Shri Kantibhai S.Patel, Ahmedabad v. The Income tax Officer,Ward-6(4),, Ahmedabad

ITA 2636/AHD/2010 | 2006-2007
Pronouncement Date: 26-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 263620514 RSA 2010
Assessee PAN AGPPP6458A
Bench Ahmedabad
Appeal Number ITA 2636/AHD/2010
Duration Of Justice 1 year(s) 19 day(s)
Appellant Shri Kantibhai S.Patel, Ahmedabad
Respondent The Income tax Officer,Ward-6(4),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 26-09-2011
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year 2006-2007
Appeal Filed On 06-09-2010
Judgment Text
-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER ITA NO.2636/AHD/2010 (ASSESSMENT YEAR:-2006-07) SHRI KANTIBHAI S PATEL 15 VRAJVIHAR SOCIETY LBS ROAD BAPUNAGAR AHMEDABAD V/S THE INCOME-TAX OFFICER WARD-6(4) AHMEDABAD PAN: AGPPP 6458 A [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI P F JAIN AR RESPONDENT BY:- SHRI S A BOHRA SR. DR DATE OF HEARING:- 21-09-2011 DATE OF PRONOUNCEMENT:- 26-09-2011 O R D E R THIS IS AN APPEAL AT THE BEHEST OF AN ASSESSEE WHI CH HAS EMANATED FROM THE ORDER DATED 12-08-2010 OF THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS)-XVI AHMEDABAD [THE CIT(A)] FOR ASSESSMENT YEAR (AY) 2006-07. THOUGH THE GROUNDS ARE ARGUMENTATIVE IN NATURE BUT FOR THE SAK E OF COMPLETENESS ARE REPRODUCED HEREUNDER:- [1] THE LD. C.I.T. (APPEALS) HAS ERRED IN LAW AND O N FACTS IN UPHOLDING THE ADDITION OF RS.3 55 421/- AS ADDITIONAL INCOME FOR ALLEGED UN ACCOUNTED EXPENSES OF AGRICULTURE IN COME EXPENSES OF AGRICULTURE INCOME ESTIMATED AT 40% OF THE INCOME WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMS TANCES OF THE APPELLANT. 2 ITA NO.2636/AHD/2010 [2] HE HAS ERRED IN LAW AND ON FACTS IN UPHOLDING T HE DISALLOWANCE OF ESTIMATED EXPENSES HOLDING THE SAME AS TAXABLE INCOME FROM OTHER SOURCES WITH OUT ANY EVIDENCE TO JUSTIFY THE SAID INFERENCE. [3] HE HAS ERRED IN APPLYING THE DECISION OF ITAT I N THE CASE OF DHIRUBHAI L. NARULA WITH OUT APPRECIATING THE FACTS THAT THE SAID DECISION WAS NEVER CONFRONTED EITHER BY 'T HE ASSESSING OFFICER OR BY THE CIT APPEAL THERE BY DENYING THE OPPORTUNITY OF REBUTTAL TO THE APPELLANT. [4] HE HAS ERRED IN LAW AND ON FACTS IN IGNORING TH E OBSERVATION OF THE ASSESSING OFFICER AS PER PARA 3A OF THE ASSESSM ENT ORDER THAT AS PER GENERAL NORMS THE MINIMUM AMOUNT OF EXPENDIT URE TO BE INCURRED FOR EARNING RS.100/- AGRICULTURE INCOME IS 40 PAISA . [5] HE HAS ERRED IN LAW AND ON FACTS IN IGNORING TH E DECISION OF AHMEDABAD ITAT IN THE CASE OF GOPAL B BHOIWALA ITA NO.3008/AHD/2009 DECIDED ON 08-01-2010 THOUGH MENTI ONED IN PARA 3 OF HIS ORDER. [6] ON THE FACTS NO ADDITION OF RS.3 55 421/- WITHO UT ANY EVIDENCE OUGHT TO HAVE BEEN MADE. 2 THE FACTS IN BRIEF AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME-TA X ACT 1961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 24-11- 2008 WERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY HAS FILED A RETURN DECLARING AN INCOME OF RS.1 35 240/- AND THE ASSESS ING OFFICER [AO FOR SHORT] HAS ALSO NOTED THAT THE ASSESSEE H AD DERIVED AGRICULTURE INCOME OF RS11 70 164/- . THE BIFURCATION OF THE AGRICULTURE INCOME AS NOTED BY THE AO WAS THAT THE ASSESSEE HAD ENTERED INTO A CONTRACT WITH THE THREE TRIBALS AND EARNED RS.93 750/- RS.97 500/- AND RS.90 360/- AS AGRICUL TURE INCOME. IN RESPECT OF REST OF THE AGRICULTURE INCOME I.E. RS.8 88 554/- IT 3 ITA NO.2636/AHD/2010 WAS OBSERVED THAT THE AGRICULTURE INCOME WAS EARNED ON ACCOUNT OF ACTUAL AGRICULTURAL ACTIVITY CARRIED OUT BY THE ASSESSEE HIMSELF. IT WAS NOTED BY THE AO THAT AS PER LEDGER ACCOUNT M AINTAINED BY THE ASSESSEE NO AMOUNT OF EXPENDITURE FOR EARNING THE SAID AGRICULTURE INCOME WAS SHOWN. AS PER THE AO SUCH A GRICULTURE INCOME SHOULD NOT HAVE BEEN EARNED WITHOUT INCURRIN G EXPENDITURE LIKE PURCHASE OF SEEDS FERTILIZERS WA TER CHARGES LABOUR TRANSPORTATION ETC. AS PER THE AO THE ASS ESSEE HAD NOT ACCOUNTED FOR ANY OF THESE EXPENDITURE. AS PER THE AOS ESTIMATION FOR EARNING RS.100/- AS AGRICULTURE INCO ME AT LEAST AN EXPENDITURE OF 40 PAISE IS REQUIRED. FOR THIS PROPO SITION THE AO HAS PLACED RELIANCE ON THE DECISION OF THE ITAT AHM EDABAD IN THE CASE OF DHIRUBHAI L NARULA & OTHERS IN ITA NOS. 2190 TO 2192/AHD/2004 ORDER DATED 17-04-2004 WHEREIN IT W AS HELD THAT EXPENDITURE TO THE EXTENT OF 40% OF THE GROSS RECEI PTS SHOULD BE REASONABLE EXPENDITURE BOUND TO HAPPEN TO CARRY OUT THE AGRICULTURAL ACTIVITY IN GUJARAT. AS PER THE AO AF TER DEDUCTING THE EXPENDITURE ONLY NET INCOME HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE SUBJECT TO ALLOWABILITY OF STATUTORY D EDUCTIONS. SINCE THE ASSESSEE HAD CLAIMED THE ENTIRE GROSS RECEIPTS AS AGRICULTURE INCOME AS EXEMPT INCOME THEREFORE THE AMOUNT EQUA L TO 40% I.E. RS.3 55 421/- WAS HELD BY THE AO AS UNACCOUNT ED EXPENSES NOT DISCLOSED IN THE RETURN OF INCOME. THE SAME WAS TAXED AS AN ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE. BEI NG AGGRIEVED THE MATTER HAD GONE BEFORE THE FIRST APPELLATE AUTH ORITY. 3 AFTER DISCUSSING THE FACTS OF THE CASE THE LEARN ED CIT(A) HAS NOTED THAT THE AO HAD SIMPLY FOLLOWED THE DECIS ION OF THE 4 ITA NO.2636/AHD/2010 ITAT PRONOUNCED IN THE CASE OF SHRI DHIRUBHAI L NAR ULA (SUPRA). IN THE SAID DECISION IT WAS HELD THAT WHERE THE DET AILS OF EXPENDITURE WERE NOT AVAILABLE THEN TO THE EXTENT OF 40% OF THE GROSS RECEIPTS WOULD BE REASONABLE EXPENDITURE FOR EARNING OF AGRICULTURE INCOME. IT WAS ALSO NOTED BY THE LEARNE D CIT(A) THAT THE CROPS LIKE BAJRI ARENDA WHEAT ETC. WERE GROW N BY THE ASSESSEE. THE CONCLUSION WAS DRAWN AS UNDER:- 4. I'VE CONSIDERED THE SUBMISSION MADE BY THE APPE LLANT AND OBSERVATION OF THE YEAR I FIND THAT ON FACTS IN TH E CASE OF THE ASSESSEE THE DECISION OF HONORABLE ITAT IN THE CASE OF DHIRU BHAI L NARULA (SUPRA) IS MORE APPLICABLE. THE ACTION OF THE AO IS CORRECT. THE ASSESSEE IS REQUIRED TO MAINTAIN DETAILS OF VARIOUS EXPENSES LIKE THAT OF COST OF SEEDS FERTILIZER WATER CHARGES LABOR CHA RGES CULTIVATION EXPENSES AND VARIOUS OTHER EXPENSES. IN THE ABSENCE OF THESE DETAILS THE ACTION OF THE AO TO TREAT 40% OF THE GROSS RECE IPTS AS EXPENSES IS CORRECT. HENCE THE INCOME TO THE EXTENT OF DISALLO WANCE OF THESE EXPENSES IS INCOME FROM OTHER SOURCES EARNED BY THE ASSESSEE IS TAXABLE. THE ACTION OF THE AO IS THEREFORE CORRECT. THE GROUND OF APPEAL IS DISMISSED. 4 FROM THE SIDE THE ASSESSEE THE LEARNED AR MR. P F JAIN APPEARED AND PLEADED THAT THE IMPUGNED ADDITION WAS MERELY ON ADHOC BASIS HENCE DESERVES TO BE ANNULLED. THE LE ARNED AR HAS ALSO PLEADED THAT THE AO HAD PROCEEDED AGAINST THE ASSESSEE WITHOUT INFORMING ABOUT THE SAID ADDITION. THE AO H AS FOLLOWED THE ORDER OF THE TRIBUNAL BUT BEFORE MAKING THE ADD ITION NO OPPORTUNITY WAS GRANTED TO THE ASSESSEE. ALTERNATIV ELY HE HAS PLEADED THAT SOME REASONABLE PERCENTAGE CAN ONLY BE APPLIED FOR THE IMPUGNED DISALLOWANCE. THE LEARNED AR HAS ALSO PLEADED THAT AT THE MOST THE AGRICULTURE INCOME WHICH WAS ASSESS ED IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. AY 2005- 06 MAY BE ADOPTED FOR THE YEAR UNDER CONSIDERATION TO MAINTAI N THE 5 ITA NO.2636/AHD/2010 CONSISTENCY IN THE ASSESSMENT PROCEEDINGS. FOR THIS PROPOSITION HE HAS PLACED RELIANCE ON THE FOLLOWING CHART:- DETAILS OF AGRICULTURE INCOME FOR BELOW MENTIONED Y EARS : SR. NO. ASST. YEAR AMT. OF AGRI. INCOME LAND A/C AS PER BALANCE SHEET TRACTOR ACCOUNT 1 2004-05 1 38 390 1 80 303 --- 2 2005-06 9 73 664 7 48 750 3 06 000 3 2006-07 11 70 164 4 2007-08 9 04 713 5 2008-09 8 10 197 6 2009-10 7 89 330 5 FROM THE SIDE OF THE REVENUE THE LEARNED DR MR. S A BOHRA HAS STATED THAT IN THE EVENT OF FAILURE TO SU BMIT THE EVIDENCE OF EXPENDITURE IT WAS JUSTIFIED ON THE PAR T OF THE AO TO TAKE GUIDANCE FROM THE ORDER OF THE TRIBUNAL AND T HEREFORE 40% OF THE GROSS RECEIPTS WERE HELD AS AN EXPENDITURE I NCURRED TO EARN THE GROSS AGRICULTURE INCOME. IT HAS ALSO BEEN ARGU ED BY THE LEARNED DR THAT THERE WAS NO EVIDENCE FURNISHED BY THE ASSESSEE TO DEMONSTRATE THAT THE LAND WAS NOT CULTIVATED BY THE ASSESSEE. BECAUSE OF THIS REASON RECEIVING OF NET SHARE FROM THE TILLERS WAS NOT ACCEPTABLE TO THE REVENUE AUTHORITIES. 6 I HAVE HEARD BOTH THE SIDES AT SOME LENGTH. I HAV E CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF COMPILATION FILED AND CASE LAW CITED. THE ONLY DISP UTE IS WHETHER THE INCOME OF RS.8 88 554/- WAS THE GROSS AGRICULTU RE INCOME OR THE NET AGRICULTURE INCOME AS DISCLOSED BY THE ASSE SSEE. ON ONE HAND THE ALLEGATION OF THE AO WAS THAT IT WAS GROS S AGRICULTURE 6 ITA NO.2636/AHD/2010 INCOME AND TO PERFORM THE AGRICULTURAL ACTIVITY AT LEAST 40% EXPENDITURE SHOULD HAVE BEEN INCURRED BY THE ASSESS EE. THE AO GOT THE SUPPORT FROM AN ORDER OF THE TRIBUNAL PRONO UNCED IN THE CASE OF SHRI DHIRUBHAI L NARULA & OTHERS IN ITA NOS .2190 TO 2192/AHD/2004 ORDER DATED 17-04-2004. I HAVE EXAMI NED THE CITED DECISION OF THE TRIBUNAL AND HAVE NOTICED THA T IN THAT CASE THE SAID ESTIMATION OF 40% WAS BASED UPON THE CIRCU MSTANCES OF THAT CASE AS ALSO THE EVIDENCES MADE AVAILABLE ON T HAT RECORD. MOREOVER IN THAT CASE IT WAS ALSO UNDER CONSIDERATI ON THAT HOW MUCH AGRICULTURE RECEIPT WAS AVAILABLE TO THE ASSES SEE FOR INVESTMENT PURPOSE. THOUGH A DIRECTION OF ALLOWING 40% EXPENDITURE WERE GIVEN AGAINST THE GROSS AGRICULTUR E RECEIPTS BUT IN MY HUMBLE OPINION THOSE GUIDELINES WERE RESTRICT ED TO THE FACTS AND CIRCUMSTANCES OF THAT VERY CASE. BE THAT AS IT WAS AT PRESENT I AM CONCERNED WITH THE FACTS OF THIS CASE AND HAVE NOTICED THAT IN THE PAST THIS ASSESSEE HAD SHOWN NE T AGRICULTURE INCOME AT RS.9 73 664/- FOR AY 2005-06. UNDISPUTEDL Y A CONSISTENT VIEW IS EXPECTED TO BE TAKEN EVEN IN INC OME-TAX PROCEEDINGS ESPECIALLY WHEN THE ASSESSEE HAS STRO NGLY CONTESTED THAT THE CROPS WERE CULTIVATED WITH THE HELP OF SOM E OTHER TILLERS WHO HAVE INCURRED THE EXPENDITURE AND THE ASSESSEE HAD GOT HIS NET SHARE OF AGRICULTURE INCOME. ACCORDING TO ME T O MAINTAIN A CONSISTENCY IT WOULD BE REASONABLE AS ALSO JUSTIFI ABLE TO DIRECT THE AO TO ADOPT TOTAL AGRICULTURE INCOME AT RS.9 73 600/- (ASSESSED IN THE IMMEDIATELY PAST A.Y.05-06) AS AGA INST THE TOTAL AGRICULTURE INCOME DISCLOSED BY THE ASSESSEE AT RS. 11 70 160/- (FOR THE YEAR UNDER CONSIDERATION A.Y. 06-07); WITH THE RESULT A DIFFERENCE OF RS.1 96 500/- SHALL BE HELD AS AN UNE XPLAINED 7 ITA NO.2636/AHD/2010 AGRICULTURE EXPENDITURE INCURRED THEREFORE TO B E TAXED IN THE HANDS OF THE ASSESSEE. RESULTANTLY THE IMPUGNED AD DITION OF RS.3 55 421/- IS HEREBY REDUCED TO RS.1 96 500/-. T HE GROUNDS RAISED ARE THEREFORE PARTLY ALLOWED. 7 IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 26-09-2011 SD/- (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER DATE : 26-09-2011 COPY OF THE ORDER FORWARDED TO: 1. SHRI KANTIBHAI S PATEL 15 VRAJVIHAR SOCIETY L BS ROAD BAPUNAGAR AHMEDABAD 2. THE INCOME-TAX OFFICER WARD-6(4) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-SMC AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD