VILAS ALIAS RAJU SHRAWAN CHAUDHARI,,JALGAON vs. INCOME-TAX OFFICER, WARD - 2(5),, JALGAON
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI S.S. VISWANETHRA RAVI & SHRI G.D. PADMAHSHALI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
This appeal by the assessee against the order dated 01-05-2017 passed by the Commissioner of Income Tax (Appeals)-2, Nashik [‘CIT(A)’] for assessment year 2013-14.
Ground Nos. 1 and 2 raised by the assessee is general in nature, hence, require no adjudication.
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Ground Nos. 3, 3.1 and 4 raised by the assessee challenging the action of CIT(A) in confirming the addition made by the AO to an extent of Rs.1,23,00,000/- in the facts and circumstances of the case.
Brief facts emanating from the record are that the assessee is an individual engaged in the business of real estate, ration shop, interest income, etc. A survey action u/s. 133A of the Act was conducted in the office premises of the assessee on 13-02-2013 and certain books of account were found and impounded. A sworn statement recorded by the survey team in Marathi is reproduced at page Nos. 2 to 12 of the assessment order. According to the AO, the assessee offered an additional income of Rs.1,50,00,000/- voluntarily and paid taxes totaling to Rs.20,00,000/-. As matter stood thus, the assessee filed return of income declaring a total income of Rs.2,21,400/- and agriculture income at Rs.49,00,000/- on 11-01-2014. According to the AO, the said return was filed to prepare the ground for retraction of the statement given during the survey and not to pay taxes on the additional income that was voluntarily offered by the assessee. It is noted that the assessee was requested to prove the entries/transaction with cogent documentary evidences in respect of impounded books of account etc. As it appears from the Para No. 8.1 of the assessment order, the assessee could not explain the source of advances, investments made in immovable properties. The AO reconciled the said transactions arising from impounded material year-wise which is reproduced in Para No. 9 from pages 21 to 24 of the assessment order. The AO has given show cause notices dated 08-01-2016 and 02-03- 2016, that the assessee submitted his reply on 15-03-2016, but however, in the opinion of the AO no proper explanation in respect of nature and source of the credits were offered in the proper manner with cogent evidences. Thus, the AO proceeded to treat entire debit entries in the
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impounded books from undisclosed source and added an amount of Rs.3,30,19,093/- vide its order dated 29-03-2016 passed u/s. 143(3) of the Act. Aggrieved by the order of AO, the assessee challenged the same before the CIT(A). The CIT(A) discussed the said issue in detail from pages 12 to 24 of the impugned order, wherein, he examined tabular chart prepared by the assessee, questioning the addition of Rs.3,30,19,093/-, is not maintainable. After careful examination of the said tabular chart, the CIT(A) was of the opinion that the investment in advances for properties etc. are at Rs.2,36,08,073/- as against Rs.3,30,19,093/- held by the AO in the assessment order. According to the CIT(A) that the source available for the assessee to make payments of Rs.2,36,08,073/- is only Rs.67,11,466/- and confirmed the addition to an extent of Rs.1,68,96,607/- (Rs.2,36,08,073/- - Rs.1,61,22,486/-). The relevant portion at para No. 5.16 of the impugned order is reproduced here-in-below : “5.16 From the balance sheets for the year ended 31/03/2011 and 31/03/2011 filed by the appellant and assessment order of the A.O. and also the submission of the appellant and as discussed above, the sources available for making the above payments of Rs.2,36,08,073/- in the year under appeal are as under : Particulars Amount (Rs.) Remark Amounts received as per 26,28,500/- As mentioned by the A.O. in impounded material tabular chart in assessment order. Agricultural Income claimed 36,75,000/- A.O. had accepted agricultural at Rs.49,00,000/- accepted income to the extent of in appeal at 75% Rs.24,50,000/-. The appellant has filed only part of the evidence in support of sale of agricultural produce. Considering the totality of the facts, evidence produced by the appellant, the submission of the appellant and land holding of the appellant, the agricultural income is accepted to the extent of 75% of the agricultural income claimed by the appellant to meet the ends of justice. The agricultural income is accordingly worked out and accepted to the extent of Rs.36,75,000/-. Income from business shown 1,70,539/- As shown in return of income. in the return for F.Y. 2011-
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12 Interest received on savings 73,385/- As shown in return of income. as shown in return for F.Y. 2011-12 NSC matured with interest 88,200/- As shown in return of income. credited in capital account Unsecured loan from Smt. 3,00,000/- As claimed in balance sheet. Sushila Vilas Chaudhari Sale proceeds of Hyundai 2,50,000/- As shown in return of income. Car Decrease in closing bank 14,98,289/- As per balance sheet at on balances appearing in the 31/03/2013 and 31/03/2012 balance sheets as at filed. 31/03/2012 and 31/02/2013 (Rs.15,62,451 – Rs.64,162) Decrease in closing cash 6,86,233/- As per balance sheet as on balance as per balance 31/03/2013 and 31/03/2012 sheets as at 31/03/2012 filed. and 31/03/2013 93,70,146/- Less : Debits in capital -26,58,680/- As per capital accounts. account except loss on sale of car Total 67,11,466/- Therefore, considering the source available of Rs.67,11,466/- for making payment of Rs.2,36,08,073/-, the unexplained investment of the appellant works out to Rs.1,68,96,607/- as against worked out by the A.O. at Rs.3,30,19,093/-. The above unexplained investment is also nearer to the declaration of additional income given by appellant in survey action at Rs.1,50,00,000/-. 5.17 In view of the above facts and discussion, the addition of Rs.3,30,19,093/- is confirmed to the extent of Rs.1,68,96,607/- and balance addition to the extent of Rs.1,61,22,486/- is deleted. Ground No. 1 is partly allowed.”
Aggrieved by the same, now, the assessee is before us. The ld. AR filed written submissions and by reiteration the same, argued that the CIT(A) erred in confirming the addition of Rs.1,68,96,607/- which includes an amount of Rs.1,23,00,000/- related to transaction with Manas Arun Kulkarni. He submits that the CIT(A) while computing the figure of 2,36,08,073/- considered an amount of Rs.1,23,00,000/- where such amount was not advanced to Manas Arun Kulkarni. It was submitted by the ld. AR that the broker had approached with the assessee proposing to purchase agricultural land of the said Manas Arun Kulkarni but no such transaction took place. He argued that all the entries in the impounded
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red dairy contains, PAN and noting on the said transaction with Manas Arun Kulkarni was written in pencil. He vehemently argued the said transaction cannot be taken into account as purchasing of agricultural land belong to the Manas Arun Kulkarni, was not materialized. He drew our attention to the affidavit dated 04-05-2017 affirmed before the Executive Magistrate, Raver.
The ld. DR supported the order of CIT(A) and she vehemently argued that the same issue was raised before the CIT(A) and after considering the CIT(A) held that dates and payments were specifically mentioned in the notice, dates and payments are different. She submitted that the proposed dates and figures of payments cannot be different on notice. The CIT(A) rightly disregarded the contention of assessee that notings made with pencil were rough working. Regarding the affidavit filed by the said Manas Arun Kulkarni is of no value as it could not be filed before the AO as well as before the CIT(A). She prayed to confirm the order of CIT(A).
Heard both the parties and perused the material available on record. The vehement contention of the ld. AR in respect of non-materialization of transaction with Manas Arun Kulkarni and drew our attention to page 19 of the paper book and argued that the contents therein deposed before the Executive Magistrate supports the statement of non-materialization of transaction regarding the alleged payment of Rs.1.23 crores. He argued that it is only a proposal with the said Manas Arun Kulkarni through a common friend Suraj Chaudhary. On perusal of the affidavit, we note that it was dated 04-05-2017 and it is admittedly not before the CIT(A) also before the AO. It was only executed by the said Manas Arun Kulkarni after passing of the impugned order which clearly shows the assessee intends to take advantage of the findings rendered in the First Appellate proceedings.
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We note that the said Manas Arun Kulkarni was appeared before the AO and made statement that no transaction was materialized in respect of entry regarding Rs.1.23 cores, but however, not preferred to file any affidavit before the AO. Since, the AO made addition taking into the said entry which was challenged before the CIT(A) except making reiteration of the statement that was made before the AO, no evidence such as the affidavit filed before the AO, also as well in the First Appellate proceedings. We see no reason for non-filing of the same before the AO and CIT(A) as rightly pointed by the ld. DR. Further, on perusal of page 25 of the impugned order vide para 5.14, the CIT(A) clearly observed vide notice that the dates and payments was specifically mentioned and as such on the dates and payments are different. Therefore, the statement made by the said Manas Arun Kulkarni before the AO is a mere statement without any evidence. Further, no such evidence furnished before the CIT(A). It is for the first time, the assessee filed such affidavit before this Tribunal, in our opinion, is only to protract the litigation. The assessee ought to have filed the same before the AO during the course of assessment proceedings in 2016 and as well before the CIT(A) in 2017. It is pertinent to note that the said affidavit is dated 04-05-2017 is only after 4 days of passing of impugned order. Therefore, taking into consideration the facts and circumstances of the case and the finding of CIT(A) in the impugned order, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground Nos. 3, 3.1 and 4 raised by the assessee are dismissed.
Ground No. 5 raised by the assessee challenging the action of CIT(A) in restricting the agricultural income to an extent of Rs.36,75,000/- as against the claim of assessee at Rs.49 lakhs.
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We note that the AO dealt the above said issue in para 10 of the assessment order. The AO asked the assessee to furnish evidences regarding agricultural income of Rs.49,00,000/-. We find, in response to which the assessee provided evidences of sale of agriculture produce to four parties totaling to Rs.15 to 20 lakhs. According to the AO no complete details were furnished regarding the total sales and expenditure, but however, allowed 50% taking into account the large land holdings by the assessee. The said 50% was treated as income from other sources is allowed setoff against the addition of Rs.3,30,19,093/- on account of undisclosed source of income. The CIT(A) discussed the same in para 6 of the impugned order. On perusal of the same, we note that the CIT(A) accepted the agricultural income at 75% to an extent of Rs.36,75,000/- which is evident from Column 2 of chart in para 5.16 of the impugned order. Before us, the assessee filed details of land holding, we note as per 7/12 extracts that the land holding by the assessee is 14H 69R that is 37 Acres in Raver Taluka of Khandesh region. Further, we note that the assessee earned gross revenue of Rs.81,26,660/-, less by 40% expenses declared net agriculture income at Rs.49,00,000/-. Since, the AO and CIT(A) made addition in this regard on estimation basis, in our opinion, without considering the land holding and crops yielded i.e. Jowar, Cotton, Udad, Adrak, Harbhara and Banana. We note that the details filed by the assessee in written statement that the Banana crop yielded alone Rs.75,60,000/- as gross receipt, but however, both the authorities below without considering the land holding, crops yielded, and value of crop yielded therein proceeded to make disallowance on estimation basis. Therefore, taking into consideration the facts and circumstances of the case i.e. land holding and details of crop yielded, average yield as per Government chart, rate per quintals and sale amount, we reverse the order
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of CIT(A) and hold that the assessee is entitled to claim allowance of entire agricultural income. Thus, ground No. 5 raised by the assessee is allowed.
In the result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 28th June, 2023.
Sd/- Sd/- (G.D. Padmahshali) (S.S. Viswanethra Ravi) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ददनाांक / Dated : 28th June, 2023. रवि आदेश की प्रतततलतप अग्रेतषत / Copy of the Order forwarded to : अपीलार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The CIT(A)-2, Nashik. 4. The Pr. CIT-2, Nashik. तवभागीय प्रतततनति, आयकर अपीलीय अतिकरण, “ए” बेंच, 5. पुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइल / Guard File. 6. //सत्यातपत प्रतत// True Copy// आदेशानुसार / BY ORDER,
िररष्ठ वनजी सविि / Sr. Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune
