Shri Pramod Jain, Prop. Pride Construction,, Indore v. The I.T.O.,, Indore

ITA 50/IND/2010 | 1998-1999
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 5022714 RSA 2010
Assessee PAN AOFPS4326E
Bench Indore
Appeal Number ITA 50/IND/2010
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant Shri Pramod Jain, Prop. Pride Construction,, Indore
Respondent The I.T.O.,, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-03-2011
Date Of Final Hearing 31-03-2011
Next Hearing Date 31-03-2011
Assessment Year 1998-1999
Appeal Filed On 27-01-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NOS.49 TO 56/JAB/2010 AYS: 1998-99 TO 2004-05 AND 2006-07 ASSTT. COMMISSIONER OF INCOME TAX CIRCLE SAGAR SAGAR ..APPELLANT V/S. SHRI SANTOSH KUMAR SAHU SAGAR PAN AOFPS4326E ..RESPONDENT APPELLANT BY : SHRI ANADI VERMA RESPONDENT BY : SHRI H.P. VERMA AND SHRI ASHISH GOYAL DATE OF HEARING 12 .12.2011 DATE OF PRONOUNCEMENT 11 .01.2012 2 O R D E R PER JOGINDER SINGH AGGRIEVED BY DIFFERENT ORDERS DATED 22.1.2010 OF T HE LEARNED CIT(A)-JABALPUR THE REVENUE IS IN APPEAL F OR ASSESSMENT YEARS 1998-99 TO 2004-05 & 2006-07 ON TH E FOLLOWING COMMON GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELLATE AUTHORITY ERRED I N DELETING THE ADDITION OF RS.32 51 062/- (A.Y. 1998-99) RS.32 92 100/- (A.Y. 1999-00) RS.33 85 051/- (A.Y. 2000-01) RS.34 22 493/- (A.Y. 2001-02) RS.34 37 695/- (A.Y. 2002-03) RS.33 47 343/- (A.Y. 2003-04) RS.32 96 799/- (A.Y. 2004-05) RS.25 69 616/- (A.Y. 2006-07) MADE BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES IN RESPECT OF INCOME FROM LEASE- HOLD LAND. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. FIRST APPELLATE AUTHORITY ERRED I N DELETING THE ADDITION OF RS.78 339/- (A.Y. 1998- 99) RS.52 040/- (A.Y. 1999-00) RS.52 689/- (A.Y. 2000-01) RS.55 147/- (A.Y. 2001-02) RS.56 145/- (A.Y. 2002-03) RS.51 557/- (A.Y. 2003-04) RS.78 101/- (A.Y. 2004-05) MADE BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES IN RESPECT OF INCOME FROM ASSESSEES OWN LAND. 3 2. DURING HEARING WE HAVE HEARD SHRI ANADI VERMA LEARNED CIT DR AND SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL LEARNED COUNSELS FOR THE ASSESSEE. 3. THE LEARNED CIT DR WHILE OPPOSING THE ORDERS OF THE LEARNED CIT(A) STRONGLY SUPPORTED THE ASSESSMENT O RDERS BY FURTHER SUBMITTING THAT THE LEARNED CIT(A) HAS P ASSED THE IMPUGNED ORDERS WITHOUT CONSIDERING THE FACTS O F THE CASE ON RECORD IN PROPER PERSPECTIVE AND AS SUCH TH E ORDERS OF THE LEARNED CIT(A) DESERVE TO BE REVERSED AND AS SUCH THE ASSESSMENT ORDERS NEED TO BE SUSTAINED. 4. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE STATEMENT OF THE ASSESSEE WAS RECO RDED ON 19-12-07 FOR ASSESSMENT YEAR 2005-06 IN WHICH T HE ASSESSEE SURRENDERED RS. 3 LAKHS OUT OF AGRICULTURA L INCOME SUBJECT TO THE CONDITIONS THAT NO HARASSMENT SHALL BE CAUSED TO HIM AND THAT NO PENALTY SHALL BE LEVIED ON HIM. HE SUBMITTED THAT THE ASSESSEE MADE THE 4 SURRENDER BUT MAINTAINED THAT WHATEVER AGRICULTURAL INCOME HAS BEEN SHOWN BY HIM WAS CORRECT. HE FURTHE R SUBMITTED THAT FOR ASSESSMENT YEAR 2005-06 AND EARL IER YEARS FROM ASSESSMENT YEAR1998-99 THE ASSESSEE HAD TO COLLECT A LOT OF EVIDENCE TO SUBSTANTIATE HIS AGRIC ULTURAL INCOME. FOR THIS HE HAS FILED PAPER-BOOK OF 1100 P AGES FOR EARLIER YEARS AND FOR ASSESSMENT YEAR 2006-07 (SUBSEQUENT YEAR) HAVING 436 PAGES. HE SUBMITTED T HAT SINCE THE ASSESSEE DID NOT MAINTAIN ACCOUNT BOOKS THEREFORE HE HAD TO COLLECT EVIDENCES IN RESPECT O F AGRICULTURAL LANDS IRRIGATION MACHINES AGRICULTU RAL OPERATIONS AGRICULTURAL PRODUCE SALES AND INCOME THEREFROM. MANY PERSONS WERE EXAMINED BY THE LEARNE D ASSESSING OFFICER . HE SUBMITTED THAT ALL THESE FAC TS HAVE BEEN SUBMITTED IN EARLIER YEARS ALSO. HE SUBMITTED THAT THE STATEMENT OF THE ASSESSEE U/S 132 (1) OF THE AC T WAS RECORDED. THEREAFTER FOR REGULAR ASSESSMENT HIS STATEMENT OF 8 PAGES WAS RECORDED ON 19-12-2007. T HE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT 5 THIS CLEARLY SHOWS THAT THE AGRICULTURAL INCOME WAS CORRECTLY SHOWN BY HIM AT RS. 28 67 570. IT WAS ALS O CONTENDED THAT CONSIDERING THE STRENUOUS EFFORTS UNDERTAKEN BY HIM FROM 2003 TO 2007 TO COLLECT VARI OUS EVIDENCES AS BOOK OF ACCOUNTS WERE NOT MAINTAINED THE ASSESSEE THOUGHT IT FIT TO MAKE THE SURRENDER IN OR DER TO BUY PEACE WITH THE DEPARTMENT. A PLEA WAS ALSO RAIS ED THAT THE ASSESSING OFFICER WITHOUT ANY BASIS ESTIMA TED THE UNACCOUNTED INCOME OUT OF AGRICULTURAL INCOME WHICH WAS IN APPEAL DELETED BY THE ID. CIT (A). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT ISSUED A NOTICE U/S 263 IN RESPECT OF AGRICULTURAL INCOME WHICH WAS DROPPED BY CONSIDERIN G AND ACCEPTING THE EXPLANATION OF THE ASSESSEE THER EFORE CONSIDERING THE CIRCUMSTANCES UNDER WHICH THE SURRENDER WAS MADE BY THE ASSESSEE NO ADDITION IS WARRANTED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FILED CASH-FLOW STATEMENT AND EXPLAINED THE INVESTMENT/EXPENDITURE TO 6 BE MAINLY OUT OF AGRICULTURAL INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THE FOLLOWING CH ART TO SHOW THAT THE ASSESSEE FILED THE RETURNS OF INCOME ON 10-01-2006 AS UNDER : S.NO. A.Y. TOTAL INCOME AGRICULTURAL INCOME 1. 1998-99 92 480 35 17 800 2. 1999-00 1 23 000 35 51 700 3. 2000-01 99 000 36 07 000 4. 2001-02 1 08 000 36 47 200 5. 2002-03 59 600 36 63 400 6. 2003-04 75 600 36 08 100 7. 2004-05 73 780 35 87 200 THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THE FOLLOWING CHART TO SHOW THAT THE ASSESSEE HAS DECLA RED THE FOLLOWING SALES AND INCOMES : S.NO. A.Y. AGRICULTURAL SALES AGRICULTURAL INCOME 1. 1998-99 35 17 800 2. 1999-00 52 83 370 35 51 700 3. 2000-01 49 42 175 36 07 000 4. 2001-02 35 68 035 36 47 200 5. 2002-03 50 58 541 36 63 400 6. 2003-04 50 74 947 36 08 100 7. 2004-05 46 50 130 35 87 200 7 OUR ATTENTION WAS ALSO INVITED TO THE FOLLOWING CHA RT SHOWING THE AGRICULTURAL INCOME FROM OWN LAND AND T HE LAND TAKEN ON LEASE :- A.Y. AGRICULTURAL LAND AREA OWNED ASSESSEE (ACRES) AGRICULTURAL LAND AREA STATED TO BE TAKEN ON LEASE (ACRES) TOTAL AGRICULTURAL LAND AREA (ACRES) TOTAL AGRICULTURAL INCOME SHOWN RATE PER ACRE 1998-99 37.68 459.25 496.63 35 17 800 7079.07 1999-00 37.68 549.85 587.53 35 51 700 5987.27 2000-01 37.68 573.90 611.58 36 07 000 5898.33 2001-02 37.68 573.90 611.58 36 47 200 5963.57 2002-03 37.68 573.90 611.58 36 63 400 5990.06 2003-04 41.84 537.10 578.94 36 08 100 6232.25 2004-05 42.46 482.03 524.49 35 87 200 6839.41 FOLLOWING CHART SHOWING INCOME AND AVERAGE INCOME P ER ACRE FROM THE LAND TAKEN ON LEASE WAS ALSO SUBMITTE D :- A.Y. AGRICULTURAL LAND AREA STATED TO BE TAKEN ON LEASE (ACRES) TOTAL AGRICULTURAL INCOME SHOWN RATE PER ACRE SHOWN AGRICULTURAL INCOME RELEVANT TO LEASE LAND 1998-99 459.25 35 17 800 7079.07 32 51 061 1999-00 549.85 35 51 700 5987.27 32 92 100 2000-01 573.90 36 07 000 5898.33 33 85 051 2001-02 573.90 36 47 200 5963.57 34 22 493 2002-03 573.90 36 63 400 5990.06 34 37 695 2003-04 537.10 36 08 100 6232.25 33 47 343 2004-05 482.03 35 87 200 6839.41 32 96 799 8 A PLEA WAS ALSO RAISED THAT THE ASSESSING OFFICER B Y REJECTING THE EVIDENCES PRODUCED BEFORE HIM ADDED THE TOTAL INCOME FROM LEASE-HOLD LAND AS INCOME FROM UNDISCLOSED SOURCES AND BESIDES INCOME FROM OWN FIE LDS MADE THE FOLLOWING ADDITIONS - A.Y. LAND AREA OWNED AGRICULTURAL INCOME RELEVANT TO OWN LAND RATE PER ACRE RATE ADOPTED AGR. INCOME CALCULATED / ADOPTED AMOUNT OF ADDITION 1998-99 37.68 2 66 739 7079.07 5000 1 88 400 78 339 1999-00 37.68 2 25 600 5987.27 4500 1 69 560 56 040 2000-01 37.68 2 22 249 5898.33 1500 1 69 560 52 689 2001-02 37.68 2 24 707 5963.57 4500 1 69 560 55 147 2002-03 37.68 2 25 705 5990.06 4500 1 69 560 56 145 2003-04 41.84 2 60 757 6232.25 5000 2 09 200 51 557 2004-05 42.46 2 90 401 6839.41 5000 2 12 300 78 101 IT WAS ALSO SUBMITTED THAT AS TIME WAS VERY SHORT A ND MANY PERSONS WERE TO BE EXAMINED AND VARIOUS DETAIL S WERE TO BE SUBMITTED THE ASSESSEE DID NOT FILE SOM E EVIDENCES WHICH WERE PRODUCED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR THE FIRST TIME AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AF TER ADMITTING THEM SENT THE SAME TO THE ASSESSING OFFIC ER FOR HIS REMAND REPORT. THEREAFTER AFTER RECEIPT OF THE REMAND 9 REPORT FROM THE ASSESSING OFFICER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ADMITTED THE EVIDENCES. 4.1 IN RESPECT OF AGRICULTURAL LAND OWNED AND HELD ON LEASE IT WAS SUBMITTED THAT THE ASSESSEE HAD FI LED KHASRA PANCHSALA. IT WAS ALSO CLAIMED THAT THERE WE RE EIGHT WELLS SEVEN TUBE WELLS ONE LAKE AND THERE WAS A RIVER NEARBY THE FARM OF THE ASSESSEE. IT WAS ALSO EXPLAINED THAT THE ASSESSEE USED TO DO AGRICULTURAL OPERATIONS WITH THE HELP OF LATEST AGRICULTURAL EQU IPMENTS AND USED TO PRODUCE SOYABEAN WHEAT GRAM MASOOR ALSI ETC. AND THE YEARWISE AVERAGE PRODUCE PER ACR E WAS CERTIFIED BY THE PRINCIPLE SCIENTIFIC OFFICER J.N. A.U AREA AGRICULTURAL RESEARCH CENTRE SAGAR. APART FROM THI S THE ASSESSEE USED TO GROW HERBAL AND FRUIT PLANTS. SO F AR AS SALES ARE CONCERNED THE ASSESSEE HAD FILED BEFORE THE LOWER AUTHORITIES MANDI VOUCHERS CONFIRMATIONS FRO M PURCHASERS THEIR PANS CHUKARA REGISTERS OF PURCHA SES 10 WHERE THE VOUCHERS WERE NOT AVAILABLE. THUS IT WAS SUBMITTED THAT THE AVERAGE AGRICULTURAL INCOME DERI VED BY THE ASSESSEE COMES TO RS. 5900/- TO RS. 7100/- P ER ACRE PER YEAR. 4.2. IT WAS EXPLAINED THAT FOR THE SUBSEQUENT ASSESSMENT YEAR 2005-06 THE ID. CIT JABALPUR ISSUE D A NOTICE U/S 263 IN RESPECT OF THE AGRICULTURAL INCOM E IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS BEFORE HIM. LEARNED COMMISSIONER OF INCOME TAX AFTER CONSIDERING THE SAME DROPPED THE PROCEEDINGS U/S 263 OF THE ACT. IN CONCLUSION THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THI S FACT BY ITSELF SHOWS THAT THE ASSESSING OFFICER HAD NO C ASE FOR MAKING THE ADDITIONS IN QUESTION AND AS SUCH THE LEARNED COMMISSIONER OF INCOME TAX WAS FULLY JUSTIF IED IN DELETING THE SAME. 4.3 A PLEA WAS RAISED THAT THE ASSESSEE HAD ALSO FILED FOR A.Y. 2005-06 THE COPIES OF RECEIPTS FOR KEEPING 11 THE AGRICULTURAL PRODUCE IN GODOWNS AND THE COPIES OF EVIDENCE FOR MAKING SALES OF THE AGRICULTURAL PRO DUCE. THE ASSESSING OFFICER ACCEPTED THE CULTIVATION OF L AND BY THE ASSESSEE OF 421 ACRES AND SALE PROCEEDS OF TH E AGRICULTURAL PRODUCE MADE THROUGH THE MANDI COMMITTEE BUT EXPRESSED HIS SURPRISE THAT THE AS SESSEE DID NOT DEPOSIT A SINGLE PENNY OF HIS AGRICULTURAL INCOME IN THE BANK ACCOUNT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE ASSESSEE WAS ALSO EXAMINED. IN THE SAID STATEMENT THE ASSESSEE EXPRESSED HIS WILLINGNESS T O PAY THE INCOME TAX TO BUY PEACE FROM DEPARTMENT ON THE INCOME OF RS. 3 00 000/- OUT OF THE AGRICULTURAL IN COME PROVIDED NO PENALTY IS LEVIED ON HIM UNDER THE IN COME TAX ACT. IT WAS PLEADED THAT THE ASSESSING OFFICER OBSERVED THAT MORE INCOME THAN THE AMOUNT OF RS. 3 00 000/- HAD BEEN CAMOUFLAGED AS HIS AGRICULTURAL INCOME BY THE ASSESSEE AND ACCORDINGLY HE ASSESSED THE INCOME FROM OTHER SOURCES AT RS. 6 00 000/- AND 12 ACCORDINGLY REDUCED THE AGRICULTURAL INCOME BY RS. 6 00 000/-. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR A.Y. 2005-06 AS AN INSTANCE TH E ASSESSEE HAS DECLARED THE AGRICULTURAL INCOME OF RS . 28 67 570/- AGAINST THE SALE PROCEEDS OF THE AGRICU LTURAL PRODUCE OF RS.59 19 258/- SUPPORTED BY SALE VOUCHER S. THIS AGRICULTURAL INCOME WORKED OUT TO RS. 6 811/- PER ACRE WHICH IS LESS THAN USUALLY ACCEPTED INCOME OF RS. 10 000/- PER ACRE FROM THE IRRIGATED LAND. THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE ABOVE THERE WAS NO JUSTIFICATION FOR THE ASSESSIN G OFFICER TO ASK THE ASSESSEE TO SURRENDER THE INCOME OF RS. 3 00 000/- AS INCOME FROM OTHER SOURCES AND THEN T O MAKE THE ADDITION OF RS. 6 00 000/- AS THE INCOME F ROM OTHER SOURCES. 4.4 IT WAS CLAIMED THAT THE BONAFIDES OF THE ASSESSEE ARE CLEAR FROM THE VERY FACT THAT THE CIT JABALPUR HAD ISSUED A NOTICE U/S. 263 FOR A.Y. 200 5-06 13 AS IN HIS OPINION UNLESS THE NAME OF THE ASSESSEE I S ENTERED IN COLUMN -4 OF FORM NO. P-II OF KHASRA PANCHSALA HE CANNOT BE ACCEPTED AS LEASE HOLDER. HOWEVER LATER ON WHEN THE MATTER WAS EXPLAINED TO HIM THE LEARNED CIT DROPPED THE PROCEEDINGS U/S. 2 63 VIDE ORDER DATED 26-02-2009. 4.5 THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE IS THE PROGRESSIVE AGRICULTURIST AND CULTIVATES THE LAND BY MODERN TECHNIQUES. ALL THE SELF OWNED AND LEASE HOLD LAND OF THE ASSESSEE IS FULLY IRRIGATED AND YIELDS TWO CROPS OF KHARIF & RABI. T HERE ARE BIG ORCHARDS WITH LARGE NUMBER OF FRUIT BEARING TREES AS CERTIFIED BY THE DEPUTY DIRECTOR OF HORTICULTURE DEPARTMENT. USUALLY THE AGRICULTURAL INCOME FROM IRRIGATED LAND AT RS. 10 000/- PER ACRE IS CONSIDER ED REASONABLE. IT WAS CONTENDED THAT THE ASSESSEE HA S NOT SHOWN THE INCOME FROM SELF OWNED LAND SEPARATELY. HOWEVER IF THE INCOME FROM SELF OWNED LAND AND LE ASE 14 HOLD LAND IS ESTIMATED AT THE SAME FIGURE AS HAS BEEN DONE BY THE ASSESSING OFFICER THE INCOME COMES BET WEEN RS. 5 898/- TO 7 079/-. THE ASSESSING OFFICER HIMSE LF HAD CALLED A REPORT OF ANNUAL PRODUCTION FROM THE REGIONAL AGRICULTURE RESEARCH CENTRE SAGAR AND TH E SAID CERTIFICATE ALSO PROVES THAT THE INCOME SHOWN BY THE ASSESSEE WAS REASONABLE. COPY OF THE SAID CERTIFIC ATE WAS SUBMITTED. HE THEREFORE SUBMITTED THAT IN VIEW OF THE ABOVE FACTS THERE WAS NO JUSTIFICATION FOR NOT ACC EPTING THE AGRICULTURAL INCOME AS SHOWN BY THE ASSESSEE. 4.6 IT WAS FURTHER CONTENDED BY THE LEARNED COUN SEL FOR THE ASSESSEE THAT THE ASSESSEE HAD CLAIMED THAT HE WAS CARRYING ON THE CULTIVATION ON THE LEASEHOLD AGRICU LTURAL LAND BETWEEN 459 TO 574 ACRES DURING THE DIFFERENT FINANCIAL YEARS AS SHOWN BELOW: 15 A. YR. AGRICULTURAL LAND AREA OWNED BY ASSESSEE (ACRES) AGRICULTURAL LAND AREA STATED TO BE TAKEN ON LEASE(ACRES) TOTAL AGRICULTURAL LAND AREA (ACRES) TOTAL AGRICULTURAL INCOME SHOWN (RS.) RATE PER ACRE (RS.) 98-99 37.68 459.25 496.93 3517800 7079.07 99-00 37.68 549.85 587.53 3551700 5987.27 00-01 37.68 573.90 611.58 3607300 5898.33 01-02 37.68 573.90 611.58 3647200 5963.57 02-03 37.68 573.90 611.58 3663400 5990.06 03-04 41.84 537.10 578.94 3608100 6232.25 04-05 42.46 482.03 524.49 3587200 6839.41 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE ASSES SING OFFICER THAT THESE LANDS BELONGED TO 39 PERSONS . THE COPIES OF KHASRA FOR ALL THE ABOVE SAID LAND WER E FILED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER WAS REQUESTED TO CONDUCT ANY ENQUIRIES TO V ERIFY THE AGRICULTURAL INCOME OF THE ASSESSEE. HE SUBMITT ED THAT MANY LAND HOLDERS FILED THEIR AFFIDAVITS WITH EVIDENCE FOR IDENTITY AND THE LD. ASSESSING OFFICER RECORDED THE STATEMENTS OF 23 LAND OWNERS OUT OF THE ABOVE SAID 39 LAND OWNERS. ALL THESE LAND OWNERS ACCEPTED THAT TH EY HAD LEASED OUT THEIR LAND TO THE ASSESSEE. THE COPY OF 16 CHART SHOWING NAMES OF LAND OWNERS THEIR LAND HOLD INGS COPY OF KHASRA FOR ASSESSMENT YEAR 1998-99 TO 2004- 05 DETAILS ABOUT AFFIDAVITS AND STATEMENTS RECORDED OF THE LAND OWNERS WERE ALSO SUBMITTED. IT WAS ARGUED THAT THE ASSESSING OFFICER IGNORED ALL THE EVIDENCES ON RECO RD POSSIBLY FOR THE REASON THAT THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE FOR SALE OF AGRICULTURAL PRODU CE AND PURCHASE OF FERTILIZERS ETC. BUT WITHOUT BRINGING ANYTHING CONTRARY ON RECORD TO PROVE THAT THE ASSESSEE WAS NOT CULTIVATING THE LEASE HOLD LANDS TREATED THE ENT IRE INCOME FROM LEASE HOLD LANDS AS THE INCOME FROM OT HER SOURCES FOR ALL THE ASSESSMENT YEARS. 4.7 IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD FILED APPLICATIONS BEFORE THE TAHSILDAR TO RECORD HIS NAME AS A MOURASI KASTKAR IN THE LAND RECORD AS HE WAS IN POSSESSION OF ALL THESE LANDS FROM 96-97. THE TAHSILDAR CONDUCTED THE ENQUIRIES AND HELD THAT TH E ASSESSEE WAS IN POSSESSION OF THE ABOVE SAID LANDS FROM 17 96-97 BUT HE DECLINED TO MAKE THE ENTRIES IN THE LAND RECORD BECAUSE OF A CIRCULAR FROM THE COMMISSIONER SAGAR DIVISION SAGAR. SUCH ORDERS IN THE CASES OF SEVERAL LAND OWNERS WERE PASSED BY THE TAHSILDAR AF TER THE COMPLETION OF THE ASSESSMENT PROCEEDINGS AND THEREFORE THEY COULD NOT BE FILED BEFORE THE ASSES SING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 1998-99 TO 2004-05 BEFORE 31-03- 2006. 4.8 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YE AR 2005-06 THAT THE ASSESSEE WAS HAVING THE AGRICULTU RAL EQUIPMENTS RIGHT FROM ASSESSMENT YEAR 98-99 AND MUC H EARLIER. IN THE ASSESSMENT YEAR 98-99 THE PURCHASE PRICE OF SUCH EQUIPMENT WAS RS. 2 50 000/- WHICH INCREAS ED TO RS. 23 95 806/- AS IS EVIDENT FROM BALANCE SHEE T AS ON 31-03-2004 AND THAT WITH THESE EQUIPMENTS THE 18 ASSESSEE WAS IN A POSITION TO CULTIVATE MORE THAN 5 00 ACRES OF LAND. MANY SALE BILLS SHOWING THE SALES OF AGRICULTURAL PRODUCE TO THE EXTENT OF RS. 59 19 258 /- WERE FILED BEFORE THE ASSESSING OFFICER AND HE ACC EPTED THE AGRICULTURAL INCOME OF RS. 22 67 570/-FOR THE ASSESSMENT YEAR 2005-06. HE FURTHER POINTED OUT TH AT THE ASSESSEE IS CULTIVATING MORE THAN 200 ACRES O F AGRICULTURAL LAND IN THE NAME OF SAHU KRISHI FARM AT ONE PLACE ON CHHATARPUR ROAD WHICH CAN BE SEEN B Y ANY PERSON. IT IS THE MOST DEVELOPED FARM WHERE SE ARCH WAS CONDUCTED. THE BALANCE LAND IS SCATTERED AT DIF FERENT PLACES. IT WAS ARGUED THAT ASSESSING OFFICER HAD NO T ACCEPTED THE AGRICULTURAL INCOME SIMPLY BECAUSE OF THE ABSENCE OF SALE BILLS OF AGRICULTURAL PRODUCE. FRO M THE BILLS OF SUBSEQUENT ASSESSMENT YEARS IT IS QUITE C LEAR THAT THE ASSESSEE IS CULTIVATING ALL THE LANDS AS S TATED BY HIM. 19 4.9 IT WAS FURTHER CONTENDED THAT THE ASSESSEE WAS SELLING SUBSTANTIAL PART OF AGRICULTURAL PRODUCE TO THE DIFFERENT GRAIN MERCHANTS OF SAGAR AND THEREFO RE HE APPROACHED THEM AND REQUESTED THEM TO PROVIDE HIM THE COPIES OF THE PURCHASE BILLS FOR PURCHASES MAD E FROM THE ASSESSEE. SOME OF THESE GRAIN MERCHANTS RESPOND ED POSITIVELY AND SOME OF THEM PROVIDED CERTIFICATES CONFIRMING PURCHASES MADE FROM THE ASSESSEE IN SOME OF THE ASSESSMENT YEARS SOME OF THEM PROVIDED CERTIFI CATES AND COPIES OF THEIR CHUKARA REGISTER ON THE DIFFERE NT DATES AND SOME OF THEM PROVIDED COPIES OF PURCHASE BILLS FOR PURCHASE OF FOOD GRAIN FROM THE ASSESSEE FOR THE DI FFERENT ASSESSMENT YEARS AS PER LIST ENCLOSED FOR THE DIFFE RENT ASSESSMENT YEARS. COPIES OF CERTIFICATES AND COPIE S OF BILLS FOR PURCHASE BY THE FOOD GRAIN MERCHANTS WERE ALSO CLAIMED TO BE SUBMITTED BEFORE THE ASSESSING OFFICE R. 4.10 ON THE BASIS OF ABOVE FACTS IT WAS ARGUED TH AT THE POSSESSION OF THE ASSESSEE ON SELF-OWNED AND LEASE 20 HOLD LAND WAS PROVED BY THE COPIES OF STATEMENTS/AFFIDAVITS OF LAND OWNERS THE COPIES O F THE ORDER OF TAHSILDAR AND ON THE SPOT ENQUIRY BY THE ASSESSING OFFICER THE CULTIVATION OF THE LAND WAS PROVED BY THE COPIES OF KHASRA FILED AND THE PART SALES OF AGRICULTURAL PRODUCE WERE ALSO PROVED TO THE EXTENT POSSIBLE. IT WAS ARGUED THAT EVEN IF ALL SALE BIL LS FOR SALE OF AGRICULTURAL PRODUCE ARE NOT AVAILABLE IT CANN OT BE DENIED THAT THE ASSESSEE WAS CULTIVATING THE LAND BETWEEN 459 TO 573 ACRES AND HE COULD EARN THE AGRICULTURAL INCOME BETWEEN RS. 5 900/- TO RS. 7 10 0/- PER ACRE. 4.11 IN VIEW OF THE ABOVE IT WAS SUBMITTED THAT I T WAS ONLY AFTER APPRECIATION OF THE ALL THE MATERIAL FACTS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REACHED A CORRECT CONCLUSION AND AS SUCH THERE IS N O MERIT IN THE APPEALS FILED BY THE DEPARTMENT WHICH DESERVE SUMMARY REJECTION. 21 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. THE FACTS IN BRIEF ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION C ARRIED OUT U/S 132 AT THE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF THE ASSESSEE WHICH COMMENCED ON 10.12.2003 AND FINALLY CONCLUDED ON 31.12.2003. SIMULTANEOUSLY SURVEY U/S 133A OF THE ACT WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES. IN RESPECT OF AGRICULTURAL INCOME IT WAS OBSERVED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE HAD SHOWN HUGE AGRICULTUR AL INCOME FOR EACH OF THE ASSESSMENT YEARS 1998-99 TO 2004-05. THE ASSESSEE HAD SUBMITTED DETAILS OF INVESTMENT AS PER THE TENTATIVE RECEIPTS AND PAYMEN TS ACCOUNTS WHICH WERE ENCLOSED WITH THE RETURNS FILED U/S 153A. THESE DETAILS OF EACH ASSESSMENT YEAR WERE BROUGHT OUT BY THE ASSESSING OFFICER IN HIS ASSESSM ENT ORDERS BY OBSERVING THAT THE ASSESSEE HAD NOT FILED HIS ORIGINAL RETURNS AND THESE TENTATIVE STATEMENTS OF AFFAIRS AS WELL AS TENTATIVE RECEIPTS AND PAYMENTS ACCOUNT S 22 PREPARED AND SUBMITTED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS WERE AN EXERCISE TO OVER-COME THE SITUA TION. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSE SSEE HAD OFFERED THE INCOME IN THE FORM OF AGRICULTURAL INCOME IN PLACE OF ITS UNACCOUNTED INCOME BY TAKING HIGH F IGURES OF AGRICULTURAL INCOME FOR WHICH NO SATISFACTORY EXPLANATIONS WERE OFFERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BASED ON THE STATEMENT RECORDED U/S 132(4) ON 11.12.2003 WHICH WAS CONTINU ED UPTO 12.12.2003 THE ASSESSING OFFICER HELD THAT THE ASSESSEE OWNED ONLY 40 TO 42 ACRES OF LAND ONLY AND HE NEVER STATED ANYTHING ABOUT TAKING OF THE AGRICULTU RAL LAND ON LEASE. DURING THE ASSESSMENT PROCEEDINGS TH E ASSESSEE DID NOT PRODUCE DOCUMENTARY EVIDENCES FOR RECEIPTS AS WELL AS RELATED EXPENSES INCURRED FOR AGRICULTURE PRODUCE. THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME AT ROUND FIGURES. THE ASSESSEE HAD SUBMITTED IN HIS LETTER DATED 17.3.2006 THAT HE HAD TAKEN ABOUT 459 TO 573 ACRES AGRICULTURAL LAND DURI NG 23 DIFFERENT FINANCIAL YEARS FROM THE LAND OWNERS ON L EASE AGREEMENT. THESE LEASE AGREEMENTS WERE MADE FROM YE AR TO YEAR BASIS. HOWEVER NOT A SINGLE AGREEMENT HAD BEEN PRODUCED BEFORE HIM. FURTHER OUT OF 40 PERSONS ONL Y 23 WERE PRODUCED WITH THEIR AFFIDAVITS WHO ALL WERE EXAMINED AND THEIR STATEMENTS WERE RECORDED ON OATH . ALL OF THEM HAD CATEGORICALLY DENIED ABOUT ANY LEA SE AGREEMENT. ALL THESE 23 PERSONS FAILED TO FURNISH ANY EVIDENCE WHICH COULD SUBSTANTIATE THAT THE ALLEGED AGRICULTURAL LAND WAS GIVEN TO SHRI SANTOSH KUMAR S AHU ON LEASE. ACCORDING TO THE ASSESSING OFFICER IT WA S WORTH MENTIONING THAT ALL THESE PERSONS HAD CATEGORICALLY ADMITTED THAT THEY DID NOT GIVE THEIR AGRICULTURAL LAND ON LEASE PRIOR TO THE YEAR 1996 AND ALSO AFTER 2004. T HE GOVERNMENT RECORDS DID NOT REFLECT SUCH SITUATION O F LEASE. THERE WERE NO CORROBORATIVE EVIDENCES WITH T HE AFFIDAVITS WHICH COULD CONFIRM THE STATEMENTS OF TH E SO CALLED AGRICULTURISTS. THE ASSESSING OFFICER THERE FORE HELD THAT SUCH AFFIDAVITS FILED BEFORE HIM ARE SE LF SERVING 24 DOCUMENTS. ACCORDING TO HIM THE AGRICULTURE LAND W AS AN IMMOVABLE PROPERTY WHICH COULD NOT BE USED BY ANYBODY WITHOUT ENTERING INTO PROPER LEASE AGREEMEN T DOCUMENT. THE ASSESSING OFFICER FURTHER OBSERVED IN HIS ORDER THAT ON THE BASIS OF CERTAIN INCRIMINATING DOCUMENTS FOUND AT THE TIME OF SEARCH AND THE DOCUMENTS PRODUCED BY THE ASSESSEE IN CONNECTION WI TH THE ACTUAL AGRICULTURAL ACTIVITIES CARRIED OUT BY H IM AND ACCEPTED IN THE STATEMENT RECORDED ON 11TH AND 12 TH DECEMBER 2003 IT WAS NOTICED THAT THE ASSESSEE WAS HOLDING LAND OF 37.68 ACRES IN A.Y. 1998-99 TO 2002 -03 41.84 ACRES IN A.Y. 2003-04 AND 42.46 ACRES IN A.Y. 2004-05. BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE THE RECEIPT PER ACRE OF AGRICULTURAL INC OME WAS CALCULATED BY THE ASSESSING OFFICER FOR EACH OF TH E ASSESSMENT YEARS AS UNDER: 25 A.YR. AG. LAND AREA OWNED TY ASSESSEE (ACRES) AG. LAND AREA STATED TO BE TAKEN ON LEASE (ACRES) TOTAL AG. LAND AREA (ACRES) TOTAL AGRL.INCOME SHOWN RATE PER ACRE 1998 - 99 37.68 459.25 496.93 35 17 800 7079.07 1999 - 00 37.68 549.85 587.53 35 51 700 5987.27 2000 - 01 37.68 573.90 611.58 36 07 300 5898.33 2001 - 02 37.68 573.90 611.58 36 47 200 5963.57 2002 - 03 37.68 573.90 611.58 36 63 400 5990.06 2003 - 04 41.84 537.10 578.94 36 08 100 6232.25 2004 - 05 42.46 482.03 524.49 35 87 200 6839.41 THE ASSESSING OFFICER FURTHER OBSERVED IN HIS ASSESSMENT ORDERS THAT THE ASSESSEE WAS NOT INVOLVE D IN AGRICULTURE ACTIVITIES AND THEREFORE WAS NOT EARN ING AGRICULTURAL INCOME FROM HIS OWN AGRICULTURE LAND- HOLDING AS HAS BEEN EXCESSIVELY CLAIMED BY THE ASS ESSEE. THUS IT WOULD NOT BE PROPER TO HOLD THAT THE FULL A MOUNT OF AGRICULTURAL INCOME PERTAINING TO HIS OWN AGRICU LTURAL LAND AND INCLUDED IN THE TOTAL AGRICULTURAL INCOME REFLECTED IN THE STATEMENT OF AFFAIRS WAS IN THE N ATURE OF UNACCOUNTED INCOME. THE ASSESSING OFFICER THEREFOR E CONSIDERED THE AGRICULTURAL INCOME DERIVED FROM THE AGRICULTURAL LAND OWNED BY THE ASSESSEE HIMSELF ONL Y AND 26 THAT TOO AT A REASONABLE LEVEL AND THE REST WAS TR EATED AS INCOME FROM OTHER SOURCES. LIKEWISE THE BALANCE AMO UNT OF THE AGRICULTURAL INCOME DERIVED FROM THE LEASE-H OLD LANDS WAS TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. FOLLOWING WAS THE DETAILS OF AGRICULTURA L INCOME DERIVED FROM THE AGRICULTURAL LAND TAKEN ON LEASE AS WORKED OUT BY THE ASSESSING OFFICER OUT OF TOT AL AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR DI FFERENT ASSESSMENT YEARS :- A.YR. AG.LAND AREA STATED TO BE TAKEN ON LEASE (ACRES) TOTAL AGRL. INCOME SHOWN RATE PER ACRE SHOWN AG. INCOME RELEVANT TO LEASE LAND 1998-99 459.25 35 17 800 7079.07 32 51 061 1999-00 549.85 35 51 700 5987.27 32 92 100 2000-01 573.90 36 07 300 5898.33 33 85 051 2001-02 573.90 36 47 200 5963.57 34 22 493 2002-03 573.90 36 63 400 5990.06 34 37 695 2003-04 537.10 36 08 100 6232.25 33 47 343 2004-05 482.03 35 87 200 6839.41 32 96 799 THUS THE SAID AMOUNT OF AGRICULTURAL INCOME IN RES PECT OF THE LEASE-HOLD LAND DETERMINED AS ABOVE IN THE LAST 27 COLUMN WAS CONSIDERED AS THE ASSESSEES INCOME F ROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE WAS HAVING IN HIS POSS ESSION AGRICULTURAL LANDS ADMEASURING 37.68 ACRES PRIOR T O FINANCIAL YEAR 1997-98. DURING THE FINANCIAL YEARS 2002- 03 AND 2003-04 THE ASSESSEE HAD PURCHASED LAND ADMEASURING 4.16 0.62 ACRES RESPECTIVELY AND SHO WN AGRICULTURAL INCOME RANGING FROM RS.5 898.33 TO RS.7 079.07 PER ACRE. THE ASSESSING OFFICER THEREF ORE CONCLUDED THAT IN THESE SITUATIONS IN RESPECT OF AGRICULTURAL LAND-HOLDING OF THE ASSESSEE ONLY (LAN D OWNED BY THE ASSESSEE) THE PER ACRE INCOME SHOWN B Y THE ASSESSEE COULD NOT BE ACCEPTED AS PROPER AND REASONABLE AND HE THEREFORE ESTIMATED THE NET AGRICULTURAL INCOME AS BELOW: A.Y. LAND AREA OWNE D AG. INCOME RELEVANT TO OWN LAND RATE/ ACRE RATE ADOPT ED AG.INC OME CALCULATED /ADOPTED AMOUNT OF ADDITION 1998 - 99 37.68 2 66 739 7079.07 5000 1 88 400 78 339 1999 - 00 37.68 2 25 600 5987.27 4500 1 69 560 56 040 28 2000 - 01 37.68 2 22 249 5898.33 4500 1 69 560 52 689 2001 - 02 37.68 2 24 707 5963.57 4500 1 69 560 55 147 2002 - 03 37.68 2 25 705 5990.06 4500 1 69 560 56 145 2003 - 04 41.84 2 60 757 6232.25 5000 2 09 200 51 557 2004 - 05 42.46 2 90 401 6839.41 5000 2 12 300 78 101 THUS THE ASSESSING OFFICER ALLOWED THE ASSESSEES AGRICULTURAL INCOME TO CERTAIN EXTENT ONLY AS DISCU SSED ABOVE AND TREATED THE ENTIRE INCOME EARNED FROM THE LEASE-HOLD LANDS AS ALSO THE BALANCE INCOME IN RESP ECT OF THE AGRICULTURE LAND OWNED BY THE ASSESSEE HIMSELF AS INCOME FROM UNDISCLOSED SOURCES AND MADE THE FOLLOW ING ADDITIONS : S.NO. NATURE OF ADDITION AMOUNT AGRL. INCOME 1. A.Y. 1998-99 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWNED LAND TOTAL 92 480 32 51 061 78 339 34 21 880 2. A.Y.1999-2000 29 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASED LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 1 23 000 32 92 100 56 040 34 71 140 34 71 140 1 69 560 3. A.Y. 2000-01 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 99 000 33 85 051 52 689 35 36 740 1 69 560 4. A.Y. 2001-02 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 1 08 000 34 22 493 55 147 35 86 090 1 69 560 5. A.Y. 2002-03 A. INCOME RETURNED B. INCOME FROM 59 600 30 OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 34 37 695 56 145 35 53 440 1 69 560 6. A.Y. 2003-04 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 75 600 33 47 343 51 557 34 74 500 2 09 200 7. A.Y. 2004-05 A. INCOME RETURNED B. INCOME FROM OTHER SOURCES RELEVANT TO LEASE LAND C. INCOME FROM OTHER SOURCES RELEVANT TO OWN LAND TOTAL 73 780 32 96 799 78 101 34 48 680 2 12 300 5.1 AGGRIEVED BY THE AFORESAID ADDITIONS MADE BY THE ASSESSING OFFICER THE ASSESSEE PREFERRED FIRST APPEAL. BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) APART FROM THE DETAILED SUBMISSIONS AS DETAILED IN THE IMPUGNED ORDERS IT WAS SUBMITTED BY THE COUNSEL FO R THE 31 ASSESSEE THAT THE ASSESSEE HAD FILED THE DETAILED SUBMISSIONS BEFORE THE ASSESSING OFFICER AND INTER ALIA HAD EXPLAINED THAT HE WAS CULTIVATING 421 ACRES O F LAND WHICH INCLUDED THE LAND OF 46.78 ACRES OWNED BY HI MSELF AND 374 ACRES (149.840 HECTRE) TAKEN ON LEASE. IN SUPPORT OF HIS CLAIM ABOUT THE LAND TAKEN ON LEASE THE LEARNED COUNSEL FOR THE ASSESSEE FILED THE COMPLETE LIST OF ALL THE LAND OWNERS WHO HAD LEASED THEIR LAND TO THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE ALS O SUBMITTED THAT THE ASSESSEE HAD ALSO FILED THE AFFI DAVITS AND EVIDENCE FOR IDENTIFICATION OF THE ABOVE SAID L AND OWNERS BEFORE THE ASSESSING OFFICER. 5.2 DURING THE COURSE OF HEARING BEFORE THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE SUBMITTED AN APPLICATION UNDER RULE 46A FOR ADMISSI ON OF FRESH DOCUMENTARY EVIDENCE FOR THE REASON THAT THE SAME COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS DUE TO SHORTAGE O F TIME. THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 32 FORWARDED THE SAME FOR COMMENTS OF THE ASSESSING OFFICER IN RESPONSE TO WHICH THE ASSESSING OFFICER SUBMITTED A REMAND REPORT SUBMITTING THEREIN THAT SEVERAL REASONABLE OPPORTUNITIES HAD BEEN ALLOWED T O THE ASSESSEE TO SUBSTANTIATE HIS INCOME FROM AGRICULTUR AL ACTIVITIES BUT INSPITE OF THIS THE ASSESSEE COULD NOT SUBSTANTIATE WITH THE HELP OF DOCUMENTARY EVIDENCES THE AGRICULTURAL INCOME DISCLOSED IN THE RETURN. ACCORD ING TO HIM DURING THE COURSE OF SEARCH AND SEIZURE PROCEE DINGS ALSO NO DISCLOSURE OF AGRICULTURAL INCOME OUT OF LA ND TAKEN ON LEASE WAS MADE. FOR THIS ATTENTION WAS DRA WN TO THE ANSWERS GIVEN BY THE ASSESSEE IN QUESTION NO.9 AND 30 OF THE STATEMENT GIVEN BY HIM DURING THE COU RSE OF SEARCH OPERATION. IT WAS ALSO INFORMED THAT IT W AS CLAIMED IN THE COURSE OF SEARCH ASSESSMENT PROCEE DINGS FOR THESE SEVEN ASSESSMENT YEARS THAT THE LAND MEASURING 459 TO 474 ACRES WERE TAKEN ON LEASE BY T HE ASSESSEE ON YEAR TO YEAR BASIS BUT DURING THE COURS E OF ASSESSMENT PROCEEDINGS NO LEASE AGREEMENT COULD BE 33 PRODUCED. DURING THE ASSESSMENT PROCEEDINGS OUT OF 40 ALLEGED LEASERS ONLY 23 WERE PRODUCED AND THEY FIL ED AFFIDAVIT. THEIR STATEMENTS WERE RECORDED ON OATH A ND ALL OF THEM HAD CATEGORICALLY DENIED ABOUT ANY LEASE AGREEMENT. IT WAS REITERATED THAT DURING THE ASSESS MENT PROCEEDINGS THE ASSESSEE DID NOT PRODUCE THE DOCUMENTARY EVIDENCES REGARDING RECEIPT AS WELL AS RELATED EXPENSES INCURRED FOR EARNING AGRICULTURAL INCOME. ON THE BASIS OF THESE IT WAS VEHEMENTLY OBJECTED THAT THESE FRESH EVIDENCES SHOULD NOT BE ENTERTAINED DURING THE APPELLATE PROCEEDING. IT WAS CONTENDED THAT THOUGH SUB-RULE 2 3 & 4 OF RULE 46A GIVE OPTION FOR ENTERTAINING ADDITIONAL EVIDENCES BUT T HERE IS NO EXPRESS MENTION THAT WHEN A CASE HAS ALREADY QUALIFIED IN SUB-RULE 1 OF RULE 46A THE SAME CAN A LSO BE ENTERTAINED BY FOLLOWING SUB-RULES. THE ADMITTANCE OF FRESH DOCUMENTARY EVIDENCES WAS OBJECTED TO BY THE ASSESSING OFFICER. THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) DURING FIRST APPELLATE STAGE DIRECT ED THE 34 ASSESSING OFFICER IN REMAND PROCEEDINGS TO FIND O UT THE AUTHENTICITY OF THE ADDITIONAL EVIDENCES BY MAKING ENQUIRIES FROM THE CONCERNED GRAIN MERCHANTS. THE ASSESSING OFFICER SUBMITTED HIS ENQUIRY REPORT OBJE CTING TO THE ACCEPTANCE OF THE OF THE ADDITIONAL EVIDENCE . ACCORDING TO HIM IN CASES OF 8 PARTIES SUMMONS U/ S 131 WERE ISSUED FOR VERIFICATION OF THE GENUINENES S OF THE ASSESSEES CLAIM WHICH INCLUDED KRISHI UPAJ MANDI SAMITI SAGAR ALSO THROUGH WHOM AS PER THE LAW OF THE STATE GOVT. ALL AGRICULTURAL PRODUCE IS PURCHAS ED AND SOLD. 5.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING THE ABOVE FACTS ADMITTED THE FRESH EVIDENCE FILED BEFORE HIM AND PROCEEDED TO DECIDE T HE APPEAL. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER HEARING THE ASSESSEE AND GOING THRO UGH THE MATERIAL BEFORE HIM OBSERVED AS UNDER :- 35 NOW IT IS A FACT THAT THE ASSESSEE OWNED 37.68 TO 42.46 ACRES OF AGRICULTURAL LAND IN DIFFER ENT ASSESSMENT YEARS AND INCOME GENERATED THEREFROM TO CERTAIN EXTENT WAS ACCEPTED BY THE AO ALSO. THE BALANCE AGRICULTURAL INCOME OUT OF SELF OWNED AGRICULTURAL LAND WAS DISALLOWED AND TREATED AS INCOME FROM OTHER SOURCES AND SIMILARLY THE ENTIRE INCOME GENERATED FROM THE LEASE HOLD LANDS WAS TREATED BY HIM AS INCOME FROM UNDISCLOSED SOURCES AND ACCORDINGLY WERE TAXED FOR ALL THESE SEVEN ASSESSMENT YEARS. NOW THIS IS ALSO A FACT THAT TH E ASSESEE OWNED AGRICULTURAL EQUIPMENT IN LARGE SCALE WHICH SHOWS THAT THE ASSESSEE WAS ENGAGED IN EXTENSIVE AGRICULTURAL ACTIVITIES AND WAS CULTIVATING THE LANDS WITH THE HELP OF MODERN TECHNIQUES. THE RECORDS ALSO SHOW THAT THE ASSESSEES OWN LAND IS FULLY IRRIGATED AND REGULARLY YIELD TWO CROPS I.E. OF KHARIB AS WELL AS RABBI EVERY YEAR. AS CERTIFIED BY THE DY COLLECTOR HORTICULTURE DEPARTMENT SAGAR HE OWNS BIG ORCHARD WITH QUITE LARGE NUMBER OF FRUIT BEARING TREES WHI CH 36 ARE SOLD IN THE OPEN MARKET. SO FAR AS AGRICULTURAL INCOME FROM LEASE HOLD LANDS IS CONCERNED THE ASSESSEE HAD SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF THAT THE AGRICULTURE LAND BETWEEN 459 TO 574 ACRES WAS PROCURED ON LEASE IN DIFFERENT FINANCIAL YEARS FOR CULTIVATION BY HIM WHICH BELONGED TO 39 PERSONS OF THAT AREA. THE COPY OF KHASRA FOR ALL THE LAND-OWNERS WERE FILED DURING THE ASSESSMENT PROCEEDINGS. MANY LAND-OWNERS HAD FILED THEIR AFFIDAVITS CONFIRMING THE ASSESSEES CLAIM OF AGRICULTURAL LAND HAVING BEEN PROCURED ON LEASE FROM THEM. FURTHER OUT OF THESE 39 PERSONS STATEMENTS OF 23 PERSONS WERE RECORDED BY THE AO HIMSELF SPECIFYING KHASRA NUMBER ETC. WHO CONFIRMED IN THEIR STATEMENTS THAT THEY HAD GIVEN THEIR AGRICULTURAL LANDS ON LEASE TO THE ASSESSEE AND ALL OF THEM HAVE EXPLAINED THE REASONS ALSO AS TO WHY THEY HAD GIVEN THEIR LANDS TO THE ASSESSEE ON LEASE. THE A.O. REJECTED THEIR AFFIDAVITS AS WELL AS DISCARDED THEIR STATEMENTS ONLY FOR THE REASON THAT 37 THERE WAS NO WRITTEN LEASE AGREEMENT BETWEEN THESE TWO PARTIES AND THAT THEY WERE NOT IN A POSITION TO FURNISH ANY DOCUMENTARY EVIDENCE IN THIS REGARD. ANOTHER REASON FOR REJECTING THE ASSESSEES CLAIM WAS THAT ALL THESE PERSONS HAD CATEGORICALLY ADMITTED THAT THEY DID NOT GIVE THEI R AGRICULTURAL LANDS ON LEASE PRIOR TO THE YEAR 1996 AND ALSO AFTER 2004 . FURTHER THE GOVT. RECORDS D O NOT REFLECT SUCH SITUATION OF LEASE. HOWEVER FOR ENTERING INTO ANY AGREEMENT IT IS NOT NECESSARY TH AT IT SHOULD ALWAYS BE REDUCED IN WRITING AND WRITTEN LEGAL DOCUMENTS SHOULD BE PREPARED. OBVIOUSLY THE LAND OWNERS ARE GENERALLY ILLITERATE OR LITTLE EDUCATED AND AVOID ENTERING INTO WRITTEN AGREEMENTS OR EXECUTING LEGAL DOCUMENTS. MOREOVER THEY BELONGED TO THE SAME VILLAGE OR NEARBY VILLAGES AND WELL ACQUAINTED WITH THE ASSESSEE AND THE ASSESSEE BEING A RESPECTABLE PERSONALITY OF THE AREA HIS WORDS WERE SUFFICIENT FOR SUCH KIN D OF CONTRACT. THEY TOOK IT FOR GRANTED THAT ONCE TH EY HAD ENTERED INTO ORAL AGREEMENT WITH THE ASSESSEE 38 ASSESSEE WOULD HONOUR HIS WORDS AND GIVE THEM REMUNERATION AS PER THE AGREEMENT. THEY HAVE IN THEIR STATEMENTS CONFIRMED THIS FACT THAT THEY ALWAYS RECEIVED THE REMUNERATION PER ACRE EVERY YEAR FROM THE ASSESSEE. JUST BECAUSE THE LAND WAS NOT GIVEN ON LEASE BY THEM PRIOR TO THE YEAR 1996 OR AFTER THE YEAR 2004 IT CANNOT BE SAID THAT TH EY HAD NOT GIVEN THEIR AGRICULTURAL LANDS ON LEASE DURING THE PERIOD UNDER REFERENCE MORE SO WHEN THEY HAVE THEMSELVES CONFIRMED AND NO EVIDENCE HAS BEEN BROUGHT FORTH BY THE A.O. TO REFUTE THE SAME. LIKE-WISE THE ASSESSEE HAS EXPLAINED AS TO WHY HIS NAME COULD NOT APPEAR OR WAS NOT POSSIBLE TO BE RECORDED IN THE GOVT. RECORDS IN RESPECT OF LEASE HOLD LAND WHICH DOES NOT MEAN THAT HE DID NOT CULTIVATE ON THE LEASE HOLD LAND ACQUIRED BY HIM FROM 39 DIFFERENT LAND OWNERS. THE EXPLANATION SUBMITTED BY HIM APPEARS TO BE REASONABLE AND ACCEPTABLE. IT WOULD ALSO BE NOT OUT OF PLACE TO MENTION HERE THAT WHILE CONDUCTING ENQUIRIES DURING ASSESSMENT PROCEEDINGS THE 39 ASSESSEE HAD POINTED OUT BEFORE THE A.O. THAT THE TAHSILDAR HAD PASSED ORDER U/S 115/116 OF THE LAND REVENUE COURT WHICH CONFIRMED THE FACT THAT THE ASSESSEE WAS IN POSSESSION OF THE LAND TAKEN ON LEASE. THE COPY OF ORDER OF THE COURT OF TAHSILDAR SAGAR DISTT. SAGAR ON VARIOUS DATES BETWEEN 31.1.2007 AND 30.3.2007 TOTALING 18 IS AVAILABLE ON RECORD ITSELF. ACCORDING TO THESE ORDE RS THE ASSESSEE HAD MOVED BEFORE HIM AN APPLICATION FOR ENTERING INTO HIS NAME IN THE LAND RECORDS AGAINST THE NAMES OF THE LAND OWNERS FROM WHOM HE HAD PROCURED LAND FOR CULTIVATION AND THE ORDER FURTHER CLARIFIES THAT THE FACTS WERE VERIFIED FROM THE NON-APPLICANTS I.E. THE LAND OWNERS WHO HAD ACCEPTED THE FACTS AS CLAIMED BY THE APPLICANT I.E . THE ASSESSEE IN HIS APPLICATION AND THE PATWARI AFTER SPOT INSPECTION HAD REPORTED THAT THOUGH TH E LAND BELONGED TO THE NON-APPLICANTS I.E. THE LAND OWNERS BUT IT WAS IN REALITY IN POSSESSION OF THE APPLICANT I.E. THE ASSESSEE AND THAT HE HAD RECOMMENDED FOR ENTERING OF THE APPLICANTS NAME 40 AS THE POSSESSOR OF THE AGRICULTURAL LAND BUT BECAUSE OF THE LETTER NO.2002/62 SAGAR DTD. 18.7.2002 OF THE REVENUE COMMISSIONER SAGAR DIVISION SAGAR NEW ENTRIES COULD NOT BE MADE AND THEREFORE THE ASSESSEES CASE WAS CLOSED AND ULTIMATELY REJECTED. THUS BECAUSE OF CERTAIN REASON S THOUGH IT WAS NOT POSSIBLE AS PER LAW TO ENTER THE ASSESSEES NAME IN LAND RECORDS IN PLACE OF THE NAME OF THE LAND OWNERS THE ORDER OF TAHSILDAR MAKES IT CLEAR THAT SPECIFIC LANDS OF SPECIFIC OWNERS WERE BEING CULTIVATED YEAR BY YEAR BY THE ASSESSEE AND THAT HE WAS IN POSSESSION OF THESE LANDS. THIS IS AN EVIDENCE WHICH CANNOT BE DISCARDED OR OVER-LOOKED BECAUSE IT IS A GOVT. DOCUMENT I.E. ORDER PASSED BY GOVT. OFFICER AND ULTIMATELY IT SUPPORTS THE CLAIM OF THE ASSESSEE. THUS IT CANNOT BE SAID THAT THERE WAS NO AGRICULTURAL INCOME GENERATED TO THE ASSESSEE OUT O F THE LEASE HOLD LANDS AS CLAIMED BY HIM. AS AGAINST THIS AS A RESULT OF SEARCH NOT EVEN AN IO TA OF EVIDENCE WAS UNEARTHED WHICH COULD DISPROVE 41 THE CLAIM OF THE ASSESSEE. FURTHER THIS IS ALSO A FACT THAT THE ASSESSEE HAD DECLARED AGRICULTURAL INCOME OF RS.28 67 570/- FROM APPROXIMATELY 421 ACRES OF AGRICULTURAL LAND FOR A.Y. 2005-06. SINCE IT WAS ACCEPTED BY THE A.O. IN HIS ASSESSMENT ORDER U/S 143(3)/147 AND AS THE CIT-1 JABALPUR WAS OF THE VIEW THAT THE ASSESSMENT MADE BY THE A.O. WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AS HE FAILED TO PROPERLY ENQUIRE AND EXAMINE INTO THE CLAIM OF THE ASSESSEE A NOTICE U/S 263 DTD. 24.3.2008 WAS ISSUED. IN COMPLIANCE OF THE SAME THE ASSESSEE FURNISHED EVIDENCES AND DETAILED EXPLANATION AND AFTER HAVING BEEN SATISFIED WITH THE SAME THE CIT-1 JABALPUR VIDE HIS ORDER DTD. 26.2.2009 DROPPED THE PROCEEDINGS INITIATED U/S 263. SINCE THE ENQUIRY WAS CONDUCTED BY ONE OF THE SENIOR MOST AUTHORITIES OF THE DEPARTMENT HIS FINDINGS REGARDING ACCEPTANCE OF THE ASSESSEES SUBMISSION AND DROPPING THE PROCEEDINGS INITIATED U/S 263 CAN ALSO BE TAKEN AS AN EVIDENCE WHICH SUPPORTS THE CLAIM OF THE ASSESSEE. BECAUSE OF TH IS 42 REASON ALSO IT CANNOT BE SAID THAT THE ASSESSEE NEVER CULTIVATED ON LEASE HOLD AGRICULTURAL LANDS AS CLAIMED BY HIM IN DIFFERENT ASSESSMENT YEARS. NOW COMING TO THE AGRICULTURAL INCOME FOR EACH YEAR TH E A.O. HAS ADOPTED THE AGRICULTURAL INCOME @ RS.5 000/- PER ACRE FOR FEW YEARS AND @ RS.4 500/- FOR OTHER YEARS AS APPEARING IN THE FORE-GOING PAR AS AS AGAINST THE RATE PER ACRE DECLARED BY THE ASSESSEE WHICH VARIES BETWEEN RS.7 079/- TO RS.6 839/-. HOWEVER ON WHAT BASIS THE RATE PER ACRE WAS ADOPTED BY THE A.O. HAS NOT BEEN CLARIFIED BY HIM NOR ANY EVIDENCE HAS BEEN BROUGHT-FORTH IN SUPPORT OF SUCH ESTIMATION. SIMILARLY THERE IS NO EVIDENCE ON RECORD BASED ON WHICH THE RATE PER ACRE DECLARED BY THE ASSESSEE CAN BE DENIED AND DISCARDED. NOW HERE IS A CASE WHERE THE SALES VOUCHERS FOR VARIOUS ASSESSMENT YEARS ARE AVAILABLE ON RECORD WHICH TOTAL UP AS UNDER: 43 FINANCIAL YEAR 1998-99 1999-00 2000-01 2001-02 2002-03 ASSTT. YEAR. 1999- 2000 2000-01 2001-02 2002-03 2003-04 SALES 5 283 370 4 942 175 3 568 035 5 058 541 5 074 947 FINANCIAL YR. 2003-04 2004-05 2005-06 2006-07 ASSTT. YEAR. 2004-05 2005-06 2006-07 2007-08 SALES 4 650 130 5 219 605 5 919 258 6 182 566 THESE ARE NOT FULL AND COMPLETE SALES VOUCHERS BUT ONLY FEW OR AS MUCH AS WAS POSSIBLE TO GATHER IN ORDER TO PROVE THE EXTENT OF SALE THEREFORE SALE M AY BE MORE THAN THESE. NOW OUT OF THESE THE NET AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IS AS UNDER: ASSESSMENT YEAR AGRICULTURAL INCOME DECLARED 1998-99 RS.35 17 800 1999-2000 RS.35 51 700 2000-2001 RS.36 07 300 2001-2002 RS.36 47 200 2002-2003 RS.36 63 400 2003-2004 RS.36 08 100 2004-2005 RS.35 87 200 44 SINCE IT HAS VERY WELL BEEN CONFIRMED THAT THE SAL E VOUCHERS ARE GENUINE AND DULY VERIFIABLE FROM THE RECORDS OF THE KRISHI UPAJ MANDI SAMITI SAGAR TH E NET INCOME DECLARED BY THE ASSESSEE WHICH IS ABOUT 70% OF THE TOTAL SALES APPEARS TO BE FAIR AND REASONABLE AND ACCEPTABLE. IN ANY CASE AS AGAINST THE ESTABLISHE D NORMS OF AGRICULTURAL INCOME OF RS.16 000/- PER A CRE IN NO BOOKS OF ACCOUNT CASES AS CONFIRMED BY THE HONBLE ITAT JABALPUR BENCH JABALPUR ALSO IN THE CA SE OF KAVITA RANI JAIN GOTEGAON VS. I.T.O. WARD 1(3) JABALPUR IN ITA NO.273/JAB/2007 A.Y. 2004-05 DATED 28.5.2008 THE INCOME BEING LESS THAN RS.16 000/- WAS WELL ACCEPTABLE. FURTHER THE HONB LE ITAT JABVALPUR BENCH IN THE CASE OF SHRI DHANIRAM JAISWAL KANDELI VS. ITO WARD 1(3) JABALPUR IN ITA NO.141/JAB/2007 A.Y. 2000-01 DTD. 15.10.2007 HAVE HELD AS UNDER:- IT IS FOUND THAT IN PARA 3 THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE IS DISCLOSING A SUM OF RS.2 LACS EVERY YEAR AS AGRICULTURAL INCOME. 45 FOR THIS PERIOD UNDER CONSIDERATION THE ASSESSEE HAS DISCLOSED AGRICULTURAL INCOME OF RS.1 75 793/- WHICH IS BELOW RS.2 LACS. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A)S FINDING IN RESTRICTING AGRICULTURAL INCOME AT RS.1 LAC IS WITHOUT ANY BASIS HAVING ACCEPTED THE ASSESSEE AS AGRICULTURIST AND OFFERING INCOME AT RS.2 LACS PER ANNUM IN ALL THE PREVIOUS PERIOD. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE VIEW TAKEN BY THE CIT(A) IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND HENCE THE SAME IS HEREBY SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE DEPARTMENT TO ACCEPT THE AGRICULTURAL INCOME OF RS.1 75 793/- AS RETURNED BY THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. AGRICULTURAL INCOME OF RS.175 793/- WAS DECLARED BY THAT ASSESSEE OUT OF 8 ACRES OF AGRICULTURAL LAND WHICH GAVE THE RATE OF ABOUT RS.22 000/- PER ACRE. 46 SINCE IN THAT CASE THE NET AGRICULTURAL INCOME OF RS.22 000/- PER ACRE WAS CONSIDERED TO BE FAIR AND REASONABLE AND ACCEPTABLE THERE IS NO REASON AS TO WHY THE AGRICULTURAL INCOME DECLARED BY THE ASSESS EE FOR THESE YEARS WHICH VARIES BETWEEN RS.7 079/- TO RS.6 839/- CANNOT BE ACCEPTED. IN ANY CASE WELL IRRIGATED AGRICULTURAL LAND CULTIVATED WITH THE HEL P OF MODERN EQUIPMENTS PRODUCING TWO CROPS I.E. RABI A S WELL AS KHARIB ANNUALLY WOULD CERTAINLY RESULT INT O NET AGRICULTURAL INCOME OF RS.7 000 TO RS.8 000/- PER ANNUM. THUS THE AGRICULTURAL INCOME DECLARED BY TH E ASSESSEE FOR EACH OF ALL THESE SEVEN ASSESSMENT YEARS WAS CERTAINLY FAIR MOST REASONABLE AND HENCE ACCEPTABLE. ACCORDINGLY THE A.O. IS DIRECTED TO ACC EPT THE AGRICULTURAL INCOME AS DECLARED BY THE ASSESSE E FOR VARIOUS ASSESSMENT YEARS AND ADOPT THE SAME FO R THE PURPOSE OF CALCULATION OF TAX FOR RATE PURPOSE S ONLY. 5.4 AFTER HEARING THE SUBMISSIONS OF THE PARTIES A ND CONSIDERING THE DOCUMENTS PLACED BEFORE US IN VIEW OF THE ORDERS OF THE LOWER AUTHORITIES WE FIND THAT T HE 47 ASSESSING OFFICER PARTLY ACCEPTED THE INCOME DISCLO SED BY THE ASSESSEE OUT OF THE INCOME DERIVED FROM 37.68 T O 42.68 ACRES OF AGRICULTURAL LAND OWNED BY THE ASSES SEE DURING THE ASSESSMENT YEARS INVOLVED IN THESE APPEA LS. THE ASSESSING OFFICER DISALLOWED THE BALANCE AGRICU LTURAL INCOME OUT OF SELF OWNED AGRICULTURAL LAND AND TREA TED THE SAME AS INCOME FROM OTHER SOURCES AND SIMILARLY THE ENTIRE INCOME GENERATED FROM THE LEASE HOLD LANDS W AS TREATED BY HIM AS INCOME FROM UNDISCLOSED SOURCES. WE FIND THAT THE ASSESEE OWNED AGRICULTURAL EQUIPMENTS IN LARGE SCALE WHICH SHOWS THAT THE ASSESSEE WAS ENGAG ED IN EXTENSIVE AGRICULTURAL ACTIVITIES AND WAS CULTIV ATING THE LANDS WITH THE HELP OF MODERN TECHNIQUES. FROM THE DOCUMENTS PLACED BEFORE US IN THE PAPER BOOK WE FIN D THAT THE ASSESSEES OWN LAND IS FULLY IRRIGATED A ND REGULARLY YIELD TWO CROPS OF KHARIF AS WELL AS RABI EVERY YEAR. WE ALSO FIND THAT THE DY COLLECTOR HORTICULTU RE DEPARTMENT SAGAR HAS CERTIFIED THAT THE ASSESSEE OWNS BIG ORCHARD WITH QUITE LARGE NUMBER OF FRUIT BEARI NG 48 TREES WHICH ARE SOLD IN THE OPEN MARKET. SO FAR AS AGRICULTURAL INCOME FROM LEASE HOLD LANDS IS CONCE RNED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED THAT THE AGRICULTURAL LAND BETWEEN 459 TO 574 ACRES WAS PROCURED ON LEASE IN DIFFERENT FINANCIAL YEARS FOR CULTIVATION BY HIM WH ICH BELONGED TO 39 PERSONS OF THAT AREA. COPIES OF KH ASRAS FOR ALL THE LAND-OWNERS WERE FILED DURING THE ASSES SMENT PROCEEDINGS. MANY LAND-OWNERS HAD FILED THEIR AFFI DAVITS CONFIRMING THE ASSESSEES CLAIM OF AGRICULTURAL LAN D HAVING BEEN PROCURED ON LEASE FROM THEM. FURTHER OU T OF THESE 39 PERSONS STATEMENTS OF 23 PERSONS WERE RECORDED BY THE ASSESSING OFFICER HIMSELF SPECIFYI NG KHASRA NUMBER ETC. WHO CONFIRMED IN THEIR STATEMEN TS THAT THEY HAD GIVEN THEIR AGRICULTURAL LANDS ON LEA SE TO THE ASSESSEE AND ALL OF THEM HAVE EXPLAINED THE REA SONS ALSO AS TO WHY THEY HAD GIVEN THEIR LANDS TO THE AS SESSEE ON LEASE. THE ASSESSING OFFICER REJECTED THEIR AFFI DAVITS AS WELL AS DISCARDED THEIR STATEMENTS ONLY FOR THE REA SON 49 THAT THERE WAS NO WRITTEN LEASE AGREEMENT BETWEEN THESE TWO PARTIES AND THAT THEY WERE NOT IN A POSITION TO FURNISH ANY DOCUMENTARY EVIDENCE IN THIS REGARD. ANOTHER REASON FOR REJECTING THE ASSESSEES CLAIM W AS THAT ALL THESE PERSONS HAD CATEGORICALLY ADMITTED T HAT THEY DID NOT GIVE THEIR AGRICULTURAL LANDS ON LEASE PRIOR TO THE YEAR 1996 AND ALSO AFTER 2004 . HE FURTHER FOU ND THAT THE GOVT. RECORDS DO NOT REFLECT SUCH SITUATI ON OF LEASE. HOWEVER FOR ENTERING INTO ANY AGREEMENT IT IS NOT NECESSARY THAT IT SHOULD ALWAYS BE REDUCED IN WRITI NG AND WRITTEN LEGAL DOCUMENTS SHOULD BE PREPARED. OBVIOUSLY THE LAND OWNERS ARE GENERALLY ILLITERATE OR LITTLE EDUCATED AND AVOID ENTERING INTO WRITTEN AGREEMENTS OR EXECUTING LEGAL DOCUMENTS. MOREOVER THEY BELONGED TO THE SAME VILLAGE OR NEARBY VILLAGES. THE FARMERS IN THEIR STATEMENTS CONFIRMED THAT THEY RECEIVED THE REMUNERATION PER ACRE IN INSTALMENTS EVERY YEAR FRO M THE ASSESSEE. WE FIND THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT LAND W AS NOT 50 GIVEN ON LEASE BY THE FARMERS PRIOR TO THE YEAR 199 6 OR AFTER THE YEAR 2004. ON THE CONTRARY THE PREVIOUS OWNERS OF THE LAND THEMSELVES HAVE CONFIRMED GIVING OF THE LAND TO THE ASSESSEE. IN REGARD TO NON-APPEARA NCE OF THE NAME OF THE ASSESSEE IN THE GOVERNMENT RECORD THE ASSESSEE HAS EXPLAINED AS TO WHY THE NAME OF THE ASSESSEE NAME COULD NOT APPEAR IN THE GOVT. RECORDS IN RESPECT OF LEASE HOLD LAND. IT DOES NOT MEAN THAT HE DID NOT CULTIVATE THE LEASE HOLD LAND ACQUIRED BY HIM FROM 39 DIFFERENT LAND OWNERS. THE EXPLANATION SUBMITTE D BY THE ASSESSEE APPEARS TO BE REASONABLE AND ACCEPTABL E.IN THIS CONNECTION WE FURTHER FIND THAT WHILE CONDUCT ING ENQUIRIES DURING ASSESSMENT PROCEEDINGS THE ASSESSE E HAD POINTED OUT BEFORE THE ASSESSING OFFICER THAT T HE TEHSILDAR HAD PASSED ORDER UNDER SECTIONS 115/116 O F THE LAND REVENUE COURT WHICH CONFIRMED THE FACT THA T THE ASSESSEE WAS IN POSSESSION OF THE LAND TAKEN ON LEASE. COPIES OF THE ORDERS OF THE TEHSILDAR SAGA R ON VARIOUS DATES BETWEEN 31.1.2007 AND 30.3.2007 HAV E 51 BEEN FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US. ACCORDING TO THESE ORDERS THE ASSESSEE HAD MOV ED BEFORE HIM AN APPLICATION FOR ENTERING INTO HIS NAM E IN THE LAND RECORDS AGAINST THE NAMES OF THE LAND OWNE RS FROM WHOM HE HAD PROCURED LAND FOR CULTIVATION AND THE ORDER FURTHER CLARIFIES THAT THE FACTS WERE VER IFIED FROM THE LAND OWNERS WHO HAD ACCEPTED THE SAME TO BE TR UE AND THE PATWARI AFTER SPOT INSPECTION HAD REPORTED THAT THOUGH THE LAND BELONGED THE LAND OWNERS BUT IT WAS LEASED TO THE ASSESSEE AND THAT HE HAD RECOMMENDED FOR ENTERING OF THE ASSESSEES NAME AS THE POSSESSOR OF THE AGRICULTURAL LAND. HOWEVER IT COULD NOT BE DONE B ECAUSE OF SOME LETTER DATED 18.7.2002 OF THE REVENUE COMMISSIONER SAGAR DIVISION ACCORDING TO WHICH NE W ENTRIES COULD NOT BE MADE. AS SUCH THE CASE OF TH E ASSESSEE WAS CLOSED AND ULTIMATELY REJECTED. THUS BECAUSE OF CERTAIN REASONS THOUGH IT WAS NOT POSSIB LE AS PER LAW TO ENTER THE ASSESSEES NAME IN LAND RECORD S IN PLACE OF THE NAME OF THE LAND OWNERS THE ORDER OF THE 52 TEHSILDAR MAKES IT CLEAR THAT SPECIFIC LANDS OF SP ECIFIC OWNERS WERE BEING CULTIVATED YEAR BY YEAR BY THE ASSESSEE AND THAT HE WAS IN POSSESSION OF THESE LAN DS. THUS WE FIND THAT THERE WAS AGRICULTURAL INCOME GENERATED BY THE ASSESSEE OUT OF THE LEASE HOLD LA NDS AS CLAIMED BY HIM. WE ALSO FIND THAT NOT EVEN AN IOTA OF EVIDENCE WAS UNEARTHED WHICH COULD DISPROVE THE CLA IM OF THE ASSESSEE. FURTHER THIS IS ALSO A FACT THAT THE ASSESSEE HAD DECLARED AGRICULTURAL INCOME OF RS.28 67 570/- FROM APPROXIMATELY 421 ACRES OF AGRICULTURAL LAND FOR A.Y. 2005-06. SINCE IT WAS ACCEPTED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER U/S 143(3)/147 AND AS THE CIT WAS OF THE VIEW THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AS HE FAILED TO PROPERLY ENQUIRE AND EXAMINE INTO THE CLAIM OF THE ASSESSEE A NOTICE U/S 263 DATED 24.3.2008 WAS ISSUED IN COMPLIANCE WITH WHICH THE ASSESSEE FURNI SHED EVIDENCES AND DETAILED EXPLANATION AND AFTER HAVING BEEN 53 SATISFIED WITH THE SAME THE CIT DROPPED THE PROCE EDINGS U/S 263 OF THE ACT. 5.5 WE ALSO FIND THAT THE ASSESSING OFFICER HAS AD OPTED THE AGRICULTURAL INCOME @ RS.5 000/- PER ACRE FOR FEW YEARS AND @ RS.4 500/- FOR OTHER YEARS AS APPEARIN G IN THE FORE-GOING PARAS AS AGAINST THE RATE PER ACRE DECLARED BY THE ASSESSEE WHICH VARIES BETWEEN RS.7 079/- TO RS.6 839/-. HOWEVER ON WHAT BASIS T HE RATE PER ACRE WAS ADOPTED BY THE ASSESSING OFFICER HAS NOT BEEN CLARIFIED BY HIM NOR ANY EVIDENCE HAS BEEN BROUGHT ON RECORD IN SUPPORT OF SUCH AN ESTIMATION. 5.6 WE FIND THAT THE NET AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE IS AS UNDER: ASSESSMENT YEAR AGRICULTURAL INCOME DECLARED 1998-99 RS.35 17 800 1999-2000 RS.35 51 700 2000-2001 RS.36 07 300 2001-2002 RS.36 47 200 2002-2003 RS.36 63 400 2003-2004 RS.36 08 100 54 WE FIND THAT THE SALE VOUCHERS ARE VERIFIABLE FROM THE RECORDS OF THE KRISHI UPAJ MANDI SAMITI. AS SUCH T HE NET INCOME DECLARED BY THE ASSESSEE WHICH IS ABOUT 70% OF THE TOTAL SALES APPEARS TO BE FAIR AND REASONABLE. BEFORE US ORDER OF ITAT JABALPUR BENCH IN THE CASE OF KAV ITA RANI JAIN GOTEGAON VS. I.T.O. WARD 1(3) JABALPUR IN ITA NO.273/JAB/2007 A.Y. 2004-05 DATED 28.5.2008 WAS PLACED ACCORDING TO WHICH THE INCOME BEING LESS THAN RS.16 000/- WAS WELL ACCEPTABLE. WE ALSO FIN D THAT THE ITAT JABALPUR BENCH IN THE CASE OF SHRI DHANIRA M JAISWAL KANDELI VS. ITO WARD 1(3) JABALPUR IN ITA NO.141/JAB/2007 A.Y. 2000-01 DATED 15.10.2007 H AS HELD AS UNDER: IT IS FOUND THAT IN PARA 3 THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE IS DISCLOSING A SUM OF RS.2 LACS EVERY YEAR AS AGRICULTURAL INCOME. FOR THIS PERIOD UNDER CONSIDERATION THE ASSESSEE HAS DISCLOSED AGRICULTURAL INCOME OF RS.1 75 793/- WHICH IS BELOW RS.2 LACS. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A)S FINDING IN RESTRICTING AGRICULTURAL INCOME AT RS.1 LAC IS WITHOUT ANY BASIS HAVING ACCEPTED THE ASSESSEE AS 55 AGRICULTURIST AND OFFERING INCOME AT RS.2 LACS PER ANNUM IN ALL THE PREVIOUS PERIOD. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT THE VIEW TAKEN BY THE CIT(A) IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND HENCE THE SAME IS HEREBY SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE DEPARTMENT TO ACCEPT THE AGRICULTURAL INCOME OF RS.1 75 793/- AS RETURNED BY THE ASSESSEE. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. AGRICULTURAL INCOME OF RS.1 75 793/- WAS DECLARED BY THAT ASSESSEE OUT OF 8 ACRES OF AGRICULTURAL LAND WHICH GAVE THE RATE OF ABOUT RS.22 000/- PER ACRE. WE FIND THAT AS THE TRIBUNAL IN THE AFORESAID CASE HAS ADOPTED THE AVERAGE NET AGRICULTURAL INCOME OF RS.22 000/- PER ACRE AS FAIR AND REASONABLE THEREF ORE THE CLAIM OF THE ASSESSEE IS QUITE JUSTIFIED BECAUS E THERE IS NO BASIS OF THE ASSESSING OFFICER IN ADOPTING TH E LOWER RATE OF AGRICULTURAL PRODUCE. WE ALSO FIND THAT SIN CE THE ASSESSEE IS CARRYING ON THE AGRICULTURAL OPERATIONS WITH THE HELP OF MODERN EQUIPMENTS THEREFORE PRODUCING TWO CROPS I.E. RABI AND KHARIB ANNUALLY WOULD CERTAINL Y RESULT INTO NET AGRICULTURAL INCOME OF RS.7 000 TO RS.8 000/- PER ANNUM. WE THEREFORE DO NOT FIND A NY 56 INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES AN D CONFIRM THE SAME. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11 TH JANUARY 2012. SD/- SD/- (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED - 11 TH JANUARY 2012 COPY TO APPELLANT/RESPONDEN T /CIT/CIT(A)/DR DN/-