THE COTTON CROP AND THAN AFTER THE CROP IS READY FO R HARVESTING THE ASSESSEE HAS SOLD THE CROP IN THE MONTH OF MARC H 2001 I.E. THE WHOLE CYCLE OF THE CROP IS ABOUT 7 TO 9 MO NTHS. 2. ENCLOSED HEREWITH GAM NAMUNO NO. I.E. 7 & 12 NO UTA RO OF LAND PURCHASED FROM NAGARBHAL AMTHABHAI PRAJAPAT I AND AMRUTBHAI AMTHABHAI PRAJAPATI. ; 3. THE TOTAL AREA OF LAND IS 70.33 BIGHA IF WE TAKE THE STANDARD PRODUCTION AS 494 KG. PER HECTARE FOR 16.3 67 HECTARE THAN TOTAL PRODUCTION COMES TO 8085 KGS. AGAINST TH E SALE OF 9385 KGS. CONSIDERING THE SELLING RATE OF COTTON RS .3.951- PER KG. IT COMES TO 1 59 678 - OF WHICH CONSIDERING THE ACTUAL EXPENSES OF- RS.63 280/- MY NET AGRICULTURE INCOME COME TO RS. 96 398/- AGAINST THE NET INCOME OF RS. 1 2.0 686/- HENCE THE REMAINING RS. 24 288/- MAY BE DISALLOWED. (CONSIDERING YOUR ORDER DATED 13/03/2009 FOR A. Y. 2004-05 OF THE SAME ASSESSEE. BUT SIR CONSIDERING THE UNCERTAIN CONDITIONS OF RA IN AND OTHER CLIMATIC C ONDITIONS AND OTHER FACTORS ONE CANNOT BE STICK TO THE STANDARD YIELDS AS NOTIFIED BY THE GUJARAT GOVE RNMENT. AND EVEN AFTER CONSULTING THE FARMERS AND OTHER CON SULT PERSON THE ACTUAL-PRODUCTION OF COTTON CAN BE AT LE AST 700 TO 800.KGS OF COTTON PER HECTARE WITH CONSIDERING THE AVERAGE WEATHER AND CLIMATIC CONDITIONS AS SUCH THE WHOLE OF THE AGRICULTURAL INCOME SHOULD BE ALLOWED AS AN AGRICUL TURE INCOME. YOU ARE HUMBLY REQUESTED TO CONSIDER OUR SUBMISSION AND ALLOW THE SAME. SIR CONSIDERING THE ABOVE GROUNDS AND FACTS OF THE CASE REQUESTED TO CONSIDER THE SAME AND LET US KNOW IF A NY OTHER QUERIES OR INFORMATION REQUIRED BY YOU.' 6. I HAVE CONSIDERED THE. SUBMISSIONS OF THE APPEL LANT. THE APPELLANT SUBMITTED THE PROOF OF THE EXPENSES OF RS .62 280/- INCURRED FOR LABOUR SEED FERTILIZERS ETC. THE AP PELLANT HAS ALSO SHOWN SALE OF 9385 KGS OF COTTON THE SALE RAT E OF WHICH IS SHOWN AT RS.394.49 / 20 KG FOR 6215 KGS & 3B7.25 / 20 KGS FOR 3170 KGS. ON THE PERUSAL OF THE DETAILS OF EXPE NSES IT IS NOTICED THAT THE APPELLANT HAS NOT CLAIMED ANY EXPE NSES FOR 4 IRRIGATION. THIS SHOWS THAT THE LAND WAS NOT HAVING IRRIGATION FACILITY. AS PER THE DATA OF GOVT. OF GUJARAT THE Y IELD WAS 265 KG/HECTARE FOR UNIRRIGATED LAND AND 783 KGS FOR IRR IGATED LAND. IN A Y 2004-05 I HAD TAKEN THE AVERAGE FOR COTTON TOTAL AT 494 KG/HECTARE BECAUSE IT WAS NOT CLEAR FROM THE 7/12 S TATEMENT WHETHER THE LAND WAS IRRIGATED OR NOT. IN THIS APP EAL IT IS PROVED THAT THE LAND WAS NOT HAVING IRRIGATION FACI LITY AND ALSO WAS NOT IRRIGATED AS NO EXPENSES FOR IRRIGATION ARE CLAIMED NOR IN THE 7/12 STATEMENT THERE IS ANY MENTION ABOUT I TS BEING IRRIGATED. IN OTHER WORDS THE TOTAL PRODUCTION OF COTTON ON 16.3671 HECTARE OF LAND IS WORKED OUT AT 275 X 16.3 671. = 4337 KG. IF AVERAGE SALE RATE OF 3.9 PER 20 KG IS T AKEN THEN TOTAL POSSIBLE PRODUCTION COMES TO RS.85 010/-. SIN CE THE LAND WAS NOT CULTIVATED BY THE .APPELLANT HIMSELF BUT BY ENGAGING LABOURS THE COST OF INPUTS IS TAKEN AT 50% AS DONE IN A Y 2004-05. THEREFORE THE NET AGRICULTURAL INCOME COM ES TO RS.42 505/- AS AGAINST RS.1 20 686/-SHOWN BY THE AP PELLANT. 7. IN OTHER WORDS THE ASSESSING OFFICER IS- DIRECT ED TO ADOPT RS.42 505/- AS AGRICULTURAL INCOME AND BALANCE AMOU NT OF RS.78 180/- AS INCOME FROM UNDISCLOSED SOURCES. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. IN THE INSTANT CASE THE ASSESSEE HAS CLAIMED TO HAVE EARN ED AGRICULTURAL INCOME OF RS.1 20 686/- WHICH WAS NOT ACCEPTED BY T HE LEARNED ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE W AS NOT OWNER OF AGRICULTURAL LAND. HOWEVER THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) ACCEPTED THAT THE ASSESSEE WAS OWNER O F 16.3671 HECTARE OF AGRICULTURAL LAND AND THEREFORE ACCEPTE D THAT ASSESSEE HAD EARNED AGRICULTURAL INCOME BUT ACCORDING TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS THE AGRICULT URAL LAND WAS NOT IRRIGATED PRODUCTION OF COTTON COULD HAVE BEEN 275 KG. PER HECTOR ON THE BASIS OF STANDARD YIELDS AS NOTIFIED BY THE GUJARAT GOVERNMENT AND THEREFORE ESTIMATED THE TOTAL PROD UCTION OF ASSESSEE AT 4 337 KG. IN PLACE OF 9385 KG. CLAIMED BY THE ASSESSEE. 5 THE SALE VALUE OF 4337 KG WAS WORKED OUT ON THE BAS IS OF THE SALE VALUE DISCLOSED BY THE ASSESSEE AT RS.85 010/- BEIN G RS.19.60 PER KG. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONSIDERING THE FACT THAT THE LAND WAS NOT CULTIVATED BY THE AS SESSEE HIMSELF ESTIMATED THE CULTIVATION EXPENSES AT 50% OF THE SA LE VALUE AND THEREBY WORKED OUT AGRICULTURAL INCOME OF THE ASSE SSEE AT RS.42 505/- IN PLACE OF RS.1 20 686/- DISCLOSED BY THE ASSESSEE. THUS THE LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) CONFIRMED THE ADDITION TO THE EXTENT OF RS.78 181/- AGAINST W HICH THE ASSESSEE IS IN APPEAL BEFORE ME. THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE CONTENDED THAT THE BASIS ADOPTED BY TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR WORKING OUT THE TOTAL PRODUCTION OF THE ASSESSEE WAS NOT JUSTIFIED AS THE STATISTICS OF GOVERNMENT OF GUJARAT ARE BASED ON AVERAGE PRODUCTI ON AND THE ACTUAL PRODUCTION VARIES FROM LAND TO LAND. THE LEA RNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED TH AT THE ESTIMATION OF CULTIVATION EXPENSES @ 50% OF THE SAL E PROCEEDS WAS EXCESSIVE AND UNREALISTIC. ON THE OTHER HAND THE L EARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). I FIND THAT I T IS NOT IN DISPUTE THAT THE STATISTICS SHOWN BY THE GOVERNMEN T OF GUJARAT IS BASED ON THE AVERAGE YIELD IN THE STATE OF GUJARAT AND REAL PRODUCTION MAY VARY FROM CASE TO CASE. FURTHER IT I S OBSERVED THAT THE ASSESSEE COULD NOT BRING ANY MATERIAL BEFORE ME TO CONTROVERT FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(A PPEALS) THAT THE AGRICULTURAL LAND POSSESSED BY THE ASSESSEE WAS NOT IRRIGATED AGRICULTURAL LAND. THE AVERAGE OF IRRIGATED AGRICUL TURAL LAND PRODUCTION WAS 275 KG. PER HECTARE BY THE STATISTIC S OF GUJARAT GOVERNMENT IS ALSO NOT IN DISPUTE. PRODUCTION OF C OTTON SHOWN BY THE ASSESSEE OF 9385 KGS. WORKS OUT TO 573.40 KG. P ER HECTARE WHICH 6 IS MORE THAN DOUBLE OF THE AVERAGE PRODUCTION. I FI ND THAT THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE C OULD NOT BRING ANY MATERIAL BEFORE ME TO SHOW THAT THE ASSESSEES AGRICULTURAL LAND CAN YIELD MORE THAN DOUBLE OF THE AVERAGE YIELD. I N ABSENCE OF SUCH MATERIAL THE CONTENTION OF THE ASSESSEE IS FOUND T O BE UNACCEPTABLE. HOWEVER GIVING THE BENEFIT OF CIRCUM STANCES TO THE ASSESSEE IT SHALL BE FAIR AND REASONABLE TO ESTIMA TE THE ACTUAL PRODUCTION OF THE ASSESSEE AT 1.5 TIMES OF THE AVER AGE PRODUCTION. THUS THE ACTUAL PRODUCTION OF COTTON OF THE ASSESS EE IS ESTIMATED AT 413 KGS. PER HECTARE AND THE TOTAL PRODUCTION WO RKS OUT TO 6760 KGS. OF COTTON THE SALE PRICE OF THE ABOVE 6760 KGS. OF COTTON ON THE BASIS OF AVERAGE SALE PRICE ADOPTED BY THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) @ 19.60 PER KG. WORKS OUT TO RS.1 32 496/-. IN RESPECT OF CULTIVATION EXPENSES IT IS OBSERVED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN HIS ORDER PASSED IN THE CASE OF THE ASSESSEE FOR ASSESSMENT Y EAR 2004-05 HAS OBSERVED THAT THE TRIBUNAL HAS HELD THAT 35% TO 40% OF THE GROSS INCOME REPRESENTS CULTIVATION EXPENSES IN RESPECT O F AGRICULTURAL INCOME. I THEREFORE KEEPING IN VIEW THE FACT THAT AS CULTIVATION WAS CARRIED OUT BY ENGAGING LABOURS IT WOULD BE JUST A ND FAIR TO ESTIMATE THE CULTIVATION EXPENSES @ 40% OF THE GROS S RECEIPTS OF RS.1 32 496/- WHICH WORKS OUT TO RS.53 000/-. THUS THE AGRICULTURAL INCOME OF THE ASSESSEE WORKS OUT TO RS.79 496/-. I THEREFORE DIRECT THE LEARNED ASSESSING OFFICER TO ACCEPT THE AGRICUL TURAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AT RS .79 496/- AND ACCORDINGLY RESTRICT THE ADDITION ON ACCOUNT OF IN COME FROM UNDISCLOSED SOURCES AT RS.41 190/-. I ACCORDINGLY MODIFY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THUS THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWE D. 7. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UND ER: 7 2.1 THE LD. CIT(A) HAS FAILED TO APPRECIATE THE RE OPENING OF ASSESSMENT U/S 147 WAS BAD IN LAW AND ILLEGAL SO TH AT THE PROCEEDINGS SHOULD BE QUASHED. 8. AT THE TIME OF THE HEARING LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE HAS NOT PRESSING THE GROUND OF APPEAL HENCE THE SAME IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 20-01-2010 SD/- (N S SAINI) ACCOUNTANT MEMBER DATE : 29-01-2010 COPY OF THE ORDER FORWARDED TO : 1. SHRI RAVI V AGARWAL 34 VISHWAKETU-II JUDGES B UNGALOW BODAKDEV AHMEDABAD 2. THE ITO WARD-11(4) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABA