M/S GULMOHAR DEVELOPERS,JAIPUR vs. INCOME TAX OFFICER, WARD-5-2, JAIPUR

lquokbZ dh rkjh[k@ Date of Hearing : 16/09/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/09/2020 vkns'k@ ORDER PER SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of ld.CIT (A)- 2, Jaipur dated 22.05.2019 for the Assessment Year 2015- 16 passed under 143(3) of the Income Tax Act, 1961 on the grounds mentioned hereinbelow. ‘’1. Under the facts and circumstances of the case the ld. CIT(A) has erred in sustaining the addition of Rs. 2,73,020/- out of Rs. 8,54,980/- made by the AO on account of alleged M/s. Gulmohar Developers. vs ITO, Ward- 5(2), ,Jaipur undisclosed income introduced in the form of agricultural income.

2.1 Apropos Ground No. 1 and 2 of the assessee, the assessee is a partnership firm and is engaged in the agricultural activity. The return of income was filed by the assessee on 31-08-2015 declaring total income of Rs. Nil. The AO completed the assessment u/s 143(3) of the Act on 23-12-2017 determining total income at Rs. 8,54,984/- inter alia making the addition of Rs. 8,54,984/- by treating the agricultural income as non- agricultural of the assessee.

2.2 In first appeal, the ld. CIT(A) has sustained the addition to Rs. 2,73,020/- by disallowing 15% of the agriculture income declared by the assessee. The relevant observation of the ld. CIT(A) at para 2.3.3 of her order is as under:-

‘’2.3.3 On perusal of overall facts, it is seen that the bills submitted with regard to sales of such produce was not doubted. The estimation has been made only on assumption of selling at fixed price. Therefore, the sales price of M/s. Gulmohar Developers. vs ITO, Ward- 5(2), ,Jaipur agriculture produce as declared by the assessee at Rs. 26,28,300/- is accepted.

Further assessee claimed expenses against agriculture receipt. Looking to overall facts and following the decision of Hon'ble Bench in Durga Prasad Yadav case, seeing the better location of the land etc. it is reasonable to restrict the expenses to 15% against 30% taken by the AO. Accordingly, income from agriculture produce is worked out at Rs. 22,34,055/- (Rs.26,28,300 x 85%). Thus total agricultural income comes to Rs. 26,30,758/- (22,34,055 + 3,96,703) against Rs. 29,03,778/- declared by the assessee. Addition of Rs. 2,73,020/- is upheld. This ground of appeal is partly allowed.’’ 2.3 At the outset of the hearing, the ld.AR of the assessee prayed that similar issue has been decided by the ITAT Jaipur Bench in the case of M/s Pink City Resorts Ltd. vs ITO (ITA No. 1128/JP/2019 date of order 25-11-2019). The ld.AR of the assessee also filed the written submission which has been taken into consideration.

2.4 On the other hand, the ld. DR relied on the orders of lower authorities.

2.5 We have heard the ld. counsels for both the parties and we have also perused the materials placed on record, deliberated upon judgements cited by the parties as well as the orders of the Revenue authorities. It is not imperative to repeat the facts of the case as in principle similar issue was decided by ITAT Jaipur Bench in the case of M/s. Pink City Resorts 3 M/s. Gulmohar Developers. vs ITO, Ward- 5(2), ,Jaipur Ltd vs ITO (supra), the sister concern of the assessee company, by observing as under:-

‘’2.6 I have considered rival contentions and carefully gone through the orders of the authorities below and found from the record that during the year under consideration the assessee has disclosed net agricultural income of Rs. 21,66,534/- from agricultural holdings around 90 bighas of irrigated agriculture land. Copy of khasra girdawari and Patwar Halka report is available on paper book page no. 6 to 7. This includes income by agricultural by-product of Rs.5,69,050/- and sale of trees of Rs. 3,73,500/-. This means that per bigha per annum agricultural income was shown at Rs. 24,073/- which is very reasonable looking to the cost of agricultural products such as gwar, mustard etc. However the AO has accepted net agricultural income to the extent of Rs. 13,42,344/- by estimating the agriculture income as per agriculture department/tehsildar reports which is general in nature and based on survey of whole state/district whereas the agriculture yield depends upon quality of land/irrigation facilities, manure and seeds quality and the general report/survey report is not applicable everywhere. From the record, I found that the entire agricultural produce obtained by way of crops is fully vouched and has been sold through Krishi Upaj Mandi. The sale is beyond doubt. The AO has not brought any material on record to disprove the sale vouchers and no enquiry has been conducted from the parties through whom the agricultural produce was sold. Any enquiry made from these parties would have disclosed the truth but this was not done by the AO. He has preferred to act on estimate and guess work. At first the AO estimated the gross agricultural produce on the basis of a report from the Tehsildar but when the same was agitated by the assessee claiming that the land owned by the asessee was more fertile and capable of yielding more crops in comparison to an average land as reported by the Tehsildar. However, the AO did not accept the contention of the assessee. This shows the variation on working of agricultural income on estimate basis. Further the AO has estimated price as well yield whereas he is not a specialist for this and made an addition of Rs. 8,24,190/-. Thus I found that merely on estimate basis the AO has rejected the assessee's claim of agricultural produce which is duly supported by the bills and vouchers. The AO acted on the 4 M/s. Gulmohar Developers. vs ITO, Ward- 5(2), ,Jaipur basis of suspicion and doubt. It is settled position of law that suspicion however strong cannot take the place of evidence. In this case the vouchers of sale cannot be rejected on the basis of suspicion and doubt. For this purpose, reliance can be placed on the following judicial pronouncements 1. Uma Charan Shaw & Brothers 37 ITR 271 (SC) 2. CIT vs. Anupam Kapoor 299 ITR 179 (P&H) 3. CIT vs. Dhiraj Lal Girdhari Lal 26 OTR 736 4. Dhakeshwari Cotton Mills 26 ITR 775 (SC) 5. State vs. Gulzari Lal Tondon 1979 AIR 1382 (SC) 6. J.A. Naidu vs. State of Maharastra 1979 AIR 1537 (SC)

Further more, I also observed that in the immediately preceding year the scrutiny assessment was framed and agricultural income so disclosed by the assessee was accepted by the Department at Rs. 31,27,010/- whereas during this year the Department has accepted only a sum of Rs. 21,66,534/- as against disclosed agricultural income of Rs. 27,00,104/-.

2.6.1 In view of the above discussions, I do not find any justification for the disallowance of agricultural income of the assessee so made by the AO and confirmed by the ld. CIT(A).’’ Taking into consideration the similar facts, circumstances of the case as well as the decision of ITAT Jaipur Bench in the case of Pink City Resorts Ltd vs ITO (supra), we do not find any justification for the disallowance of agricultural income of the assessee so made by the AO and confirmed by the ld. CIT(A). Thus the appeal of the assessee is allowed. M/s. Gulmohar Developers. vs ITO, Ward- 5(2), ,Jaipur 3.0 In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 16 /09/2020.