DCIT, Coimbatore v. R.Mahendran (HUF), Pollachi

ITA 3248/CHNY/2016 | 2009-2010
Pronouncement Date: 29-11-2017 | Result: Allowed

Appeal Details

RSA Number 324821714 RSA 2016
Assessee PAN AAGHR3032P
Bench Chennai
Appeal Number ITA 3248/CHNY/2016
Duration Of Justice 1 year(s) 1 day(s)
Appellant DCIT, Coimbatore
Respondent R.Mahendran (HUF), Pollachi
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Department
Tags No record found
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-11-2017
Date Of Final Hearing 04-07-2017
Next Hearing Date 04-07-2017
First Hearing Date 04-07-2017
Assessment Year 2009-2010
Appeal Filed On 28-11-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI ... # BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI S. JAYARAMAN ACCOUNTANT MEMBER /. I.T.A. NOS. 3247 & 3248/MDS/2016 / ASSESSMENT YEARS : 2013-14 & 2009-10 DEPUTY COMMISSIONER OF INCOME TAX NON CORPORATE CIRCLE -4 COIMBATORE. VS. M/S. R. MAHENDRAN (HUF) NO. 15 KAMARAJ ROAD MAHALINGAPURAM POLLACHI 642 002. [PAN: AAGHR 3032P] ( / APPELLANT) ( / RESPONDENT) %& / APPELLANT BY : SHRI. ASISHTRIPATI JCIT )*%& / RESPONDENT BY : SHRI. T. BANUSEKAR CA & /DATE OF HEARING : 12.09.2017 & /DATE OF PRONOUNCEMENT : 29.11.2017 / O R D E R PER S. JAYARAMAN ACCOUNTANT MEMBER: THE REVENUE FILED THESE APPEALS AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3 IN ITA NO. 57 & 58/16-17 DATED 07.09.2016 FOR AYS 2013-14 & 2009-2010 RESPECTIVE LY. :-2-: ITA NOS. 3247 & 3248/MDS/2016 2. R. MAHENDRAN KARTHA OF HUF A POST GRADUATE PH YSICIAN IN GENERAL MEDICINE IN HIS INDIVIDUAL CAPACITY IS PERFORMING ORGANIC AGRICULTURAL OPERATIONS BESIDES HAVING PASSION FOR SPORTS EQUES TRIAN THUS MAINTAINING A HORSE FARM ALSO. A SURVEY WAS UNDERTAKEN ON 22.01. 2015 IN CONNECTION WITH HIS AGRICULTURAL INCOME WHILE COMPLETING THE ASSESS MENT FOR ASSESSMENT YEAR 2012-13. BASED ON THE SURVEY FINDINGS THE REOPENE D ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 AND THE ASSESSMENT FOR ASS ESSMENT YEAR 2013-14 WAS SCRUTINISED . THE ASSESSEE CLAIMED AGRICULTURA L INCOME OF RS. 54 31 200/- & RS. 78 66 500/- FOR THE ASSESSMENT YEARS 2009-10 & 2013-14 RESPECTIVELY. IT WAS FOUND THAT THE ASSESSEE IS HAVING A TOTAL LA ND HOLDING OF 32 ACRES IN WHICH HE HAS CULTIVATED COCONUT AS A PARENT CROP N UTMEG AND VANILLA AS THE INTERCROPS IN AY 2009-10 AND COCONUT AS A PARENT CR OP NUTMEG AND ARICANUT AS THE INTERCROPS IN AY 2009-10. DURING THE SURVE Y PROCEEDINGS THE ASSESSEE WAS NOT ABLE TO PRODUCE COMPLETE BOOKS OF ACCOUNTS IN CONNECTION WITH ITS AGRICULTURAL ACTIVITIES. AT THE TIME OF S CRUTINY ALSO IT HAS NOT PRODUCED ANY BILLS VOUCHERS AND BOOKS OF ACCOUNT AND DETAIL S OF EXPENSES INCURRED FOR EARNING HUGE AGRICULTURAL INCOME OF RS.78 66 500/-I N AY 2013-14. THE ASSESSEE ADMITTED NET INCOME FROM COCONUT AT RS.40 40 000/ NUTMUG AT RS.46 36 000/- AND FROM ARICANUT AT RS.11 31 800/- AND CLAIMED A TOTAL EXPENDITURE OF JUST RS. 19 05 700/- ONLY FOR ALL TH E CROPS IN THE ASSESSMENT YEAR 2013-14. THE AO FOUND THAT THE ASSESSEE A DMITTED MORE INCOME BUT CLAIMED TO HAVE INCURRED VERY LESS EXPENDITURE AND THE EXPENDITURE WAS :-3-: ITA NOS. 3247 & 3248/MDS/2016 ALSO NOT MAINTAINED CROP-WISE . HENCE THE AO THOU GHT THAT FINDING OUT THE AVERAGE INCOME AND EXPENDITURE FOR EACH CROP IS THE SUITABLE METHOD FOR DETERMINING THE INCOME. IN THE CIRCUMSTANCES THE AO OBTAINED DETAILED EXPERT REPORT FROM CARDS TAMILNADU AGRICULTURAL UN IVERSITY FOR CULTIVATION OF COCONUT IN POLLACHI REGION AND FOUND THAT FULLY GRO WN TREES (TREES WHICH ATTAINED 8 YEARS OR MORE) CAN YIELD 8400 COCONUTS PER ACRE PER SOLE CROP. THE GROSS INCOME FROM COCONUT AS PER THE REPORT F OR FINANCIAL YEAR 2012-13 WAS RS. 1 18 650/- PER ACRE THE AVERAGE EXPENDI TURE IS ABOUT RS. 46 495/- PER ACRE AND HENCE THE NET INCOME WOULD BE AROUND R S. 71 705/- PER ACRE PER SOLE CROP. THE ASSESSEE CLAIMED TOTAL EXPENDITURE OF RS. 19 05 700/- FOR ALL THE CROPS IN THE ASSESSMENT YEAR 2013-14. ASSESSEE HAS NOT MAINTAINED PROPER ACCOUNTS. HENCE THE AO BASED ON THE EX PERTS REPORT DETERMINED THE NET INCOME FROM COCONUT FOR 32 ACRES AT RS.22 9 4 560 @ RS. 46 495/- PER ACRE. 2.1 THE ASSESSEE ALSO ADMITTED INCOME FROM NUTMUG A T RS.46 36 000/. THE AO FOUND THAT THE ASSESSEES ADMITTED INCOME FROM T HIS CROP IN THE LAST 4 YEARS AS UNDER : A.Y INCOME FROM NUTMEG 2009-10 22 05 000/- 2010-11 21 93 750/- 2011-12 26 50 500/- :-4-: ITA NOS. 3247 & 3248/MDS/2016 2012-13 27 67 500/- THE ASSESSEE HAS NOT PRODUCED ANY BILLS/VOUCHER EXC EPT SALE NOTE. GENERALLY NUTMEG SELLERS ARE ISSUING BILLS BUT ASSESSEE HAS N OT PRODUCED ANY BILLS IN THIS REGARD. THE AO FOUND THAT THE MAXIMUM GROSS INCOME FROM NUTMEG IS 27.50 LAKHS IN THE LAST 4 YEARS WHEREAS THIS YEAR THE AS SESSEE CLAIMED A HUGE INCOME FROM NUTMUG AT RS.46 36 000/- WHILE THERE IS NO CHANGE IN THE NUMBER OF TREES. THOUGH THERE COULD PRICE BE INCR EASE BUT 180% INCREASE IS NOT REASONABLE FOR NUTMEG AS THE CROP IS SEASONA L AND HARVESTING ONCE OR TWICE IN A YEAR. IN SUCH FACTS AND CIRCUMSTANCES T HE AO COMPARING THE USAGE OF LAND PATTERNS CONSIDERING THE LAND AND SOIL FER TILITY OTHER CROPS PATTERN AND ALL OTHER FACTORS HELD THAT AN INCREASE OF 10% OVE R THE GROSS INCOME OF THE PREVIOUS YEAR I.E RS.27 67 500 WOULD BE REASONABLE ONE AND ACCORDINGLY HE RESTRICTED THE GROSS INCOME FROM NUTMEGAT RS.30 44 250/- (IE.RS.27 67 500 +2 76 750 ) AND AFTER ALLOWING THE FARM EXPENSES OF RS.6 04 266/- HE DETERMINED THE NET INCOME FROM NUTMUG AT RS.24 39 984/-. 2.2 THE ASSESSEE HAS ADMITTED INCOME FROM ARICANU T AT RS.11 31 800/-. THE A O NOTED THAT TILL LAST YEAR THE ASSESSEE CU LTIVATED VANILLA AS INTERCROP AND ALL OF A SUDDEN CLAIMED ARICANUT AS AN ALTERNAT E CROP WHICH YIELDED WITHIN A SHORT SPAN OF ONE YEAR. USUALLY ARICANUT TAKES A TLEAST FIVE YEARS FOR THE FIRST HARVEST. THE GROWN AREA IS SAME AS 32 ACRES ONLY. IT HAS NOT MAINTAINED ANY BILLS/ VOUCHER EXCEPT BOUGHT NOTE. DUE TO NON AVAIL ABILITY OF BILLS THE A O :-5-: ITA NOS. 3247 & 3248/MDS/2016 CONSIDERED THAT THE REASONABLE NET INCOME FROM ARIC ANUT WOULD BE 50% OF THE ADMITTED INCOME AT RS.5 65 900/- AND DISALLOWED TH E REST . THUS THE AO DETERMINED THE NET AGRICULTURE INCOME AT RS.53 00 444/- AND TREATED THE EXCESS OF RS.25 66 056/- AS AN INCOME FROM OTHER S OURCES AND ASSESSED IT TO TAX. FURTHER THE AO NOTICED FROM THE BOOKS OF ACC OUNT THAT THE ASSESSEE HAD ADVANCED RS. 78 50 000/- TO HIS GRANDMOTHER SMT N. KAMATCHIAMMAL. WHEN VERIFIED WITH THE BOOKS OF SMT. KAMATCHIAMMAL HE F OUND THAT THERE WAS NO CORRESPONDING LIABILITY IN HER BOOKS OF ACCOUNT. TH EREFORE HE TREATED THE ADVANCES GIVEN TO SMT N. KAMATCHIAMMAL AS BOGUS AND ADDED RS.78 50 000/- IN THE HANDS OF THE ASSESSEE. 3. SIMILARLY IN THE REASSESSMENT MADE FOR AY 200 9-10 THE AO FOUND THAT OUT OF THE GROSS AGRICULTURAL INCOME OF RS.77 66 00 0/- THE ASSESSEE ADMITTED A NET AGRICULTURAL INCOME OF RS 54 31 200/- FROM C OCONUT AS A PARENT CROP NUTMEG AND VANILLA AS THE INTERCROPS . FOR THE REA SONS MENTIONED IN AY 2013- 14 ADOPTING THE SAME METHOD THE AO DETERMINED TH E NET INCOME FROM COCONUT FROM 32 ACRES AT RS. 17 60 000/- FOR ASSE SSMENT YEAR 2009-10 . WHILE DOING SO HE TOOK INTO CONSIDERATION THE EX PERTS REPORT FOR THE FINANCIAL YEAR 2012-13 AND AFTER CONSIDERING THE PERIOD OTHE R FACTORS LIKE PRICE OF THE COCONUT IN THE MARKET AND COOLY ETC FOR AY 2009- 10 THE AO ARRIVED THE NET INCOME FOR COCONUT @ RS. 55 000/- PER ACRE WHICH IS 25% LESS THAN THE INCOME OF FY 2012-13 DETERMINED BY THE EXPERTS. FR OM VANILLA THE ASSESSEE :-6-: ITA NOS. 3247 & 3248/MDS/2016 ADMITTED RS.43 56 000/- . THE AO AFTER VERIFICATI ON HAS ACCEPTED SUCH RECEIPTS. FOR NUTMEG THE ASSESSEE PLANTED IN 30 AC RES OF LAND AND ADMITTED RS. 22 05 000/- THE AVERAGE INCOME PER ACRE AT RS. 73 500/-. IN THE ABSENCE OF BILLS AND VOUCHERS THE AO DISALLOWED 25% OF SUC H INCOME AND ESTIMATED THE GROSS INCOME AT RS. 16 50 000/-. THUS AS AGAI NST THE NET AGRICULTURAL INCOME OF RS. 54 31 200/- RETURNED FOR THE ASSESSME NT YEAR 2009-10 THE AO AFTER ALLOWING THE EXPENDITURE AND LOAN REPAYMENTS DETERMINED THE NET AGRICULTURAL INCOME AT RS. 36 35 000/- AND TREATED THE BALANCE OR THE EXCESS CLAIM AT RS 17 96 200/ AS INCOME FROM OTHER SOURC ES AND BROUGHT TO TAX FOR AY 2009-10 .FURTHER AFTER VERIFYING THE BANK ACCOU NTS THE AO FOUND THAT THE ASSESSEE HAD INVESTED IN LIC MET LIFE INSURANCE CO MPANY LTD. VMD FOODEX AND BONANZA PORTFOLIO LTD. AT RS. 56 52 040/- BUT FAILED TO PROVIDE ANY DOCUMENTS IN THIS REGARD. THE ASSESSEE HAS ALSO NO T DISCLOSED THEM IN ITS BOOKS OF ACCOUNT. THEREFORE THE AO TREATED THESE INVESTMENTS AS AN UNEXPLAINED INVESTMENT U/S. 69A AND ADDED TO THE TO TAL INCOME. 4. AGGRIEVED THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE CIT(A) RESTRICTED THE DISALLOWANCE TO 10% EACH FOR AGRICUL TURAL INCOME RETURNED FROM COCONUT AND VANILLA(SIC) CULTIVATION BY THE ASSESSE E. AS REGARD THE ADDITION U/S. 69A THE CIT(A) HELD THAT : THESE INVESTMENTS HAVE BEEN MADE THROUGH THE BANK ING CHANNEL. IF ALL THERE HAS TO BE AN ADDITION IT S HOULD HAVE BEEN FOR THE SOURCE OF THESE INVESTMENTS. THIS IS NOT THE ASPECT CONSI DERED IN THE ASSESSMENT :-7-: ITA NOS. 3247 & 3248/MDS/2016 ORDER. THE REASON STATED IN PARAGRAPH 5 OF THE ASS ESSMENT ORDER IS THAT THE APPELLANT HAD FAILED TO PROVIDE ANY DOCUMENTS IN TH IS REGARDS. DOCUMENTS ARE NEEDED TO PROVE THE SOURCE OR THE CREDIT SIDE. THE SE ARE OUTGOINGS THROUGH THE BANKING CHANNEL AND ADDITION UNDER SECTION 69A OF T HE INCOME TAX ACT IS MADE WITHOUT ANY SUSTAINABLE REASON AND IS DELETED. 4.1 IN RESPECT OF THE MONEY ADVANCED TO SMT. N KAMA TCHIANMAL THE CIT(A) HELD THAT : THE ASSESSING OFFICER HAS HELD THAT THE SAID SUM WAS NOT INCLUDED AS A LIABILITY IN THE BALANCE SHEET OF SMT N. KAMATCHIAMMAL. THEREFORE THIS WAS HELD TO BE A BOGUS ASSET. HAD THERE BEEN A BOGUS CREDIT THE SAME WOULD LOGICALLY HAVE TO BE TREATED AS INCO ME OF THE APPELLANT. HERE SMT. N KAMACTHIAMMAL IS A SUNDRY DEBTOR AND NOT A S UNDRY CREDITOR. IF IT IS THE CASE THAT THE APPELLANT HAD NO SOURCE INITIALLY TO MAKE THIS ADVANCE IT SHOULD HAVE BEEN ASSESSED IN THE FINANCIAL YEAR IN WHICH I T WAS SHOWN AS OUTGOING BY THE APPELLANT AS UNEXPLAINED EXPENDITURE. THE ADEQ UACY OF SOURCE HAS NOT BEEN QUESTIONED BY THE ASSESSING OFFICER. IN VIEW OF THIS THE ADDITION MADE FOR BOGUS ASSET IS UNSUSTAINABLE AND IS DELETED. 5. AGGRIEVED THE REVENUE FILED THESE APPEALS WITH THE FOLLOWING COMMON GROUNDS FOR BOTH THE AYS: 1. THE ORDER OF THE LEARNED CIT(A) IS NOT ACCEPTAB LE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW IN RESTRICT ING THE DISALLOWANCE OF AGRICULTURAL INCOME TO 10% WHEN THE AO HAS ARRIVED AT THE AGRICULTURAL INCOME BASED ON THE TNAU REPORT. 3. THE LEARNED CIT(A) HAS NOT CONSIDERED THAT IT TA KES FIVE YEARS FOR HARVESTING ARECANUT BUT THE ASSESSEE CLAIMED AGRICULTURAL INC OME FROM ARECANUT IN THE FIRST YEAR ITSELF. 4. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE FINDINGS OF THE SURVEY AND THAT THE DISALLOWANCE WAS MADE AS A RESULT OF T HE FINDINGS OF THE SURVEY. :-8-: ITA NOS. 3247 & 3248/MDS/2016 FOR AY 2013-14: 5. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF BOGUS ADVANCE MADE TO THE ASSESSEE'S GRANDMOTHER SMT N. KAMATCHIAMMAL IN WHO SE ACCOUNTS THE ADVANCE DOES NOT APPEAR. FOR AY 2009-10 : 6. THE CIT(A) HAS ERRED IN DELETING THE ADDITION MA DE UNDER UNEXPLAINED INVESTMENTS U/S. 69A AS IT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND COULD NOT BE EXPLAINED. 6. THERE WAS A DELAY OF 8 DAYS IN FILING THE APPEAL IN AY 2013-14. THE REVENUE FILED THE PETITION FOR CONDONATION OF DELAY . WE HEARD THE AR AND THE DR. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR NO T FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE WE CONDONE THE DEL AY AND ADMIT THE APPEAL. 7. THE DR SUBMITTED THAT THE ASSESSEE CLAIMED AGRI CULTURAL INCOME OF RS. 54 31 200/- & RS. 78 66 500/-FOR THE ASSESSMENT YEARS 2009-10 & 2013- 14 RESPECTIVELY. IT HAS NOT PRODUCED ANY BILLS / VOUCHERS EXCEPT BOUGHT NOTE AND LOOSE SHEETS. DURING THE SURVEY IT WAS FO UND THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT FOR AGRICULTUR AL ACTIVITY. THE A O FOUND THAT THE ASSESSEE ADMITTED MORE INCOME BUT CLA IMED TO HAVE INCURRED VERY LESS EXPENDITURE AND THE EXPENDITURE WAS ALSO NOT MAINTAINED CROP-WISE . HENCE THE A O THOUGHT THAT FINDING OUT THE A VERAGE INCOME AND EXPENDITURE FOR EACH CROP IS THE SUITABLE METHOD FO R DETERMINING THE INCOME. IN THE CIRCUMSTANCES THE AO OBTAINED DETAILED EXPE RT REPORT FROM CARDS TAMILNADU AGRICULTURAL UNIVERSITY FOR CULTIVATION O F COCONUT IN POLLACHI REGION . :-9-: ITA NOS. 3247 & 3248/MDS/2016 THE AO HAS SCIENTIFICALLY ARRIVED AT THE DISALLOWAN CE BASED ON THE REPORT OF THE TNAU. THE AVERAGE YIELD OF COCONUTS AND FOR OT HER CROPS AVERAGE EXPENSES PER ACRE ESTIMATED BY THE AO IS VERY REAS ONABLE. ASSESSEE ADMITTED AGRICULTURAL INCOME FROM ARICANUT IN AY 2 013-14. TILL THE PREVIOUS YEAR I.E. TILL A.Y. 2012-13 THE ASESSEE HAD CULTIV ATED VANILLA AS INTERCROP. ALL OF A SUDDEN IT CLAIMED HUGE INCOME FROM ARICANUT AS AN ALTERNATE CROP. IT TAKES ATLEAST FIVE YEARS FOR THE FIRST HARVEST FOR THE ARICANUT. THE FACT THAT THE ASSESSEE IS CLAIMING HUGE INCOME FROM ARICANUT ON THE VERY FIRST YEAR ITSELF CLEARLY SHOWS THAT ITS CLAIM IS NOT CORRECT. THE C IT(A) HAS RESTRICTED THE DISALLOWANCES TO 10% OF AGRICULTURAL INCOME FOR EAC H CROP BASED ON THE SOLE GROUND THAT THE FIGURES GIVEN BY TNAU WERE PLACE WI SE AVERAGES AND THERE ARE FLUCTUATIONS IN INDIVIDUAL YIELDS IN ALL PROBAB ILITY.IT IS CLEAR FROM THE ORDER OF THE CIT (A) THAT THE ASSESSEE HAS NOT RAISED ANY WORTHY GROUNDS ON THE OTHER CROPS. IN SPITE OF IT THE CIT(A) HAS RESTR ICTED THE DISALLOWANCES ON OTHER CROPS ALSO. THE ONUS IS ON THE ASSESSEE TO L AY ALL MATERIAL TO ESTABLISH ITS EXEMPTION CLAIM BUT IT HAS NOT LAID ANY MATERI AL EITHER TO ESTABLISH ITS CASE NOR LAID ANY MATERIAL TO DISLODGE THE FINDINGS OF T HE AO AND HENCE THE DECISION OF THE CIT(A) IS ARBITRARY AND HENCE IT MAY BE SET ASIDE AND THE ORDERS OF THE AO BE RESTORED FOR BOTH THE AYS. 7.1 THE DR CONTINUED HIS SUBMISSIONS STATING THAT T HE AO FOUND FROM THE BOOKS OF ACCOUNT OF AY 2009-10 THAT THE ASSESSEE MA DE INVESTMENTS FOR RS. :-10-: ITA NOS. 3247 & 3248/MDS/2016 56 52 040/- BUT FAILED TO PROVIDE ANY DOCUMENTS A ND HAS NOT DISCLOSED IT IN THE BOOKS OF ACCOUNTS. THEREFORE THE INVESTMENTS W ERE TREATED AS UNEXPLAINED INVESTMENT U/S 69A. THE CIT(A) HAS DELE TED ON THE GROUND THAT THESE INVESTMENTS HAVE BEEN MADE THROUGH BANKING CH ANNEL DOCUMENTS ARE NEEDED TO PROVE THE SOURCE OR THE CREDIT SIDE AND T HESE ARE OUTGOINGS THROUGH THE BANKING CHANNEL AND SO ADDITION IS MADE WITHOUT ANY SUSTAINABLE REASON AND IS DELETED. THE CIT(A)'S DECISION IS NO T CORRECT AS THE SOURCE FOR INVESTMENTS COULD NOT BE PRODUCED AND IT WAS NOT IN CLUDED IN THE BOOKS OF ACCOUNTAND HENCE PLEADED TO RESTORE THE ORDERS OF T HE A O . 7.2 FURTHER PLEADED THAT THE A O FOUND IN AY 2013 -14 THAT THE ASSESSEE HAD ADVANCED RS. 78 50 000/- TO HIS GRANDMOTHER SM T N. KAMATCHIAMMAL. WHEN THE A O VERIFIED WITH THE BOOKS OF SMT. KAMAT CHIAMMAL AND FOUND THAT THERE WAS NO SUCH CLAIM IN HER BOOKS. THEREFOR E THE ADVANCES GIVEN TO SMT N. KAMATCHIAMMAL WAS TREATED AS BOGUS AND ADDED IN THE HANDS OF THE ASSESSEE. THE CIT(A) HAS DELETED THIS ADDITION STAT ING THAT IT SHOULD HAVE BEEN ADDED IN THE FINANCIAL YEAR IN WHICH IT WAS SH OWN AS OUTGOING BY THE APPELLANT AS UNEXPLAINED EXPENDITURE AND THAT THE A DEQUACY OF SOURCE HAS NOT BEEN QUESTIONED BY THE AO. THE CIT(A)'S DECISION I S NOT TENABLE BECAUSE THE SOURCES OF FUNDS HAS NOT BEEN EXPLAINED AND HENCE T HE D R PLEADED TO RESTORE THE ORDERS OF THE A O . :-11-: ITA NOS. 3247 & 3248/MDS/2016 8. PER CONTRA THE AR SUBMITTED THAT THE ASSESSEE H OLDS 32 ACRES OF LAND AT THE FOOT HILLS OF ANAIMALAI A VERY FERTILE AREA . THE SOIL AVAILABILITY AND THE RAINFALL IS MUCH ADEQUATE FOR THE CROPPING. COCONUT IS THE PARENT CROP NUTMUG VANILLA AND ARICANUT WERE INTERCROPS. THE POLLACHI REGION COMPRISES OF TWO FERTILE PARTS ON THE WEST AND SOUTH OF POLLA CHI AND DRY REGION IN THE EAST AND NORTH . IN THE WEST AND SOUTH REGION THE MINIMUM YIELD IS 150 TO 180 NUTS PER TREE WHILE IN THE EAST AND NORTH IT WOULD BE 80 TO 90 NUTS PER TREE. THE AVERAGE YIELD IS 150 NUTS PER TREE THE AVERAGE PRICE IS RS10 PER NUT AND THE AVERAGE EXPENDITURE IS RS. 26 000 PER A CRE . THERE WERE 2400 COCONUT TREES AND 2250 NUTMEG TREES AND THESE PAR TICULARS WERE ALREADY SUBMITTED IN THE EARLIER ASSESSMENT YEARS . THE A SSESSEE PRODUCED SALE NOTES. THE AO DID NOT FIND ANY DEFICIENCY . HOWEVE R FOLLOWING THE TNAU REPORT WHICH COMPRISES FOR ALL THE FOUR REGIONS AND WITHOUT CONSIDERING THAT IT IS ONLY AS A GUIDELINE THE ASSESSING OFFICER ADO PTED IT FOR DETERMINING THE INCOME FOR THE COCONUT CROP AND FOR OTHERS HE ADOPT ED A 10% INCREMENTAL ALLOWANCE OVER THE GROSS INCOME OF THE EARLIER YEA RS. CONSEQUENTLY UNREASONABLY DISALLOWED 33% OF NET AGRICULTURAL INC OME. THE CIT (A) HAS ADOPTED A REASONABLE APPROACH AND HENCE THE REVEN UES APPEALS MAY BE DISMISSED. IN RESPECT OF THE ADVANCE GIVEN AT RS. 78 50 0000/ TO SMT. N. KAMATCHIAMMAL THE A R SUBMITTED THAT AS PER THE WI SH OF THE KARTAS GRANDMOTHER SMT. N. KAMATCHIAMMAL TO MATERIALIZ E A PROPERTY ON THE OCCASION OF MARRIAGE OF THE GREAT GRANDDAUGHTER OF SMT. N. KAMATCHIAMMAL. :-12-: ITA NOS. 3247 & 3248/MDS/2016 THE ASSESSSEE IS OWING A SUM OF RS. 110 LACS TO SM T. N. KAMATCHIAMMAL . OUT OF THE SAID PAYABLE THE ASSESSEE PAID THE SAI D SUM. THIS IS ONLY AN ASSET OF THE ASSESSEE . THE SOURCES WERE FULLY EXP LAINED AS PER THE BALANCE SHEET FILED. THERE IS NO INADEQUACY OF SOURCE TO P AY THE SAID SUM. THE SAID TRANSACTION WAS NOT ACCOUNTED IN THE BOOKS OF KAMAT CHIAMMAL FOR THE REASON THAT AS FAR AS SMT. N. KAMATCHIAMMAL IS CONCERNED IT IS ONLY A JOURNAL ENTRY TO BE PASSED IN HER BOOKS WHICH WOULD HAVE NO MONE TARY EFFECT NEITHER THE RECEIPT NOR THE PAYMENT. BETWEEN THE TWO ACCOUNTS IT NEEDS ONLY RECONCILIATION. MOREOVER THE ADVANCE WAS PAID BY T HE ASSESSEE AND ALSO ACCOUNTED IN THE BOOKS EXHIBITED AS CURRENT ASSET IN THE BALANCE SHEET. THE CHARACTER OF THE TRANSACTION IS ASSET AND AS PER TH E ACCOUNTING STANDARDS IT SHOULD NOT BE ADDED AS INCOME UNLESS FOR THE INADEQ UACY OF SOURCES FOR THE SAID PAYMENT. BUT THE ASSESSING OFFICER ADDED THE A SSET AS INCOME. IT IS NOT ACCORDED WITH THE PRINCIPLES OF ACCOUNTANCY. RECEI PTS AND INCOME FALLS UNDER THE CATEGORY OF CREDIT AND PAYMENT AND EXPENDITURE FALLS UNDER THE CATEGORY OF DEBIT. THE ASSESSING OFFICER ADDED THE DEBIT WI TH CREDIT. THIS IS NOT AN UNEXPLAINED EXPENDITURE. HENCE THE AR SUBMITTED T HAT THE CIT(A) HAS CORRECTLY DELETED THE ADDITION . IN RESPECT OF RS. 56 52 040/- ADDED AS AN UNEXPLAINED INVESTMENTS IN AY 2009-10 THE AR SUBM ITTED THAT THE ASSESSEE IS HAVING TWO STATUSES ONE AS AN INDIVIDUAL AND ANO THER AS HUF. THE ASSESSEE IS THE KARTA OF THE HUF. TO MEET OUT THE O BLIGATIONS IN TIME THE :-13-: ITA NOS. 3247 & 3248/MDS/2016 ASSESSEE ISSUED CHEQUES FROM THE HUF STATUS. THE DE TAILS OF PAYMENTS ARE AS UNDER : DATE OF PAYMENT NATURE OF PAYMENT AMOUNT INVESTMENTINTHE NAME OF PAN HEADS IN BALANCE SHEET 07 - 05 - 2008 METLIFE 650000 R MAHENDRAN ADWPM2725R INVESTMENTS 28 - 03 - 2009 METLIFE 650000 R MAHENDRAN ADWPM2725R INVESTMENTS 03 - 12 - 2008 BONANZA PORTFOLIO LIMITED 1995088 R MAHENDRAN ADWPM2725R DEPOSITS AND ADVANCES 25 - 08 - 2008 VMD FOODEX 1800000 R MAHENDRAN AAGHR3032P REPAYMENT OF ADVANCES 29 - 05 - 2008 LIC 278476 R MAHENDRAN ADWPM2725R DRAWINGS 28 - 11 - 2008 LIC 278476 R MAHENDRAN ADWPM2725R DRAWINGS 28 - 11 - 2008 LIC 150000 R MAHENDRAN AAGHR3032P DRAWINGS TOTAL 5652040 THESE PAYMENTS THOUGH MADE OUT OF HUF BANK ACCOUNT S WERE SUBSEQUENTLY REIMBURSED BY THE CONCERNED STATUS WHICH COULD BE V ERIFIED . THE SAID BANK ACCOUNTS ARE ACCOUNTED IN THE BOOKS OF ACCOUNT MAIN TAINED IN THE REGULAR COURSE OF BUSINESS AND EXHIBITED IN THE BALANCE SH EET AS INVESTMENTS AND DRAWINGS. THE ASSESSING OFFICER HAS NOT UNEARTHED A NY BANK ACCOUNTS WHICH IS NOT FOUND IN THE BALANCE SHEET WITHOUT OFFERING AN OPPORTUNITY AND NOT GOING THROUGH THEFACTS SUBMITTED IN THE ORIGINAL ASSESSME NT MADE UNDER SECTION 143(3) THE A O SIMPLY ADDED BACK THEM AS INCOME. T HE AR SUBMITTED THAT THE CIT(A) HAS CORRECTLY DELETED THE ADDITION . :-14-: ITA NOS. 3247 & 3248/MDS/2016 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE FA CT REMAINS THAT THE ASSESSEE IS HAVING A TOTAL LAND HOLDING OF 32 ACR ES IN WHICH IT HAS CULTIVATED COCONUT AS A PARENT CROP FOR THE IMPUGNED ASSESSMEN T YEARS NUTMEG AND VANILLA AS THE INTERCROPS IN AY 2009-10 AND NUTM EG AND ARICANUT AS THE INTERCROPS IN AY 2013-14 . DURING THE SURVEY PROCE EDINGS THE ASSESSEE WAS NOT ABLE TO PRODUCE COMPLETE BOOKS OF ACCOUNT IN CO NNECTION WITH ITS AGRICULTURAL ACTIVITIES. AT THE TIME OF SCRUTINY A LSO THE ASSESSEE HAS NOT PRODUCED ANY BILLS VOUCHERS AND BOOKS OF ACCOUNT A ND DETAILS OF EXPENSES INCURRED FOR EARNING HUGE AGRICULTURAL INCOME. THE A O FOUND THAT THE ASSESSEE ADMITTED MORE INCOME BUT CLAIMED TO HAV E INCURRED VERY LESS EXPENDITURE AND IT DID NOT MAINTAIN CROP-WISE DE TAILS ALSO. HENCE THE A O CONSIDERED THAT DETERMINING THE AVERAGE INCOME AND EXPENDITURE FOR EACH CROP IS THE SUITABLE METHOD FOR DETERMINING THE COR RECT INCOME. IN THE CIRCUMSTANCES THE AO OBTAINED DETAILED EXPERT REPO RT FROM CARDS TAMILNADU AGRICULTURAL UNIVERSITY FOR CULTIVATION OF COCONUT IN POLLACHI REGION AND ADOPTED SUCH INCOME FOR THE COCONUT CROP SUITA BLY FOR THE INVOLVED YEARS. THE ASSESSEE CHALLENGES SUCH FINDINGS BASED ON A PLEA THAT POLLACHI REGION COMPRISES OF TWO FERTILE PARTS ON THE WEST A ND SOUTH OF POLLACHI AND DRY REGION IN THE EAST AND NORTH . IN THE WEST AND SOUTH REGION THE MINIMUM YIELD IS 150 TO 180 NUTS PER TREE WHILE IN THE EAST AND NORTH IT WOULD BE 80 TO 90 NUTS PER TREE. THE AVERAGE YIEL D IS 150 NUTS PER TREE THE :-15-: ITA NOS. 3247 & 3248/MDS/2016 AVERAGE PRICE IS RS10 PER NUT AND THE AVERAGE EXPEN DITURE IS RS. 26 000 PER ACRE . THERE WERE 2400 COCONUT TREES AND 2250 NUTME G TREES AND THESE PARTICULARS WERE ALREADY SUBMITTED IN THE EARLIER ASSESSMENT YEARS . HOWEVER THE ASSESSEE HAS NOT LAID ANY MATERIAL TO PROVE SUC H CONTENTIONS. NEITHER THE AO NOR THE CIT (A) HAVE INDICATED THE ASSESSEES A DMITTED AND ASSESSED INCOME FROM COCONUT EITHER IN THE EARLIER OR SUBSE QUENT ASSESSMENT YEARS. WHEREVER THE ASSESSEE HAS LAID MATERIAL THE AO HAS ACCEPTED SUCH INCOME FOR EXAMPLE THE INCOME FROM VANILLA IN AY 2009-10. THE AO ON DUE EXAMINATION OF THE INCOME ADMITTED BY THE ASSESSEE FROM NUTMEG FROM AY 2009-10 TO 2012-13 HAS ARRIVED CERTAIN INCOME. HOW EVER THE CIT (A) WITHOUT ANY MATERIAL RESTRICTED SUCH INCOME @ 10% O F THE ADMITTED INCOME. SO ALSO FOR THE INCOME FROM ARICANUT . ON THE OT HER ADDITIONS VIZ THE ADVANCE GIVEN AT RS. 78 50 0000/- TO SMT. N. KAMAT CHIAMMAL AND RS. 56 52 040/- ADDED AS AN UNEXPLAINED INVESTMENTS IN AY 2009-10 THE ASSESSEE STRONGLY RELIES ON ITS BOOKS OF ACCOUNT A ND IT WAS PLEADED THAT ON DUE VERIFICATION THE ASSESSEE CAN PROVE THE MERIT S ON ITS SIDE . SINCE THE SOURCES FOR THESE ADVANCES AND DEPOSITS ARE CONNECT ED WITH DETERMINATION OF AGRICULTURAL INCOME OR INCOME FROM OTHER SOURCES A S THE CASE MAY BE ETC AND CONSIDERING THE FACTS AND CIRCUMSTANCES THAT T HE ASSESSEES ADMITTED AND ASSESSED INCOME FROM EACH OF THE IMPUGNED AGRIC ULTURAL SOURCES IN THE EARLIER OR SUBSEQUENT ASSESSMENT YEARS IS NOT AVAI LABLE ON RECORD THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND ALL THE ISSUES ARE REMITTED TO THE AO :-16-: ITA NOS. 3247 & 3248/MDS/2016 FOR A FRESH EXAMINATION FOR BOTH THE ASSESSMENT YEA RS. THE A O SHALL REQUIRE THE ASSESSEE TO LAY ALL THE MATERIALS IN SUPPORT OF ITS CONTENTION DULY EXAMINE THEM AND AFTER AFFORDING ADEQUATE OPPORTUNI TY TO THE ASSESSEE WOULD PASS SPEAKING ORDERS . THE REVENUES APPEAL S FOR ASSESSMENT YEARS 2013-14 & 2009-10 RESPECTIVELY ARE TREATED AS ALL OWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT THE REVENUE APPEALS IN ITA NOS. 3247 & 3248/MDS/2016 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY THE 29 TH DAY OF NOVEMBER 2017 AT CHENNAI SD/- ( . . . ) (N.R.S. GANESAN) !' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI 0 /DATED: 29 TH NOVEMBER 2017 JPV &)1232 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ) (/CIT(A) 4. 4 /CIT 5. 2) /DR 6. 7 /GF