HARIBHAI AMRABHAI BHARWAD,AHMEDABAD vs. ITO, WARD -3(2)(1), AHMEDABAD

The grounds of appeal are as under:- “1. Initiation of Penalty Proceedings under section 271AAC of the Act is unjustifiable. 2. Charging of interest under section 234A, 234B, 234C, 234D is unjustifiable. 3. The order passed by lower authorities is bad and invalid and required to be quashed as same has violated principle of natural justice. 4. Ld. NFAC erred in law and on facts in confirming addition of Rs. 2704000 by invoking provision of section 69A of the Act ignoring fact that said income is in nature of agriculture income and not liable to tax.

The assessee is engaged in sale of kerosene oil. The assessee filed his return of income for assessment year 2017-18 on 02-08-2017 declaring total income at Rs. 2,70,060/-. The return was processed u/s. 143(1) of the Act and selected for scrutiny for the reason that cash deposit during demonetization period. After issuing statutory notices and the show cause notice, the assessee submitted his reply on 02-12-2019. The Assessing Officer observed that there was no proof of gross receipt filed relating to the business activity of the assessee. The submissions before the Assessing Officer only revealed that the assessee had claimed agricultural income of Rs. 28,86,017/-. But the return of income filed for assessment year 2017-18 reveals that the assessee had shown agricultural income of Rs. 1,31,000/- only. Thus, the assessee was called upon to produce the source of cash deposit of Rs. 27,04,000/-. The assessee filed reply dated 10-12-2019 and submitted that the assessee did not include his land sharing agricultural income into his agricultural income due to lack of taxation knowledge. To verify the said content, the Assessing Officer issued summons u/s. 131 to Dineshbhai K. Bharwad, Bikhubhia K Bharwad and Haribhai Bharwad i.e. assessee. But non attended the assessment proceedings, and there was agreement written on blank papers which was not accepted by the Assessing Officer. Thus, the Assessing Officer made addition of Rs.27,04,000/- as cash deposits from unexplained sources

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that during assessment proceedings on 02-12-2019 regarding modus operandi of transactions with Dineshbhai K. Bharwad and their land holding, share pertains to the assessee and the details of expendtiure incurred by them were submitted before the Assessing Officer. Since the assessee is i.e. working on sharing basis and accordingly entire expenses were borne by land owner and the assessee is entitled to fixed percentage of shares. The assessee has given the details of sale of agricultural produce and evidences related to expenses. The assessee is submitting the affidavit of land owners before the Tribunal related to these share of produce from 01-04-2010 and also confirmed the said profits relating to agricultural produce.

The ld. D.R. submitted that Assessing Officer issued summons to the very same party i.e. Dineshbhai K. Bharwad and Bikhubhia K Bharwad but the same parties have not appeared before the Assessing Officer and has not given any corresponding evidences to the same. The evidences produced at this juncture was never before the Assessing Officer and are just afterthought. Thus, the Ld. D.R. relied upon the assessment order and the order of the CIT(A). 3

Heard both the parties and perused all the relevant material available on record. From the perusal of the facts produced before the Tribunal through Bhikabhai K. Bharwad and Dineshbhai Bharwad. Both these parties has admitted that the assessee has taken their land on sharing basis for the purpose of agricultural activities and both of them have given the assessee 40% share of the said produce. The assessee’s co- owners of self assessment whereby the declaration was only to the extent of Rs. 1,31,000/- cannot negate the fact that the assessee has entered with these two parties the share of profits of agricultural income. The expenses also has been explained by the assessee before the Tribunal through various receipts along with the receipts of the APMC market where the assessee sold the produce. Therefore, the cash generated to these agricultural produce cannot be totally negated that the assessee was not having cash in hand. In fact, the assessee has generated the cash amount to be deposited in the bank account. Therefore, these factual aspects related to the agreement between these three parties submitted before the Assessing Officer was totally ignored and hence the addition does not sustain.

In the result, the appeal of the assessee is allowed.

Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,