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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed against the order dated 22.05.2017 passed by Commissioner of Income Tax (Appeals)-35, New Delhi for assessment year 2013-14.
The grounds of appeal are as under :
1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.21,69,306/- (i.e. 30% of Rs.72,31,023/-) by treating the same as ‘income from undisclosed sources’ instead of ‘agricultural income’ as claimed by the assessee and taxed accordingly and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.21,69,306/- by treating the same as ‘income from undisclosed sources’ instead of ‘agricultural income’ is bad in law and against the facts and circumstances of the case.
3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
During the year, the assessee was engaged in the business of agriculture, besides getting salary as director from M/s Garden View Landscape Pvt. Ltd. along with income from house property and other sources. Assessee filed its return of income declaring an income of Rs. 99,64,010/- on 29.07.2013. The case was selected for scrutiny and notice under Section 143 (2) was issued on 16.09.2014. Notice u/s 142(1) was issued on 28.09.2015. In response to notices, CA/Authorized Representative appeared from time to time before the Assessing Officer and filed requisite details. The Assessing Officer made addition of Rs. 21,69,306 on account of agriculture/nursery income from undisclosed 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. AR submitted that the Assessing Officer erred in making addition of Rs. 21,69,306/- i.e. 30% of Rs. 72,31,023/- by treating the same as ‘income from undisclosed sources’ instead of agricultural income as claimed by the assessee and taxed accordingly. The Ld. AR submitted that the assessee is engaged in the agricultural activity of growing high end plants, grass for parks, lawns since last so many years. These plants and grass etc. grown by the assessee are used in artistic & expensive landscaping projects and one of the projects where it was used was in Expansive lawns around T3 terminal of Indira Gandhi International Airport, New Delhi. Planation/samplings done by the assessee are for Indoors, highways, airports, kothi-lawns, farmhouses, and township gardens and such agricultural income has been earned in earlier years. The Ld. AR submitted that the assessee filed all the relevant evidences during the assessment proceedings such as ledger account of sales of Grass/Plants & Seeds, purchases made of Grass/saplings /seeds, Soil, Manure & Fertilizer purchased by the assessee. The Ld. AR further submitted the earlier years Assessment Orders wherein the said income was treated as agricultural income and were accepted by the Revenue authorities. The Ld. AR also submitted the CIT(A)’s order for A.Y. 2011-12, 2012-13 and 2014-15 wherein the assessee’s claim was accepted by the revenue and the same was never challenged by the authorities.
The Ld. DR relied upon the Assessment Order as well as the order of the CIT(A). The Ld. DR further submitted that the quantum of agricultural income was exaggerated by the assessee for year under consideration and further the part of the land was barren having no agricultural/nursery activity was carried out. Therefore, the Assessing Officer as well as CIT(A) rightly made 30% of the additions as undisclosed sources.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that at no point of time the Assessing Officer has denied the fact that the assessee is deriving the agricultural income. In fact, in past assessment years also similar income was accepted by the Revenue as agricultural income. While giving finding that this year the income is exaggerated, has not been established by the Assessing Officer on the basis of the documents and evidences produced by the assessee during the assessment proceedings. The stand taken by the Revenue does not have any basis. The activities carried out by the assessee are coming under the purview of Explanation 3 of Section 2(1A) of the Income Tax Act, 1961. Besides this, all the sources of the income were explained by the assessee during the assessment proceedings with the supporting documentary evidences which was never doubted by the Revenue. Therefore, the Assessing Officer as well as the CIT(A) failed to take cognizance of these factual aspects in the present case. We therefore, set aside the order of the CIT(A) and allowed the appeal of the assessee.
In result, appeal of the assessee is allowed. Order pronounced in the Open Court on 20th August, 2019.