ITO, WARD-1(2), BHUBANESWAR vs. SREE MAHABAHU AGRICULTURAL & CONSTRUCTION PVT. LTD., BHUBANESWAR

आयकर अपील�य अ�धकरण, कटक �यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.402/CTK/2017 (�नधा�रण वष� / Assessment Year :2013-2014) ITO, Ward-1(2), Bhubaneswar Vs. Sree Mahabahu Agricultural & Construction Pvt. Ltd., Sree Mahabahu House, Soubhagya Nagar, Baramunda, Bhubaneswar- 751003 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAJCS 6093 D (अपीलाथ� /Appellant) (��यथ� / Respondent) .. राज�व क� ओर से /Revenue by : Shri Subhendu Dutta, CITDR �नधा�रती क� ओर से /Assessee by : Shri Mihir Kumar Sahu, AR सुनवाई क� तार�ख / Date of Hearing : 11/09/2018 घोषणा क� तार�ख/Date of Pronouncement 27/09/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: This is an appeal filed by the Revenue against the order of CIT(A)- 1, Bhubaneswar, dated 03.07.2017, passed in I.T.Appeal No.0509/15-16. 2. The Revenue has raised the following grounds of appeal :- 1. The order of the Ld. CIT(A) is erroneous on facts and in law. 2. The Ld. CIT(A) is not justified in deleting the addition of Rs.37,02,854/- made by AO by the way of disallowing the claim of Agricultural income, when the assessee has not been able to establish the claim of receipt of an amount of Rs. 37,02,854/- from agriculture income during the previous year relevant to the A.Y. 2013-14. 3. The Ld. CIT(A) erred in deleting the addition of Rs. 37,02,854/-made by the AO towards income from other sources after rejecting the claim of agriculture income and further when in the remand report dated 25.04.2017 furnished by the present AO, it has not been proved that the assessee had earned income from agriculture activity

2 ITA No.402/CTK/2017 amounting Rs. 37,02,854/- during the previous year relevant to the A.Y. 2013-14. 4. The Ld. CIT(A) is not justified in deleting the addition of Rs. 18,00,000/- made by the AO towards unexplained investment when the assessee has not been able to establish the claim of investment in share application money stated to be made in cash in its sister concern i.e. R.D. Commercial Pvt. Ltd., as made out of agriculture income during the previous-year-relevant to the A.Y. 2013-14. 5. The Ld. CIT(A) erred in deleting the addition of Rs.18,00,000/- towards the investment made in share application money stated to be in cash during the previous year relevant to the A.Y. 2013-14, when the assessee has not been able to prove with documentary evidence the source of the same during the previous ' year relevant to the A.Y. 2013-14. 6. The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceedings. 3. Brief facts of the case are that the assessee is engaged in the

business of agriculture and carrying on business in the trade name and

style M/s Sree Mahabahu Agriculture and Construction Pvt. Ltd.,

Bhubaneswar and filed the return of income electronically on 14.12.2013

for the A.Y.2013-2014 declaring total income at Rs.Nil. The return of

income was processed u/s.143(1) of the Act. Subsequently the case was

selected for scrutiny under CASS and notices u/s.143(2) & 142(1) of the

Act along with questionnaire were issued. In compliance of the same, ld.

AR appeared before the AO and case was discussed. Subsequently the

AO completed the assessment assessing total income at Rs.55,02,850/-

and passed order u/s.143(3) of the Act, dated 22.02.2016 making

additions on account of agricultural income and unexplained investment in

share application money.

3 ITA No.402/CTK/2017 4. Aggrieved by the order of AO, the assessee preferred an appeal

before the CIT(A). In the appellate proceedings, the assessee reiterated

the submissions made before the AO and the CIT(A) after considering the

submissions of assessee in the appellate proceedings and findings of the

AO, allowed the appeal of the assessee.

appeal before the Tribunal.

assessee could not prove that it had earned income from agriculture for

the assessment year under consideration. Ld. DR further submitted that

the assessee could not establish the claim of investment in share

application money stated to be made in cash in sister concern i.e. R.D.

Commercial Pvt. Ltd., out of agriculture income during the previous-year-

relevant to the A.Y. 2013-14 and prayed for allowing the appeal.

available on record. We found that the ld. CIT(A) while deleting the

addition made by the AO on account of agricultural income, has observed

as under :-

“3.2 I have perused the materials on record and gone through the remand report of the AO. Considering the remand report of the AO, the claim of the agricultural income of Rs.37,02,854/- is accepted. Hence, the addition of equal amount made as income from other sources is deleted.”

With regard to addition made on account of unexplained investment, the

CIT(A) observed as under :-

4 ITA No.402/CTK/2017 “4.2 I have given careful consideration to the matter. The AO appears not to have appreciated the facts of the case before considering the investment in question as unexplained. The assessee has adequate agricultural income and the investment of Rs.18,00,000/- is well explained being out of that income. Genuineness of the transactions and creditworthiness of the party are relevant only when cash credits are involved. The AO appears not to have appreciated the fact that the assessee has not received any money from anybody but has given money to M/s R.D. Commercial (P) Ltd. to buy the shares of that company. The source of the money given to M/s R.D. Commercial (P) Ltd. Having been fully explained, there is no warrant to make any disallowance. Hence, the addition of Rs.18,00,000/- is deleted.”

while deleting the addition made by the AO on account of agricultural

income, has called for the remand report from the AO. The CIT(A)

considering the remand report and submissions of the assessee accepted

the agricultural income disclosed by the assessee and deleted the

addition. And with regard to addition made on account of unexplained

investment, the CIT(A) observed that the source of the investment is well

explained being the income of the assessee and the same is out of

agricultural income. The CIT(A) further opined that the assessee has not

received any money from anybody but has given money to M/s R.D.

Commercial (P) Ltd. to buy the shares of the company, therefore, the

source of the money given to M/s R.D. Commercial (P) Ltd. has been fully

explained. The ld. DR could not bring any new material fact or any cogent

material to controvert the above findings of the CIT(A). Accordingly, we do

not find any good reason to interfere with the above findings of the CIT(A)

and we uphold the same and dismiss the grounds of appeal of the

Revenue.

5 ITA No.402/CTK/2017 Order pronounced in the open court on this 27/09/2018. Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER कटक Cuttack; �दनांक Dated 27/09/2018 �.कु.�म/PKM, Senior Private Secretary आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. ITO, Ward-1(2), Bhubaneswar ��यथ� / The Respondent- 2. Sree Mahabahu Agricultural & Construction Pvt. Ltd., Sree Mahabahu House, Soubhagya Nagar, Baramunda, Bhubaneswar-751003 आयकर आयु�त(अपील) / The CIT(A), 3. आयकर आयु�त / CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कटक / DR, ITAT, Cuttack 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// (Senior Private Secretary) आयकर अपील�य अ�धकरण, कटक / ITAT, Cuttack