SHRI SANT SADHU SINGH,HOSHIARPUR vs. INCOME TAX OFFICER,WARD-4, HOSHIARPUR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A. No. 763/Asr/2017 Assessment Year: 2009-10

Sant Sadhu Singh, vs. Income Tax Officer, Chella Sant Hari Singh, Ward-4, Hoshiarpur VPO Kaharpur, Hoshiarpur [PAN: ATOPS 3154J] (Appellant) (Respondent)

Appellant by : Sh. Surinder Mahajan (C.A.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 01.05.2019 Date of Pronouncement: 29.07.2019

ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee-individual, agitating the Order by the Commissioner of Income Tax (Appeals)-1, Jalandhar ('CIT(A)' for short) dated 03.10.2017, dismissing the assessee’s appeal contesting his assessment u/s. 143(3) r/w s. 147 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 20.12.2016 for the Assessment Year (AY) 2009-10.

2 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO Rs.21,72,090, i.e., besides agricultural income at Rs.9.50 lacs. The return was processed as such u/s. 143(1) of the Act. Enquiries with the assessee u/s. 133(6) in respect of cash deposits (at an aggregate of Rs.25,79,929) during the relevant year in his savings bank account with State Bank of Patiala (SBP), Mahilpur, District Hoshiarpur, eliciting no response, proceedings u/s. 147 were initiated by the issue of notice u/s. 148 on 03.02.2016 upon observing the procedural requirements. The assessee filed a return on 06.10.2016 enhancing the agricultural income to Rs.19.50 lacs, i.e., up from Rs.9.50 lacs, while retaining the other income, being by way of bank interest, etc. at Rs.21.72 lacs. The returning of the agricultural income at Rs.9.50 lacs vide the original return was claimed to be by way of a mistake. In support, the assessee filed Khasra Girdavaris of the agricultural lands (at various places) for a total of 56 acres and odd, claiming Rs.36,000/- to be the going annual rent per acre. Even as the lands were self-cultivated, the said rent, it was submitted, would give a fair idea of the agricultural income that would stand to be generated. The assessee has, in addition, sold Eucalyptus trees during the relevant year. The same was not accepted in the absence of any proof as to the sale of crops, which, as per the Khasra Girdavaris, were for wheat, maize, and sugarcane. The sale of Eucalyptus trees was also sans any material. The assessee’s agricultural income for the two immediately preceding, and the two immediately succeeding, years, was at Rs.9.50 lacs each. Regarding the assessee’s agricultural income for the year at the originally returned sum of Rs.9.50 lacs, an addition for Rs.10 lacs toward unexplained cash deposit/s in his bank account was made by deeming it as unexplained income, assessing thus the total income at Rs.31,72,090, i.e., besides agricultural income at Rs.9.50 lacs. The same being confirmed, and on the same basis, the assessee is in second appeal.

3 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO 4.1 The appeal, per its’ three grounds, agitating the issue afore-stated, assails the non-acceptance of the assessee’s agricultural income at Rs.19.50 lacs, stating the originally returned sum of Rs. 9.50 lacs as a mistake. The assessee, stated to be the head of a Dera (Math), is admittedly not maintaining any accounts. The first thing that strikes one is with regard to the quantum of the addition, assessed at Rs.10 lacs, in-as-much as the assessee was required to explain the cash deposits in his bank account at Rs.25.80 lacs, while the agricultural income, even at the revised amount, is only Rs.19.50 lacs. Upon this, it was explained by the ld. counsel for the assessee, Sh. Mahajan, that the net cash deposits are at Rs.16.11 lacs, as under (pg. 5 of the assessment order):

Particulars Amount (Rs.) Cash deposit during the year 25,79,928/- Less: Cash Withdrawal during the year 9,69,310/- Net cash deposit during the year 16,10,618/-

The total agricultural (or non-agricultural) income, generated in cash, is at Rs.19.50 lacs. This, therefore, it was explained, leaves a surplus of Rs.3.39 lacs (Rs.19.50 lacs – Rs.16.11 lacs), which may be regarded as spent for personal purposes.

Now, without doubt, Rs.3.39 lacs is too meager an amount for running a Dera and, thus, regarded as adequate for the purpose. However, there being no enquiry on this aspect of the matter, the shortfall in the cash generation (with reference to the proved/accepted sources of income), which is required to explain the cash deposits of Rs.25.80 lacs, during the year, is thus taken at Rs.10 lacs. In other words, the claim of agricultural income at Rs. 9.50 lacs, and therefore of cash

4 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO to that extent, is taken as accepted. This is considered valid as Rs.6.30 lacs (i.e., Rs.9.69 lacs – Rs. 3.39 lacs) can reasonably be regarded as expenditure on agriculture, generating gross agricultural revenue of Rs.15.80 lacs (i.e., Rs.25.80 lacs – Rs.10 lacs), yielding agricultural income at Rs.9.50 lacs (Rs. 15.80 lacs – Rs. 6.30 lacs).

4.2 I, next, consider the merits of the assessee’s explanation with regard to the said shortfall of Rs.10 lacs, stated to be agricultural income. Prior to the issue of notice/s u/s. 133(6), enquiring about the source of the cash deposits in his bank account, the assessee had returned agricultural income of Rs.9.50 lacs for the past five years, i.e., for assessment years 2007-08 to 2010-11. It is, under the circumstances, the returning of the agricultural income at Rs. 19.50 lacs in response to notice u/s. 148 for the current year, i.e., at an increase of over 100%, that, rather, ought to be inferred as by way of a ‘mistake’. Unless, of course, the assessee is able to establish an increase in the landholding or cultivable land, or a spurt in the agricultural produce, or an increase in it’s price/s (without corresponding increase in input prices/costs, as the two normally move in sympathy), or some other like reason justifying the sharp increase for the current year. On the contrary, it is observed that the assessee’s claim of agricultural income, much less at the enhanced amount, is wholly unsubstantiated. As rightly observed by the ld. CIT(A) (at pg. 13 of the impugned order), the Khasra Girdavaris or Jamabandi only evidence the landholding or the area under cultivation, and not the quantum of the agricultural income. The non-preserving of Form-J by the assessee, a regular assessee (at least since AY 1999-2000), returning income, and at no insubstantial sums, is most unexpected to say the least. Why, no Form-J are produced even for the subsequent years, which could give a fair estimate of the agricultural income in-as-much as the yield (of crops) would

5 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO normally fall in the same range. There is also no evidence of the sale of Eucalyptus trees, as well as the obtaining lease rent for the current year. In fact, even an increase in the landholding would not automatically translate into an increase in agricultural income, unless, of course, this increase is for the relevant year only, i.e., as against the preceding and the succeeding years. This is as the returning of agricultural income at Rs. 9.50 lacs for these years is admittedly not a mistake! It is, under the circumstances, the returning of agricultural income at Rs.28 lacs (for AY 2012-13) and Rs.30 lacs (for AYs 2013-14 and 2014-15), relied upon by Sh. Mahajan, that ought to be questioned or doubted as to its’ veracity inasmuch as it is at a quantum (i.e., to the tune of 3 times) increase w.r.t. the preceding years. That is, the same has to have a basis in facts, which have not been stated, much less shown or established. The facts of the case being in the intimate knowledge of the assesse, it needs to be appreciated, can only be led by him. It is precisely for this reason that the primary burden to prove his return, and the claims preferred thereby, is only on the assesse (refer: CIT v. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC); CIT v. R. Venkataswamy Naidu [1956] 29 ITR 529 (SC)). In this context one cannot help notice the irony that the sudden, unexplained, and quantum increase in the agricultural income for the later years (AY 2012-13 onwards) corresponds to the time the notices u/s. 133(6) were issued to the assessee (being on 14.02.2012, 06.3.2012, 28.10.2014 and 13.01.2015). This is in fact further accentuated by the fact that the assessee also runs a Dera – requiring funds, in no small measure, on a regular basis, and, as afore-noted, does not maintain any accounts. On what basis, in the absence of accounts and, as it transpires, maintenance of basic records (viz. Form-J), bills of seeds; pesticides; labour; etc., then, one wonders, the assessee returns his agricultural income from year to year? That is, much less, state of the sum originally returned was by way of a mistake. (also see para 4.4)

6 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO 4.3 On the Bench observing during hearing the assessee’s case to be wholly un- evidenced, Sh. Mahajan would submit that, true, but, then, the assessee has no other source of income besides agricultural income (and bank interest), so that, in the absence of any adverse material, what is returned ought to be accepted as such. The argument, appealing at first blush, is not tenable, either in law or on facts. To begin with, the Apex Court in CIT v. Devi Prasad Vishvanath Prasad [1969] 72 ITR 194 (SC) clarified that where there is an unexplained credit, it is open to the AO to hold that it is the income of the assesse, and no further burden lies on him to show that the income is from a particular source. It is for the assessee to prove that, even if the cash credit represents his income, it is from a source which has already been taxed. The Revenue is thus not obliged to show the source of the unexplained credit. This was reiterated by the Apex Court in Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC). The said statement of law would apply equally for an addition u/s. 69A, i.e., for an unexplained cash deposit (in bank). Further, as afore-noted, the onus in law to establish that his income is subject to exemption, as u/s. 10(1)(agricultural income), is on the assessee. On facts, the assessee heads a Dera, with a following. It is therefore inconceivable that offerings are not made by the devotees at the Dera, and it could well be that it is these funds that are sought to be routed as ‘agricultural income’.

4.4 The assessee also seeks to rely on the order by the Tribunal in Pradeep Batra v. IAC [1991] 39 ITD 406 (Del), wherein the tribunal, noticing in the decision in K.J. Joseph v. ITO [1980] 121 ITR 178 (Ker), held that the AO has no power under the Act to estimate the assessee’s agricultural income, a state subject and, thus, within the competence of the state legislature. The reliance is misplaced in-as-much as the tribunal has per the said order itself clarified that it would be open for the AO to test the claim with regard to the investment made out of the

7 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO income from agricultural operations. In doing so, the AO is not acting without jurisdiction as his determination of income from agriculture would be for the limited purpose of determining the income assessable under the Act. The ld. CIT(A) has reproduced the said observations by the tribunal at pg. 12 of her order. In fact, the assessee, in relying on this order, i.e., as and in the manner he does, contradicts his reliance on the assessment of the agricultural income at an enhanced amount for AYs. 2012-13 to 2014-15. That apart, the order by the tribunal is also distinguishable on facts inasmuch as it has been observed that the assessee in the instant case has access to funds that may be offered at the Dera (Math) he is running, while in the facts of that case the assessee had no other known source of income. The income of a religious institution, including by way of voluntary contributions, is not exempt per se under the Act, but only on being applied for its’ objects in terms of s. 11 and, further, only where such institution is registered as such under the Act (s. 12A; U.P. Forest Corporation v. Dy. CIT [2008] 297 ITR 1 (SC)). Rather, the agriculture produce may be consumed at the Dera, and which perhaps also explains the non-production of Form J. The said decision is thus distinguishable also on facts.

8 ITA No. 763/Asr/2017 (AY 2009-10) Sant Sadhu Singh v. ITO Copy of the order forwarded to: (1) The Appellant: Sant Sadhu Singh, Chella Sant Hari Singh, C/o Surinder Mahajan & Associates, CAs, 74, Vijay Nagar, Jalandhar - 144 001 (2) The Respondent: Income Tax Officer, Ward-4, Hoshiarpur (3) The CIT(Appeals)-1, Jalandhar (4) The CIT concerned (5) The Sr. DR, I.T.A.T