ITO, v. Datatraya Waman Patil,

ITA 904/PUN/2008 | 2005-2006
Pronouncement Date: 10-12-2010 | Result: Allowed

Appeal Details

RSA Number 90424514 RSA 2008
Assessee PAN ATUPP2995E
Bench Pune
Appeal Number ITA 904/PUN/2008
Duration Of Justice 2 year(s) 5 month(s) 20 day(s)
Appellant ITO,
Respondent Datatraya Waman Patil,
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 10-12-2010
Assessment Year 2005-2006
Appeal Filed On 20-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 904/PN/08 (ASSTT. YEAR 2005-06) ITO WARD -3(2) DHULE .... APPELLANT VS. SHRI DATTATRYA WAMAN PATIL A/P. NAGAON DIST-DHULE PAN NO. ATUPP2995E . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY : SHRI S.U. PATHAK ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-I NASHIK DATED 24-03-2008 FOR THE A.Y 2004-05 AND THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- 1. THE ORDER OF THE CIT(A) IS NOT CORRECT ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 21 34 162/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN BANK ACCOUNT. 3. THE LD. CIT(A) ERRED IN HOLDING THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUPPORTED BY ANY EVIDENCE OR PROPER BASIS WITHOUT APPRECIATING THE FACT THE ENTIRE ADDITION WAS MADE ON TH E BASIS OF EVIDENCE OBTAINED IN THE FORM OF DISTRICT AGRICULTURAL YIELD STATISTIC S OF THE GOVERNMENT. 4. THE LD. CIT(A) ERRED IN ADMITTING THE ADDITIONAL EVIDENCE IN THE FORM OF REVISED 7/12 EXTRACT WITHOUT PROVIDING AN OPPORTUNITY TO THE ASSESSING OFFICER AS PROVIDED UNDER RULE 46A ESPECIALLY WHEN THE ASSESSEE FURNISHED DIFFERENT AND HOLDING AT DIFFERENT POINTS OF TIME. 5. THE LD. CIT(A) OUGHT NOT TO HAVE CONSIDERED THE NEW EVIDENCE FIELD BY THE ASSESSEE IN THE FORM OF THE STATISTIC PUBLISHED BY THE D EPARTMENT OF AGRICULTURAL ECONOMICS. MAHATMA PHULE KRISHI VIDYAPITH . 6. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E STATISTIC PUBLISHED BY THE VIDYAPITH PROVIDES ONLY THE RANGE OF YIELD OF AGRICULTURE PRODUCE AND NOT THE ACTUAL AVERAGE YIELD STATISTIC IN THE DISTRICT. 7. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E ASSESSEE NEVER PRODUCED HIS COPY OF RECEIPTS OF DHULE KRISHI UTPAN BAJAR SAMITI EIT HER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) AND THEREF ORE IT CANNOT BE SAID ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 2 OF 9 THAT THE OVER WRITING AND CORRECTIONS IN THE RECEIPTS ARE NOT ATTRIBUTED TO THE ASSESSEE. 8. THE LD. CIT(A) OUGHT NOT TO HAVE CONSIDERED THE EXTRANEOUS ISSUES SUCH AS NON-INVESTMENTS DURING THE YEAR WHICH HAVE NO RELEVANC E TO THE ISSUE ON HAND I.E. SOURCE OF DEPOSITS IN THE BANK ACCOUNT. 9. THE LD. CIT(A) OUGHT NOT TO HAVE HELD THAT THE A SSESSEE HAS NO OTHER SOURCE OF INCOME WHEN THE ASSESSEE IS GETTING ALL THE BENEFITS AVAILABLE TO A SITTING MLA BY WAY OF HONORARIUM ETC. 10. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING BEFORE THE HONBLE ITAT. 2. BRIEFLY STATED THE RELEVANT FACTS OF THE CASE AS N ARRATED IN PARA 3 OF THE IMPUGNED ORDER OF THE CIT(A) ARE AS FOLLOWS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE I.T.O C.I.B. PUNE NOTED DEPOSITS OF ABOUT RS. 25 LACS DURING THE F.Y 2004-05 IN THE BANK ACCOUNT OF THE APPELLANT AND HENCE ISSUED HIM UNSIGNED NOTICE U/S. 142(1) OF THE INCOME-TAX ACT 1961 TO FILE RETURN OF INCOME. THE A PPELLANT DID NOT FILE RETURN AS HE IS AN AGRICULTURIST AND IS NOT HAVING ANY OTHER TAXABLE INCOME. THE INFORMATION REQUIRED BY THE A.O DURING THE COURSE O F ASSESSMENT PROCEEDINGS WAS FILE BY THE APPELLANT FROM TIME-TO-TI ME. HOWEVER AS THE RETURN OF INCOME WAS NOT FILED THE A.O. PASSED ASSES SMENT U/S. 144 OF THE INCOME-TAX ACT 1961 STATING THAT THE GROSS RECEIPTS FROM AGRICULTURAL PRODUCE CLAIMED BY THE APPELLANT ARE EXCESSIVE TO THE EXTENT OF RS. 21 34 162 AND TREATED THE SAME AS INCOME FROM OTHER SOURCES . 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT SUBMITTED TO THE A.O. AS UNDER I. THE 7/12 & 8A EXTRACTS OF AGRICULTURAL LAND SHOWING AGRICULTURAL LAND HOLDING OF ABOUT 36 ACRES AND SHOWIN G CROPS GROWN ON THE SAID LAND. II. THE 20 RECEIPTS FOR AGRICULTURAL PRODUCE SOLD TO KRISHI UTPANNA BAZAR SAMITTEE AND 5 RECEIPTS FOR COTTON SOLD TO PRIV ATE PARTIES. III. BANK STATEMENT SHOWING ALL THE DEPOSITS IN C ASH AND MOST OF THE WITHDRAWALS IN CASH HAVING PEAK MAXIMUM BALANCE OF RS. 7 20 951. IV. THE APPELLANT FILED WRITTEN SUBMISSIONS AND C LAIMED THAT HE IS PURELY AGRICULTURIST AND HAS NO OTHER SOURCE OF INCOME AND HIS AGRICULTURAL INCOME IS EXEMPT U/S. 10(1) OF THE I.T. ACT 1961. HE HAS DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF HIS G ROSS AGRICULTURAL INCOME OF RS. 26 70 707 AND ALSO OUT OF CASH WITHDRA WALS FROM BANK ACCOUNT. 3.2 THE A.O PARTLY ACCEPTED THE CONTENTION OF THE A PPELLANT AND HELD THAT GROSS AGRICULTURAL INCOME TO THE EXTENT OF RS. 21 34 1 62 IS EXCESSIVE STATING FOLLOWING REASONS: I. AS PER STATISTICS OF DHULE DISTRICT AVERAGE YIELD OF COTTON PRODUCED IN DHULE DISTRICT IS 1229.8 KGS. PER HECTORS (I.E. AREA UNDER COTTON IN DHULE DISTRICT 71800 HECTORS PRODUCTION 88 300 M.T). THE GROSS SALE PROCEEDS OF COTTON FROM 5 HECTORS OF LAND CU LTIVATED CAN BE 6149.50 KGS ONLY AGAINST 30365 KGS . CLAIMED BY THE APPELLANT. THE ACCEPTABLE PRODUCTION OF COTTON AS PER A.O IS 20.09% AGAINST PRODUCTION CLAIMED. THE SALE PROCEEDS OF THE COTTON A T 20.09% RS. 1 31 150 IS ACCEPTABLE AS AGAINST CLAIM OF THE APPE LLANT AT RS. 6 52 850. ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 3 OF 9 II. THE GROSS SALE PROCEEDS OF THE OTHER CROPS CLAIME D BY THE APPELLANT AT RS. 20 17 857 IS TREATED AS EXCESSIVE T O THE EXTENT OF 79.81% RS. 16 12 462 AND ACCEPTED TO THE EXTENT OF 20.09% RS. 4 05 395 FOLLOWING THE CONTENTION OF EXCESSIVE CLAI M IN RESPECT OF COTTON PRODUCTION. III. THERE IS OVERWRITING ON 7/12 EXTRACT IN RESPECT OF AREA UNDER CULTIVATION OF COTTON. IV. THERE IS OVERWRITING ON SOME RECEIPTS OF KRISHI U TPANNA BAZAR SAMITTEE DHULE. 3. DURING THE FIRST APPELLATE PROCEEDINGS ASSESSEE SU BMITTED THAT A.O FAILED TO UNDERSTAND THE FACT THAT 21500 KGS OF COTTON OUT OF TOTAL SALES OF 30365 KGS OF COTTON WAS SOLD ON 02-04-2004 TO THREE PARTIES AND S AID COTTON WAS NOT GROWN IN THE YEAR UNDER CONSIDERATION AND IT BELONGS TO THE PRO DUCTION OF EARLIER YEARS. BALANCE OF 10000 KGS (APPOX) OF COTTON IS QUANTITAT IVELY PRODUCIBLE IN THIS YEAR IN THE LAND HELD BY THE ASSESSEE. THE AVERAGE YIELD OF 1600 KGS TO 3000 KGS PER HECTOR AS PER THE MPKV STATISTICS WILL PROTECT THE ASSESSEE S CLAIM. THE AVERAGE PRODUCTION OF COTTON AT THE RATE OF 1229.80 KGS. PER HECTOR AS E STIMATED BY THE AO IN THE ASSESSMENT IS UNSUBSTANTIATED AND NOT BACKED BY ANY EVIDENCE. REGARDING OTHER CROPS THE ASSESSEE POINTED OUT THAT THE AO BLINDLY INVOKING THE ESTIMATIONS AS APPLIED TO THE COTTON YIELD. AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE AS PER HIS FINDING IN PARA 4.5. RELEVANT DISCUSSION OF THE CIT(A) AS GIVEN IN PARA 4.1 OF TH E IMPUGNED ORDER IS AS FOLLOWS. 4.1 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AND REPORTS/ COMMENTS OF THE A.O AND SUBMISSIONS FILED BY THE AP PELLANT. THE A.O HAS BASED HIS ADDITION ON HIS CONTENTION THAT THE QUANT ITY OF COTTON SOLD 30500 KGS. IS PRODUCED DURING THE FINANCIAL YEAR 2004-200 5 AND AS PER STATISTICS OF DHULE DISTRICT THE AVERAGE PRODUCTION OF COTTON IS 1229.80 KGS. PER HECTOR ONLY. HENCE THE APPELLANTS PRODUCTION OF COTTON CO ULD BE ONLY 6149 KGS. THE APPELLANT HAS POINTED-OUT THAT THE COTTON SOLD ON 0 2/04/2004 CANNOT BE PRODUCED WITHIN TWO DAYS IN F.Y. 2004-05 AND HENCE THE SAME WAS COTTON STORED WHICH WAS PRODUCED IN EARLIER YEARS REGARDS BALANCE COTTON OF 10000 KGS. PRODUCED DURING THE YEAR FROM 5 HECTORS OF LAN D AT 2000 KGS. PE HECTOR THE APPELLANT CORRECTLY CLAIMED THAT THE AVERAGE COT TON PRODUCED IN DHULE DISTRICT AT 1229.80 KGS. PER HECTOR IS IN RESPECT O F 80% LAND WHICH IS NOT IRRIGATED AND 20% LAND WHICH IS IRRIGATED AND HENCE THE PRODUCTION IN RESPECT OF IRRIGATED LAND (AS THAT OF THE APPELLANT) IS BOU ND TO BE MUCH HIGHER THAN THE AVERAGE YIELD FROM SUBSTANTIAL NON-IRRIGATED AN D LESS IRRIGATED LAND. THE CLAIM OF THE APPELLANT IS ALSO SUPPORTED BY THE STA TISTICS PUBLISHED BY DEPARTMENT OF AGRICULTURAL ECONOMICS MAHATMA PHULE KRISHI VIDYAPEETH AS PER WHICH COTTON PRODUCTION IN IRRIGATED LAND CAN B E 1600 TO 3000 KGS. PER HECTOR. IN VIEW OF THE ABOVE FACTS THE BASIS OF TH E A.O FOR NON-ACCEPTANCE OF GROSS AGRICULTURAL PRODUCE CLAIMED BY THE APPELLANT ON THE BASIS OF RECEIPTS ISSUED BY KRISHI UTPANNA BAZAR SAMITTEE DHULE IN R ESPECT OF VARIOUS CROPS AND FROM OTHER PARTIES IN RESPECT OF COTTON IS PROV ED TO BE INCORRECT AND HENCE REJECTED. THE A.O HAS ERRONEOUSLY APPLIED THE SAID INCORRECT BASIS ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 4 OF 9 ARRIVED AT IN RESPECT OF COTTON SOLD FOR NOT ACCEPT ING SALE PROCEEDS OF OTHER CROPS ALSO. 4. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL FOR THE ASSESSEE ARGUED STATING THAT WHILE THE LAND HOLDING IS UNDISPUTED AND ALSO WHEN THE GENUINENESS OF AGRICULTURE OF COTTON AND OTHER CROPS IS UNDISPUTED AND WHEN THE SALE OF THE AGRICULTURAL PRODUCE TO THE GENUINE PARTIES WHICH IS SUPPORTED BY THE SALE BILLS IS UNDISPUTED THE A.O CANNOT REJECT THE CLAIM OF THE A SSESSEE. IN THIS REGARD THE LD COUNSEL RELIED ON THE EVIDENCES FURNISHED BEFORE THE REVENUE AUTHORITIES. REFERRING TO THE GROUND 9 OF THE APPEAL IE THE LD. CIT(A) OUGHT NOT TO HAVE HELD THAT THE ASSESSEE HAS NO OTHER SOURCE OF INCOME WHEN THE ASS ESSEE IS GETTING ALL THE BENEFITS AVAILABLE TO A SITTING MLA BY WAY OF HONORARIUM ETC LD COUNSEL MENTIONED THAT THE HE HAS OBJECTION TO THE SAID GROUND RAISED BY THE REVE NUE AS THE SAME IS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND IT WAS NOT RAISE D OR ATTENDED BY THE REVENUE EITHER DURING THE ASSESSMENT OR FIRST APPELLATE PROCEEDI NGS. IN THIS REGARD WITHOUT CONCEDING THE COUNSEL ARGUED STATING THAT THE AO CA NNOT MADE ADDITION OF RS. 21 34 162/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN BANK ACCOUNT WHEN THE ASSESSEE NO OTHER SOURCE OF INCOME AND HE TOOK SUPPORT SOME DECISIONS IN THIS REGARD. IN THE ALTERNATIVE THE COUNSEL FOR ASSESSEE SU BMITTED THAT IN THE SAID BANK ACCOUNT RECORDS THE WITHDRAWAL OF CASH TOO AND IF THE TELESCOPE BENEFITS ARE GRANTED AGAINST THE DEPOSITS IN THE SAID ACCOUNT THE ADDIT IONS SHOULD BE MUCH LESS. AS PER THE COUNSEL THE SAID WITHDRAWALS ARE ROUTED FOR MEETIN G THE EXPENDITURE INCIDENTAL TO THE AGRICULTURAL ACTIVITIES. IN THIS REGARD IN SUP PORT OF THE PEAK CREDIT WORKING AND CONSEQUENT ADDITIONS LD. COUNSEL RELIED ON THE JUD GMENTS REPORTED IN 72 ITR 757 (KER) PAGE 763 AND 87 ITR 395 (SC). 5. ON THE OTHER HAND LD. DR FOR REVENUE RELIED ON THE ORDERS OF THE A.O AND ARGUED STATING THAT ASSESSEE IS A POLITICIAN SITTIN G MLA AND POSSESSES LAND HOLDINGS. ASSESSEE IS A NON FILER OF THE TAX RETURNS AND THEREFORE THE CLAIM REGARDING THE AGRICULTURAL INCOME OF LAND HOLDING SURFACED FOR THE FI RST TIME IN THIS YEAR. AS PER THE LD DR THE ASSESSEE NEVER DEMONSTRATED THE FACT OF UN DERTAKING THE AGRICULTURAL ACTIVITIES RELATING TO COTTON WHEAT ETC EITHER IN TH E CURRENT YEAR ON THE EARLIER YEARS FOR SUPPORTING THE COTTON SALES AMOUNTING TO 30365 KGS. FURTHER AS PER THE DR THE ASSESSEE FAILED TO EVIDENCE THE EXPENDITURE INCU RRED FOR EFFECTING THE CULTIVATING OF COTTON AND OTHER CROPS BY FURNISHING THE BASIC EVI DENCES IN SUPPORT OF PURCHASES OF RELEVANT SEEDS FERTILIZERS/MANURE LABOUR ETC. FURTHE R STATING THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS LD DR MENTIONED THAT T HE ASSESSEE MADE A CLAIM OF EXEMPTION U/S 10(1) OF THE ACT AND IT IS FOR HIM TO EVIDENCE THAT THE CLAIM IS PROPER ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 5 OF 9 AND CREDIBLE AND IT IS NOT FOR THE AO TO PROVE THAT TH E IMPUGNED CLAIM IS NOT GENUINE. REGARDING THE DECISION RELIED UPON BY THE CO UNSEL HE MENTIONED THAT THE GROUND 9 OF THE APPEAL IS A FACT AND IN SUCH CIRCUMST ANCES THE ASSESSEE CANNOT BE HELD AS THE PERSON WITHOUT ANY OTHER SOURCE OF INCOME AS HE RECEIVES VARIOUS RECEIPTS IN THE CAPACITY OF MLA. REGARDING THE SET O FF OF THE WITHDRAWALS OF CASH FORM THE IMPUGNED BANK ACCOUNT THE DR IS CRITICAL OF THE ALTERNATIVE CONTENTION OF THE COUNSEL FOR THE ASSESSEE AND MENTIONED THAT SUCH SET OFF SHOULD NOT BE ENTERTAINED AS THERE IS NO EVIDENCE TO SUPPORT THAT TH E SAID WITHDRAWALS ARE ROUTED IN TO THE SEEDS OR FERTILIZERS OR LABOUR OR ANY OTHER AGRI CULTURAL ACTIVITIES RELEVANT TO THE SALES IN QUESTION. LD DR IS ALSO CRITICAL OF THE CIT(A) IN GRANTING A RELIEF TO THE ASSESSEE WITH REGARD TO (I) THE COTTON RELATABLE TO TH E EARLIER YEAR WITH OUT GOING INTO THE BASICS OF SUCH CLAIM AND (II) THE AGRICULTU RAL PRODUCE OF THE OTHER CROPS WITHOUT GOING INTO THE ISSUES. AS PER THE DR MERE PO SSESSING THE LAND HOLDING IS NOT ENOUGH TO UPHOLD THE CLAIM OF AGRICULTURAL INCOME WHICH IS ENTITLED FOR THE EXEMPTION U/S 10(1) OF THE ACT AND FURTHER MERELY THE EXISTENCE OF STATISTICS PUBLISHED BY DEPARTMENT OF AGRL. ECONOMICS MAHATMA PHULE KRISHI VIDYAPEETH WHICH BATS FOR AVERAGE COTTON PRODUCTION IN IRRIGATED LA ND @ 1600 TO 3000 KGS PER HECTOR IS NOT ADEQUATE FOR ALLOWING THE CLAIM OF THE ASSESSEE. IN NUTSHELL LD DR RELIED HEAVILY ON THE ORDER OF THE AO AND HE IS CRITICA L OF THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF T HE REVENUE. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS AGRICULTURAL HOLDINGS OF 36 ACRES AS EVIDENT FROM THE EXTRACTS FROM THE RECORDS OF THE REVENU E DEPARTMENT OF THE STATE GOVERNMENT. HE IS ALSO A POLITICIAN AND A SITTING ML A. HE NEVER FILED THE RETURN OF INCOME IN THE PAST AND THEREFORE THERE IS NO OFFICIAL CLAIM OF AN AGRICULTURAL INCOME IN THE PAST. THE CREDITS AND THE DEBITS WHICH APPEA RED IN THE IMPUGNED BANK ACCOUNT OF THE ASSESSEE FOR THE RELEVANT PERIOD ARE TH E CASH TRANSACTIONS. THE ASSESSMENT WHICH WAS COMPLETED BY THE AO IS THE BES T JUDGMENT ASSESSMENT MADE U/S 144 OF THE ACT. CIT(A) ADMITTED ADDITIONAL EVID ENCES AS RAISED IN GROUND 4 OF THIS APPEAL AND THE AO DID NOT HAVE ANY OCCASION TO ADDRESS TO THESE EVIDENCES. THE ONLY DOCUMENTS OR EVIDENCES FURNISHED BY THE ASSE SSEE DURING THE FIRST APPELLATE AUTHORITIES INCLUDE THE 7/12 & 8A EXTRACTS OF AGRICULTURAL LAND SHOWING AGRICULTURAL LAND HOLDING OF ABOUT 36 ACRES AND SHOWIN G CROPS GROWN ON THE SAID LAND AND 20 RECEIPTS FOR AGRICULTURAL PRODUCE SOLD TO KRISHI UTPANNA BAZAR SAMITTEE (KUBS) AND 5 RECEIPTS FOR COTTON SOLD TO PRIVATE PARTIES. IT IS ALSO AN UNDISPUTED FACT THAT AO ACCEPTED THE PRODUCTION OF AGRICULTURAL PRODUCE IN THE ASSESSEES LAND HOLDING IN THE YEAR UNDER CONSIDERATION AND HE HAS NO OCCASION TO EXAMINE FOR THE ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 6 OF 9 EARLIER YEARS AS HE IS UNDER THE BONA FIDE BELIEF THAT THE WHOLE OF THE COTTON SOLD BELONGS TO THE CURRENT YEAR WHICH IS FACTUALLY INCORREC T AS CORRECTED BY THE CIT(A) DURING THE PROCEEDINGS BEFORE HIM. 7. ON THE OTHER HAND THE DISPUTED AREAS BETWEEN THE PARTIES ARE AS FOLLOWS. WHETHER THE PRINCIPLES OF NATURAL JUSTICE AND THE PROVI SIONS OF RULE 46A OF THE I T RULES 1962 ARE NOT COMPILED WITH BY THE CIT(A) IN EN TERTAINING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE DURING THE FIRST APPE LLATE PROCEEDINGS? WHO HAS FAILED TO DISCHARGE THE ONUS THE ASSESSEE OR THE AO ? WHAT IS THE CORRECT QUANTUM OF COTTON PRODUCTION PER HECTARE AND IF THE MPKV STATI STICS ARE CREDIBLE? WHETHER THE ASSESSEE HAS OTHER SOURCE OF INCOME OR NOT TO EXPL AIN THE CASH DEPOSITS IN THE BANK ACCOUNTS WITHIN THE MEANING OF THE CITATIONS RE LIED UPON BY THE ASSESSEES COUNSEL OR NOT?. IF THE ORDER PASSED BY THE CIT(A) IS CRYPTIC VIS A VIS THE COTTON PRODUCE GROWN AND BELONGS TO THE EARLIER YEARS AND IMPU GNED SALES OF OTHER CROPS SUCH AS WHEAT ETC. WHETHER THE PEAK CREDITS SHOULD ON LY BE CONSIDERED FOR ADDITION OR NOT? IN THE LIGHT OF OUR UNDERSTANDING THE DISPUTED AREAS OF THIS APPEAL CONSIDERING THE ARGUMENTS OF THE RIVAL PARTIES WE PROCE ED TO ADJUDICATE THESE ISSUES IN THE PRECEDING PARAGRAPHS. 8. PRINCIPLES OF NATURAL JUSTICE AND THE PROVISIONS OF RULE 46A : SO FAR AS THE PRINCIPLES OF NATURAL JUSTICE AND THE PROVISIONS OF RULE 46A OF THE I T RULES 1962 IT IS ADMITTED POSITION THAT THE ASSESSEE DID NOT F ILE THE IMPUGNED ADDITIONAL EVIDENCES FOR THE FIRST TIME BEFORE THE CIT(A) THE FI RST APPELLATE AUTHORITY. IT IS SURPRISING TO NOTE THAT THERE IS NO WHISPER ABOUT THE F ILING OF THE IMPUGNED ADDITIONAL EVIDENCES FOR THE FIRST TIME BEFORE HIM AN D UNDER WHAT CIRCUMSTANCES THE ASSESSEE COULD NOT PRODUCE THE SAME DURING THE ASSES SMENT PROCEEDINGS WHICH WAS IN FACT COMPLETED U/S 144 OF THE ACT. IN OUR OPI NION THE CIT(A) WHO SHOULD HAVE COMPLETED THE APPELLATE PROCEEDINGS AFTER REMAND REPORT FROM THE AO IS NOT IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE A ND TO THAT EXTENT THE GRIEVANCE OF THE REVENUE IS JUSTIFIED IN ITS ENTIRETY. RELEVANT GROUNDS OF THE REVENUE ARE ALLOWED . 9. ONUS : REGARDING THE ISSUES RELATING TO THE DISCHARGING O F THE ONUS BY THE ASSESSEE IN OUR OPINION IN ADDITION TO THE 7 /12 & 8A EXTRACTS SHOWING THE LAND HOLDING OF 36 ACRES AND SHOWING CROPS GROWN ON TH E SAID LAND AND 20 RECEIPTS FOR SALE OF AGRICULTURAL PRODUCE ASSESSEE SHOULD HAVE FILED EVIDENCES IN SUPPORT OF THE ACTUAL AGRICULTURAL PRACTICES UNDERTAKEN BY THE AS SESSEE DURING THE CURRENT YEAR ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 7 OF 9 AND ALSO THE EARLIER YEARS IN SUPPORT OF THE STORED COTT ON OF 21500 KGS SOLD ON 2 ND APRIL. IT IS ALSO APPROPRIATE TO MENTION THAT THE AO S HOULD NOT SIMPLY DISMISS THE CONTENT OF THE ABOVE SAID EVIDENCES FILED BY THE AS SESSEE WITHOUT ESTABLISHING THAT THEY ARE INCREDIBLE AND INGUINENE. WHEN THE DEDUCTION IS CLAIMED U/S 10(1) OF THE ACT BY THE ASSESSEE IN OUR OPINION THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE ON VARIOUS CRUCIAL ASPECTS OF THIS 21500 OF COTTON SAID TO BE BELONG TO EARLIER YEARS. 10. DHULE DISTRICT COTTON DATA IS NOT RELIABLE VIS A VI S THE MPKV STATISTICS: REGARDING THE RELIABILITY OF THE STATISTICS OF MPKV RELIED UPON BY THE ASSESSEE AND THE DISTRICT LEVEL DATA RELIED UPON BY T HE AO IN OUR OPINION ALL OF THEM ARE MERE ESTIMATES. IN THE CONTEXT OF THE YIELD RELATING TO THE SUGARCANE CROP IN CONNECTION WITH THE OTHER APPEALS RELATING TO SUGA RCANE YIELD THIS BENCH HAS ALREADY QUESTIONED THE VERACITY AND CREDIBILITY OF THE DATA OF MPKV STATISTICS. THEREFORE THE PARTIES IN QUESTION HAVE TO BRING FORTH T HE CREDIBLE AND COMPARABLE DATA TO SUPPORT THEIR CLAIMS. ASSESSEE IS UNDER OBLIG ATION TO ESTABLISH HOW SPECIFIC DHULE DISTRICT COTTON DATA IS NOT RELIABLE VIS A VIS THE MPKV STATISTICS WHICH IS MORE GENERAL IN NATURE. 11 . COTTON OF EARLIER YEARS: FURTHER IT IS AN ADMITTED FACT SO FAR AS THE COTTON IS CONCERN 30365 KGS OF COTTON WAS SOLD IN THE YEAR UNDER CONSIDERATION OUT OF WHICH 10000 KGS BELONG TO THE CURRENT YEAR AND 21500 KGS PERTAINS TO EARLIER YEAR AGRICULTURAL PRODUCTION. IN OUR OPINION 1229.80 KGS IE 6149 KGS FOR FIVE HECTORS PER HECTOR IS DETERMINED BY THE A.O IS NOT WITHOUT ANY B ASIS ALTHOUGH IT IS ALSO A MERE ESTIMATE. REGARDING THE 21500 KGS OF COTTON WE FIN D THAT THE ORDER OF THE CIT(A) IS DEFICIENT AS TO HOW THE CIT CAME TO THE CONCLUSION THAT THE SAID COTTON WAS GROWN WHETHER GROWN AT ALL WERE SOLD OR NOT. IT IS NOT CLEAR A S TO HOW THE CLAIM OF THE ASSESSEE WAS ACCEPTED WITHOUT ANY BASIS MORE SO WHE N THE ASSESSEE IS NOT A TAX PAYER AND NOT FILING THE RETURN OF INCOME. ASSESSEE AL SO FAILED TO DEMONSTRATE THE FACTS THAT THERE WERE AGRICULTURAL PRACTICES IN EARLIER Y EAR. THEREFORE REGARDING THE 21500 KGS OF COTTON RELATABLE TO THE EARLIER YEARS T HE ONUS IS ON THE ASSESSEE TO DEMONSTRATE THAT THE SAID COTTON IS GROWN IN HIS LAND HOLDINGS AND THE SAME IS STORED FOR REASONABLE GROUNDS AND MANNER OF STORING. AO H AS TO GO INTO THE ROOT OF THE MATTER IN TERMS OF YEAR OF CROP STORAGE DETAILS PE R HECTARE YIELD AFTER CONSIDERING THE COMPARABLE CASES. 12 . OTHER CROPS ESTIMATION OF PRODUCE COTTON YIELD ING AS BASIS: REGARDING OTHER CROPS WE ARE OF THE OPINION THAT CIT(A) HAS NOT MERELY FOLLOWED THE ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 8 OF 9 FINDINGS IF HELD IN CONNECTION WITH THE COTTON NO INDEPENDENT FINDING WAS GIVEN BY THE CIT(A) IN HIS ORDER ON THE POINT. FROM THE ORDERS OF THE REVENUE IT IS EVIDENT THAT FOR ESTIMATION OF THE PRODUCE OF OTHER CROPS WAS D ONE BASED ON THE CRITERIA OF COTTON. IN OUR OPINION SUCH ESTIMATION IS ERRONEOUS. MORE SO WHEN THE AOS ESTIMATION IS EVIDENTLY ERRONEOUS AS POINTED OUT BY T HE CIT(A). WE HAVE ALSO MENTIONED EARLIER THAT THE AO CONSIDERED EARLIER YEARS PRODUCE OF COTTON AS THE PRODUCE OF THE YEAR UNDER CONSIDERATION. THEREFORE ASSES SEE HAS NOT PRODUCED REQUISITE EVIDENCES TO SUPPORT THE CLAIMS RELATING TO QUANTITIES OF OTHER CROPS AND CLAIM OF DEDUCTION U/S 10(1) OF THE ACT. REVENUE HA S NOT DONE ITS JOB IN GARNERING REQUISITE BASIC FACTS RELATING TO THE PROPER CRITERIA FOR ESTIMATING THE REASONABLE CROP PRODUCE IN RESPECT OF THESE CROPS SUCH COMPARABLE CASES CROP YIELDS FROM THE LAND HOLDING OF THE NEIGHBORING AGRICULTURISTS OF THE SAME LOCALITY ETC. 13. NOT A SPEAKING ORDER ON VARIOUS ASPECTS: ORDER OF THE CIT(A) IS NOT A SPEAKING ORDER ON MANY ASPECTS. SOME OF THESE ASPECTS ARE WHETHER THE ASSESSEE HAS HELD REQUISITE COTTON CULTIVABLE LAND IN THOSE Y EARS WHETHER THE IMPUGNED COTTON IS ACTUALLY CULTIVATED IN HIS LAND HOLDINGS WHETHER ASSESSEE INCURRED REQUISITE EXPENDITURE ON THE ESSENTIALS OF ANY CROP IE PURCHASE OF SEEDS FERTILIZERS AND LABOUR TRANSPORT OF THE COTTON FROM THE FIELDS TO THE STORAGE POINTS IMPUGNED COTTON WAS STORED FOR YEARS BEFORE SELLING IT ON 2 ND APRIL WHETHER THE COTTON SALES MADE ON 2 ND APRIL IS AN AGRICULTURAL PRODUCE OR OTHERWISE THE DE TAILS OF THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE HAD TO PRESERVE THE COTTON FOR YEARS BEFORE IT WAS SOLD ON 2 ND APRIL. AS PER THE ASSESSEES VERSION 21500 KG OF COT TON PERTAINS TO EARLIER YEARS AND THERE IS NO SPECIFIC FINDING ON THE YEAR IT BELONGS. IN ANY CASE 21500 KG OF COTTON MUST PERTAIN TO MORE THAN 3 YEARS A T THE RATE ADOPTED BY THE AO IE @ 1229 KGS PER HECTARE. AO NEEDS TO ATTEND TO THES E ISSUES WHILE MAKING THE ASSESSMENT IN THE SET ASIDE PROCEEDINGS. 14 . AGRICULTURIST AND POLITICIAN: IN THE CONTEXT OF TRITE LAW REGARDING ABSENCE OF OTHER SOURCES OF INCOME TO THE ASSESSEE LD COUNSEL TOOK OBJECTION TO THE REVENUES GROUND AT SL NO 9. IN THE GROUND THE REVENUE ATTEMPTED TO CONVEY THAT THE ASSESSEE IS A POLITICIAN AND IT IS THE SOURCE O F THE IMPUGNED INCOME WHICH IS ADDED AS THE INCOME OF THE ASSESSEE. LD COUNSEL ARGU ED VEHEMENTLY STATING THAT THE ORDERS OF THE REVENUE DO NOT REFER THE RELEVANT FACT S AND THEREFORE THE REVENUE CANNOT RAISE SUCH GROUND BEFORE THE TRIBUNAL. AS SEEN FROM THE ORDERS OF THE REVENUE THIS ISSUE HAS COME UP FOR THE FIRST TIME BEF ORE US AND THERE IS NO DATA ON ITA NOS. 904/PN/08 A.Y. 2005-06 PAGE 9 OF 9 IF THE ASSESSEE WAS EARNING ANY INCOME IN THE CAPACI TY OF THE MLA IF IT IS A FACT. BASIC FACTS ARE REQUIRED TO BE BROUGHT TO THE RECORDS IN THE INTEREST OF THE JUSTICE. 15 . THUS IN OUR VIEW THERE ARE MANY LACUNAE IN THE ORDERS OF THE REVENUE AND IMPUGNED ORDER WAS PASSED WITHOUT BRINGING BASIC FACTS NECESSARY FOR ADMINISTRATION OF LAW JUDICIOUSLY. THEREFORE WE ARE OF THE OPINION ALL THE GROUNDS RAISED IN THE APPEAL OF THE REVENUE HAS TO BE SET ASI DE TO THE FILES OF THE AO. AO SHALL REDO THE ASSESSMENT PRO-TANTO AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THE GROUNDS ARE SET ASIDE. 16. IN THE RESULT APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDERS PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 10 TH DECEMBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ITO WARD-3(1) DHULE 2. ASSESSEE 3. CIT(A)-I NASHIK 4. CIT C.I.B PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE