VYANKATESH NARAYAN KULKARNI,THANE vs. INCOME TAX OFFICER, RANGE 3(4) , THANE

On the fac Ld. CIT (A) er made by the A the appellant 3. On the fac Ld. CIT (A) er has received section 56(2)( reason that b reserves of th the wealth of shares. 4. On the fac Ld. CIT (A) e shares so rec consideration is the decreas by the appell (vii)(c) are not 2. Briefly stated, 31.08.2015 declarin consultancy income, income. The assesse M/s Manas Vyapar assessee was selected under the Income-tax complied with. The dated 29.12.2017, m agricultural income a an addition of ₹13 account of allotment Ltd. without consider Vyanka ITA cts and circumstances of the case and in red in upholding the additions of Rs. 13,3 AO u/s 56(2)(vii)(c) in respect of shares re allegedly without consideration. cts and circumstances of the case and in rred in not appreciating the fact that the the shares as bonus shares and the pro (vii) (c) are not applicable to bonus shar bonus shares are issued against capita he company and there is no increase or d f the shareholders pursuant to the issue cts and circumstances of the case and in erred in not appreciating the fact that t ceived by the appellant are not receive n or at a lesser consideration but the con se in the intrinsic value of the original sh lant and therefore the provisions of sec applicable in the instant case. the assessee filed return ng total income of ₹9,80,480 income from other sources, a e was also in receipt of salary Pvt. Ltd. The return of incom d for scrutiny assessment and s x Act, 1961 (in short ‘the Act’) w Assessing Officer (“AO”), in or made (i) an addition of ₹10,85 as unexplained credit u/s 68 of ,33,16,700/- u/s 56(2)(vii)(c) of additional shares by M/s Ma ration. atesh Narayan Kulkarni 2 A No. 1849/MUM/2025 n law, the 33,16,700 eceived by n law, the appellant ovisions of res for the lization of ecrease in e of bonus n law, the the bonus ed without nsideration hares held ction 56(2) of income on 0/-, comprising and agricultural as a director in me filed by the statutory notices were issued and rder u/s 143(3) 5,690/- treating f the Act; and (ii) of the Act on anas Vyapar Pvt.

1 On further ap additions. Aggrieved, raising grounds as re 3. Before us, the L containing pages 1 t perused the paper b arising for adjudicatio Ground No. 1: Addition o 4. The ground N Rs.10,85,690/- u/s 6 unexplained cash cre are that the assess agriculture income income from agricul agriculture income o produce. As far as th amounting to Rs.4, between the parties. income of Rs.10,85,6 claim of agriculture failed to substantiat Before the Ld. CIT( Vyanka ITA ppeal, the Ld. CIT(A) confir the assessee is in appeal befo eproduced above. Ld. counsel for the assessee file to 84. We have considered riv book and judicial precedents ci on are taken up sequentially. of ₹10,85,690/- u/s 68 of the Act (Agric No. 1 of the appeal relates 68 of the Act holding the agricu edit. The facts in brief qua the see in its computation of the of Rs.15,17,234/- comprised ltural land amounting to Rs.4 of Rs.10,85,690/- from sale of he quantum of lease rent from a 31,544/- is concerned, there The only dispute is in respec 690/-. The lower authorities h income mainly on the ground e his claim by way of docume (A), the assessee submitted t atesh Narayan Kulkarni 3 A No. 1849/MUM/2025 rmed both the re us by way of ed a Paper Book al submissions, ited. The issues cultural income) to addition of ulture income as issue in dispute income shown d of lease rent 4,31,544/- and the agriculture agricultural land is no dispute ct of agriculture has rejected the d that assessee entary evidence. that agriculture produce were sold on copy of bills or vouch 4.1 The Ld. counse 13 and submitted th land as under: Vyankatesh Kulka Crop Jambul Rice Sonchafa Mango 4.2 Further, the Ld Book page 14 and s agricultural income i year 2012-13 to asse reproduced as under Sr. No 1. 2. 3. 4. 5. 6. 7. 8. 4.3 The Ld. couns consideration and a Vyanka ITA n cash in local market and it wa hers. l for the assessee referred to P e land holding and deatil of cro arni 2014-15 Area (acre) No of Tr 2.62 1.1 7 2 1500

We have heard the relevant material agricultural income o cultivation of rice, unexplained cash cre on the ground that agricultural produce upon (i) 7/12 extra hectares of land; (ii) r consistent pattern of subsequent assessm Department. It was similar addition was [ITA No. 4850/Mum/ 6.1 In the assessm comprised of lease r from produce of Rs.9 after considering the agriculture income produce observing as “11.I have co gone through computation o of Rs. 13,67 against his la Rs. 9,35,860/ treated the en Vyanka ITA rival submissions of the parti ls on record. The short controv of ₹10,85,690/- declared by th mango, jambhul etc. can edit. The lower authorities disbe no proper documentary evid was furnished. Before us, the acts evidencing cultivation on receipts from purchasers of pro disclosure of agricultural incom ment years which had been a further pointed out that in A deleted by the Tribunal in asse /2025]. ent year 2017-18, the agricultu rent of Rs.4,31,544/- and agri 9,35,860/-. The Tribunal (supra e submission of the assessee a of Rxs.9,35,860/- from sale s under: onsidered the rival contentions of both th h the orders of lower authorities. I fin of income, the assessee has claimed agric 7,404/- out of which the assessee has and pooled in AOP of Rs. 44,31,544/- and /- was from agriculture produce. The ass ntire receipt as income from other sources atesh Narayan Kulkarni 6 A No. 1849/MUM/2025 ies and perused versy is whether e assessee from be treated as elieved the claim ence of sale of e assessee relied more than 15 oduce; and (iii) a me in earlier and accepted by the A.Y. 2017-18, a essee’s own case ure income was iculture income a) in AY 2017-18 allowed claim of of agriculture he parties and d that in the culture income s shown rent d remaining of sessing officer s for the want of proper evid details of ag agriculture ac organic farmi pesticides we activities is d CIT(A) accept activities but Before Tribun Manas Krush Farm along w 2017-18. The furnished be agriculture la assessee has extracts were 7/12 is reco Government. such evidenc village Saziv assessee own on activities i documents w that such evi by State Gove the agricultur agriculture re acceptable. S Manas Krush evidence to co AOP as neith evidence to authorities. Th 4,31,544/- in remaining ad ground of app 6.2 Thus, the Trib agricultural income o the assessee posses were Government re abnormal given the Vyanka ITA dence. Before Id. CIT(A), the assessee furn griculture activities and income and e ctivities. The assessee also claimed th ing, hence no expenditure incurred on f ere very minimum. Maintaining of details ifficult. The assessee furnished details of ted the fact that assessee is engaged t the same is not proved by document nal, the assessee has filed computation hi Farm (AOP), financial statement of M with memorandum of association and its e assessee has certified that all such ev efore lower authorities. However, th and is filed for the first time before Trib s fairly accepted on index of paper bo e not furnished before lower authorities. ord of agriculture holding is maintain The assessee has furnished copy of ce ce. The assessee has shown agricultu vali Taluka, Sahapur District Thane ned 8.39 hector of land. I find that agric is not disputed by Id. CIT(A). No doubt were not furnished before lower authorit idence cannot be disputed as has bee ernment, thus, keeping in view the size a re land in Taluka Sahapur District Thane, eceipt of Rs. 9,35,860/- is not abno So far as other receipt of Rs. 4,31,544/- hi Farm is concerned, I find that there is onvince me about the rental income recei her the memorandum of AOP was furnis substantiate such fact was filed herefore, action of assessing officer for tre n treating as income from other sources ddition of Rs. 9,35,860/- is deleted. In th peal is partly allowed.” bunal in A.Y. 2017-18 (supra of ₹9,35,860/- from sale of prod ssed substantial landholdings, ecords, and the quantum of in nature of cultivation. Having atesh Narayan Kulkarni 7 A No. 1849/MUM/2025 nished certain expenditure of hat he is into fertilizers and in agriculture f AOP. The Id. in agriculture tary evidence. n of income of Manas Krushi ts ITR for A.Y. vidences were he extract of bunal and the ook that such The extract of ned by State rtified copy of ure holding of wherein the culture holding that all such ties still I find en maintained and location of therefore, the ormal and is received from s no sufficient ved from such shed nor other before lower eatment of Rs. is upheld and he result, this a) has accepted duce, noting that 7/12 extracts ncome was not g regard to the consistency of disclo years, and more imp own case by the Co hold that the agricult as unexplained cash sustaining the additio ground no. 1 of the a Grounds Nos. 2 56(2)(vii)(c) (Allotme 7. The second issue taxability of additio conversion of a co-op The AO invoked se received without cons 7.1 The brief facts qu Officer noticed incre under consideration noted that assessee w Manas Group Indust as ‘Society’). During was converted into Industriual Sankul company the assess Vyanka ITA osures, acceptance by the Re portantly the binding preceden -ordinate Bench (supra), we ar tural income of ₹10,85,690/- ca credit. Accordingly, the order o on is set aside and the addition appeal is accordingly allowed. to 4: Addition of ₹13,33 ent of shares) of addition of Rs.13,33,16,700 onal shares received by the perative society into a private lim ection 56(2)(vii)(c) holding tha sideration. ua the issue in dispute are tha ase in its capital of assessee d by Rs.13,33,16,700/-. The As was a member of a co-operative trial Sankul Ltd. (hereinafter s the year under consideration, a joint stock company namely Pvt. Ltd. Before converting t see carried out revaluation of atesh Narayan Kulkarni 8 A No. 1849/MUM/2025 evenue in other nt in assessee’s re persuaded to annot be treated of the Ld. CIT(A) n is deleted. The 3,16,700/- u/s 0/- pertains to assessee upon mited company. at shares were at the Assessing during the year ssessing Officer e society namely shall be referred the said society y Manas Kudus he society into f its underlying assets including land into private limited c was allotted shares a Assessing Officer si limited company wit Officer treated this ev 7.2 Before the Ld. C infused any addition increase in capital. passed by the society of the shares, copy o operative Society an those documents to report. In the re acknowledged that th the assessee for iss report mentioned in under: “As per re Rs.1,28,40,60 paid up. Furt land on 30.0 land was R 73,18,28,206 19,86,75,058 taken at Rs. additional sh number of sh initially issue Vyanka ITA d. After said revaluation, society company and post the conversi against said re-valued reserve. A nce the assessee received sh thout paying any consideration vent as taxable u/s 56(2)(vii)(c) o CIT(A), the assessee contested t nal fund as capital which ha The assessee filed a copy of y, the documents filed with RO of the order issued by District R d other documents. The Ld. C the Assessing Officer and calle mand report, the Assessing here were no additional funds be suance of shares. The extract the impugned appellate order is mand report, Society had paid up 00/- consisting of 1,28,046 shares of 1 ther the Co-operative society made the 08.2013. As per revaluation, the fair ma Rs. 73,18,28,206/-. This fair market 6/- included the land development exp 8/-. Therefore, the upward valuation of 53,31,53,148/-. Now, the Cooperative s hares to its members during FY 2013- ares becomes 54,57,744 of Rs. 100 each ed shares. Further the revalued land is atesh Narayan Kulkarni 9 A No. 1849/MUM/2025 y was converted on the assessee According to the hares of private n, the Assessing of the Act. that he had not ad resulted into f the resolution OC for allotment