Shri Rajeshbhai S. Haria,, JAMNAGAR v. The Income Tax Officer, Ward-1(3),, JAMNAGAR

ITA 942/RJT/2010 | 2004-2005
Pronouncement Date: 10-07-2013 | Result: Partly Allowed

Appeal Details

RSA Number 94224914 RSA 2010
Assessee PAN AACPH0386A
Bench Rajkot
Appeal Number ITA 942/RJT/2010
Duration Of Justice 3 year(s) 1 month(s) 16 day(s)
Appellant Shri Rajeshbhai S. Haria,, JAMNAGAR
Respondent The Income Tax Officer, Ward-1(3),, JAMNAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 10-07-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 10-07-2013
Date Of Final Hearing 21-06-2013
Next Hearing Date 21-06-2013
Assessment Year 2004-2005
Appeal Filed On 24-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA JM AND SHRI D K SRIVASTAVA AM ITA NO. 94 2 /RJ T/201 0 ASSESSMENT YEAR : 200 4 - 0 5 SHRI RAJESHBHAI S. HARIA RAJSHANTI METAL PVT LTD B - 42 STU GIDC JAMNAGAR PAN: AACPH 0386 A V. ITO WARD - 1 (3) JAMNAGAR DATE OF HEARING : 21 .0 6 .2013 DATE OF PRONOUNCEMENT : 10 .0 7 .2013 ASSESSEE BY : SHRI J C RANPURA CA REVENUE BY : SHRI M K SINGH DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST T HE ORDER PASSED BY THE CIT(A) JAMNAGAR ON 08 . 0 4 .20 1 0 ON THE FOLLOWING GROUNDS: - 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) JAMNAGAR [HEREINAFTER REFERRED TO AS THE CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN UPHOLDING THE ACTION OF AO IN REJECTING BOOKS OF ACCOUNT U/S 145(3) OF THE ACT. THE REJECTION OF BOOKS OF ACCOUNT IS TOTALLY UNJUSTIFIED ON FACTS AS ALSO IN LAW AND THE AO MAY KINDLY BE DIRECTED TO ACCEPT THE SAME. 3.0 THE LD. CIT(A) ERRED ON FACTS AS ALSO IN LAW IN RESTRICTING THE NET AGRICULTURAL INCOME OF THE APPELLANT AT RS.83 413/ - AS AGAINST THE ACTUAL NET AGRICULTURAL INCOME OF RS.2 83 506/ - AND THEREBY CONFIRMING THE ADDITION OF RS.2 00 093/ - MADE U/S 68 OF THE ACT. 3.1 THE LD CIT(A) IN HOLDING THAT AGRICULTURAL EXPENSES SHOULD BE AT 26% OF GROSS AGRICULTURAL RECEIPTS AS AGAINST ACTUAL AT 22.45%. THE AO BE DIRECTED TO ACCEPT AGRICULTURAL EXPENSES AS PER RETURN OF INCOME. 4.0 THE APPELLA NT CRAVES LEAVE TO ADD AMEND ALTER OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL. HIS MAIN SOURCES OF INCOME ARE INCOME FROM SALARY OTHER SOURCES AND AGRICULTUR E. IN THE RETURN FILED B Y THE ASSESSEE ON 2 942 - RJT - 2010 SHRI RAJESHBHAI S HARIA 30.09.2004 TOTAL INCOME WAS SHOWN AT RS.15 44 290/ - IN ADDITION TO AGRICULTURAL INCOME AT RS.2 83 506/ - . THE ASSESSEE CLAIMED TO HAVE MAINTAINED BOOKS OF ACCOUNT S IN WHICH NET AGRICULTURAL INCOME OF RS.2 83 506/ - WAS CREDITED. THE ASSESS ING OFFICER PROCEEDED TO VERIFY THE GENUINENESS OF THE QUANTUM OF NET AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. FOR THE DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER THE ASSESSING OFFICER CONSIDERED A SUM OF RS. 2 58 176 / - AS NON - AGRICULTURAL INCOME OUT OF TOTAL AGRICULTURAL INCOME OF RS 2 83 506 / - SHOWN BY THE ASSESSEE. ON APPEAL THE LD CIT(A) PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: - 6. I HAVE CAREFULLY CONSIDERED THE ENTIRE ISSUE AND I HAVE GONE THROUGH THE ASS ESSMENT ORDER. SO FAR AS REJECTION OF BOOKS OF ACCOUNTS IS CONCERNED IT IS SEEN THAT THE AO HAS DISCUSSED THIS ISSUE IN DETAIL IN PARA 4 OF THE ASSESSMENT ORDER IN WHICH HE HAS CLEARLY STATED THAT SALE OF AGRICULTURAL INCOME IS NOT SUPPORTED BY SALE BILL S AND ONLY ONE SALE BILL RELATING TO SALE OF GROUNDNUT WAS AVAILABLE. ALL OTHER DOCUMENTS ARE SELF PREPARED ON WHICH THERE IS NO SIGNATURE OF THE PURCHASER. EVEN THE EMPLOYEE OF THE APPELLANT HAD STATED THAT VEGETABLES WERE NOT BEING GROWN. THE EXPENSES CL AIMED AGAINST AGRICULTURAL INCOME EXCEPT TELEPHONE AND VEHICLE EXPENSES WERE NOT SUPPORTED WITH ANY EVIDENCE REGARDING INCURRING OF EXPENSES. THE EXPENSES WERE ALSO LOW AS COMPARED TO NORMAL EXPENSES. IT IS ALSO MENTIONED BY THE AO THAT UNDER SEC.131(1) BO OKS OF ACCOUNTS OF THE APPELLANT WERE CALLED FOR AND IT WAS ADMITTED BY T HE APPELLANT THAT BOOKS OF ACCOU NTS RELATING TO SOME OF THE YEARS WERE NOT READY. THE APPELLANT COULD NOT PRODUCE BEFORE THE AO ANY BOOK REGISTER OR EVIDENCE TO SHOW THAT BOOKS OF AC COUNTS RELATING TO AGRICULTURAL INCOME WAS BEING MAINTAINED REGULARLY. ALL THESE GOES TO SHOW THAT SO FAR AS AGRICULTURAL INCOME IS CONCERNED ALLEGED BOOKS OF ACCOUNTS ARE NOT AT ALL RELIABLE AND THEREFORE THE AO HAS RIGHTLY REJECTED THE BOOKS OF ACCOUN TS. 7. COMING TO THE ASPECT OF YIELD OF THE APPELLANT BASED ON THE GOVERNMENT RECORDS THE AO HAS WORKED OUT THAT YIELD OF GROUNDNUT WAS NOT EXPECTED TO BE MORE THAN 2400 KGS AS AGAINST THE SALE OF 7000 KGS SHOWN BY 3 942 - RJT - 2010 SHRI RAJESHBHAI S HARIA THE APPELLANT. IN THIS CONNECTION THE APPELLANT HAS STATED THAT THE YIELD MAY GO UPTO 5000 KGS. PER HECTARE AND FOR THIS CERTIFICATE OF DISTRICT AGRICULTURAL OFFICER JAMNAGAR HAS BEEN PRODUCED. HOWEVER IF THE CERTIFICATE IS SEEN IT IS NOTICED THAT YIELD OF GROUNDNUT VARIES BETWEEN 987 KGS. TO 2500 KGS. PER HECTARE IN NORMAL CIRCUMSTANCES DEPENDING ON THE LEVEL OF MONSOON AND OTHER FACILITIES AVAILABLE WITH THE AGRICULTURIST. IN THE LAST COLUMN IT IS MENTIONED THAT MAXIMUM YIELD CAN BE UPTO 5000 KGS. PER HECTARE IF MECHANICAL CULTIVATION IS DONE WITH THE HELP OF CHEMICAL PESTICIDES ETC. SO FAR AS APPELLANTS CASE IS CONCERNED IN THE WRITTEN REPLY ITSELF THE APPELLANT HAS ADMITTED THAT NO CHEMICAL FERTILIZERS WERE USED AND ONLY ORGANIC FERTILIZER WAS USED IN AGRICULTURE. IN SUCH A SITUATION THE YIELD CANNOT BE THAT HIGH. IN ANY CASE THE TOTAL LAND HOLDING OF THE APPELLANT AS PER CERTIFICATE PRODUCED IS ONLY 0.92 HECTARE . THEREFORE EVEN IF IT IS PRESUMED THAT BECAUSE OF BETTER IRRIGATION FACILITIES ON THE LAND THE APPELLANT COULD GET MORE YI ELD THAN A NORMAL PERSON STILL THE YIELD CANNOT BE 5000 KGS. PER HECTARE IN SUCH CIRCUMSTANCES . A T BEST BECAUSE OF BETTER AGRICULTURE FACILITIES THE NORMAL YIELD CAN BE HELD TO BE 20% MORE THAN BY THE MAXIMUM NORMAL YIELD IN GENERAL CONDITION S WHICH IS SH OWN TO BE 2500 KGS. PER HECTARE IN THE CERTIFICATE OF THE DISTRICT AGRICULTURAL OFFICER JAMNAGAR WHICH HAS BEEN SUBMITTED BY THE APPELLANT ALONGWITH HIS SUBMISSIONS. THEREFORE EVEN IN THAT SITUATION THE APPELLANT HOLDS ONLY 1 HECTARE OF LAND THE MAXIMU M YIELD OF GROUND NUT CAN BE ONLY 3000 KGS. THUS THE YIELD OF 7000 KGS SHOWN BY THE APPELLANT IS APPARENTLY INCORRECT AND IMPOSSIBLE. SUCH YIELD IS IN FACT AN IMPOSSIBILITY. APPARENTLY THE YIELD OF 4000 KGS. OF GROUNDNUT IS SHOWN IN EXCESS BY THE APPELLANT . 8. COMING TO THE SALE OF VEGETABLES IT IS SEEN FROM THE AGRICULTURAL RECORDS THAT VEGETABLE HAVE BEEN GROWN ONLY ON 0.05 HECTARE AND SALE OF VEGETABLES HAS BEEN SHOWN AT RS.2 4 2 880 . AS PER SUBMISSIONS OF THE APPELLANT VEGETABLES WERE GROWN ONLY DURIN G THE WINTER SEASON AND NOT IN THE ENTIRE YEAR. THE AGRICULTURAL RECORDS I.E. 7/12 EXTRACT SHOW S THAT IN FACT VEGETABLE WERE GROWN BY THE APPELLANT BUT ONLY IN WINTER . C ONSIDERING THE FACT THAT IT WAS GROWN ON 0.05 HECTARE AND THAT TOO ONLY IN ONE SEASON. T HE 4 942 - RJT - 2010 SHRI RAJESHBHAI S HARIA PRODUCE WORTH RS. 2 42 880 IS AN IMPOSSIBILITY. THE SAME CAN AT BEST BE ESTIMATED AT RS. 6 0 000. THUS THE EXCESS PRODUCTION SHOWN BY THE APPELLANT IS AS UNDER ; 4000 KGS. GROUND NUT RS.17.50 PER KG. RS. 70 000 EXCESS PRODUCTION OF VEGETABLES (2 42 880 - 60 000) RS. 1 82 880 TOTAL RS.2 52 880 THUS THE ACTUAL SALE / PRODUCE OF THE APPELLANT HAS TO BE WORKED OUT AS UNDER: GROSS SALES SHOWN RS.3 65 600 LESS : EXCESS PRODUCTION AS SHOWN ABOVE RS.2 52 880 TOTAL RS.1 12 720 THE AO HAS ADOPTED EXPENSES @ 40% BASED ON ITAT AHMEDABAD BENCHS ORDER. HOWEVER ITAT RAJKOT BENCH HAS HELD IN THE CASE OF MAHESHBHAI B. KIYADA (HUF) IN ITA NO.487/RJT/2006 AND IN THE CASE OF MINESH JADVBHAI PATEL IN ITA NO.142/RJT/2007 THAT AGRICULTURAL EXPE NSES SHOULD BE ESTIMATED @ 26%. THEREFORE OUT OF THE ABOVE AGRICULTURAL EXPENSES SHOULD BE ESTIMATED AT 26% AND AGRICULTURAL INCOME SHOULD BE WORKED OUT ON THAT BASIS. THE AO IS DIRECTED TO DO SO. THE BALANCE INCOME WILL BE TAKEN AS UNDISCLOSED INCOME OF THE APPELLANT AND TAXED ACCORDINGLY. 9. AN ISSUE HAS BEEN RAISED THAT IN EARLIER YEAR A HIGHER INCOME FROM AGRICULTURE HAS BEEN ACCEPTED BY THE DEPARTMENT AND THEREFORE EVEN FOR THIS YEAR THE SAME SHOULD BE ACCEPTED. HOWEVER IT IS TO BE POINTED OUT TH AT IN ALL THOSE YEARS ASSESSMENTS WERE COMPLETED U/S.143(1) AND THAT CANNOT BE THE BASIS FOR WORKING OUT INCOME IN THIS YEAR BECAUSE THIS YEAR PROPER SCRUTINY HAS BEEN DONE. IT HAS BEEN NOTICED THAT AGRICULTURAL PRODUCE HAS BEEN INFLATED. AO IS THEREFORE DIRECTED TO WORK OUT AGRICULTURAL INCOME AS STATED ABOVE. 3 . AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A) THE ASSESSEE IS NOW I N APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS WHICH WERE EARLIER MADE BEFORE THE LD CIT(A). HIS MAIN SUBMISSIONS WERE THAT THE BOOKS OF ACCOUNTS HAVE PROPERLY BEEN MAINTAINED BY THE ASSESSEE IN WHICH REVENUES FROM THE AGRICULTURE AS WELL AS EXPENSES INCURRED IN THAT BEHALF HAVE BEEN FULLY RECORDED AND THEREFORE THE ASSESSING OFFICER AS WELL AS CIT(A) OUGHT TO HAVE ACCEPTED THE NET AGRICULTURAL 5 942 - RJT - 2010 SHRI RAJESHBHAI S HARIA INCOME SHOWN BY THE ASSESSEE. IT IS FURTHER CLAIMED THAT REVENUE ITSELF HAS ACCEPTED HIGHER NET AGRICULTURAL INCOME IN THE PAST IN THE CASE OF THE AS SESSEE. 4 . IN REPLY THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 5 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. THE LD CIT(A) HAS GIVEN COGENT REASONS FOR ENDORSING THE ACTION OF THE ASS ESSING OFFICER IN REJECTING THE TOTALITY OF AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. THE LD CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS RESULTS IN SO FAR AS THEY RELATED TO AGRICULTURAL INCOME. 6 . THE ESTIMATION OF NON - AGRICULTURAL INCOME BY THE ASSESSING OFFICER AT RS.2 58 176/ - OUT OF TOTAL AGRICULTURAL INCOME OF RS.2 83 506/ - SHOWN BY THE ASSESSEE APPEARS TO BE ON HIGHER SIDE. TAKING INTO ACCOUNT THE PAST RECORDS OF THE ASSESSEE TH E SUBMISSIONS MADE BY THE ASSESSEE AND THE MATERIALS BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THE LD CIT(A) IT IS CONSIDERED APPROPRIATE TO RESTRICT THE ADDITION TO RS. 1 5 0 000/ - OUT OF RS. 2 58 176 / - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIM ATION OF NON - AGRICULTURAL INCOME. WE ORDER ACCORDINGLY. 6 . IN VIEW OF THE FOREGOING T HE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 10 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 10 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT SHRI RAJESHBHAI S. HARIA RAJSHANTI METAL PVT LTD JAMNAGAR 2 . RESPONDENT - ITO WARD - 1(3) JAMNAGAR 3 . CONCERNED CIT - JAMNAGAR 4 . CIT (A) - JAMNAGAR 5 . DR ITAT RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT