SH. DHEERAJ SINGH SISODIYA,KOTA vs. DCIT, CENTRAL CIRCLE, KOTA, KOTA

आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “B” JAIPUR
डा० एस. सीतालक्ष्मी, न्यायिक सदस्य एवं श्री राठोड कमलेश जयन्तभाई, लेखा सदस्य के समक्ष
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI,
आयकर अपील सं. / ITA Nos. 931 to 936/JP/2024
निर्धारण वर्ष / Assessment Years : 2012-13 & 2014-15 to 2018-19

Dheeraj Singh Sisodiya
005,
(Nayagaun)
Ram Ganmandi, Kota
बनाम
स्थायी लेखा सं. / जीआईआर सं./PAN/GIR No.: APAPS 6392 E
अपीलार्थी / Appellant
प्रत्यर्थी / Respondent
निर्धारिती की ओर से / Assessee by : Sh. P. C. Parwal, CA
राजस्व की ओर से / Revenue by : Mrs. Alka Gautam, CIT-DR
सुनवाई की तारीख / Date of Hearing
: 07/01/2025
उदघोषणा की तारीख / Date of Pronouncement: 28/01/2025
आदेश/ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM
These six appeals are filed by the assessee aggrieved from the order of Commissioner of Income Tax (Appeal), Udaipur-2 [ for short CIT(A)] for the assessment years 2012-13 & 2014-15 to 2018-19 dated 17.05.2024. The said order of the Id. CIT(A) arise as against the order dated 23.12.2019
passed under section 143(3) r.w.s 153A & 143(3) r.w.s 153B(1)(b) of the Income Tax Act, 1961 [ for short Act ] by ACIT, Central Circle, Kota [ for short AO ].
2. Since the issues involved in these appeals in ITA Nos. 931 to 934/JP/2024 for A.Ys 2012-13 & 2014-15 to 2016-17 are inter related, identical on facts and are almost common, except the difference in figure disputed in each year, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order.
3. At the outset, the Id. AR has submitted that the matter in ITA No.
931/JP/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount disputed in other cases for the A. Y.
14-15 to 16-17. The Id. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 931/JP/2024 is taken as a lead case.
4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal for assessment year 2012-13 in ITA No. 931/JP/2024 on the following grounds;
“1. The Ld. CIT(A) has erred on facts & in law in confirming the addition of Rs. 5,59,890/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land by not accepting the explanation of assessee that the source of same is out of agriculture income of Rs. 3,12,998/- earned during the year on the ground that assessee has not disclosed the enhanced agriculture income in the return filed in response to notice issued u/s 153A of the Act but has disclosed the same in assessment proceedings u/s 153A which is not admissible and from past savings of Rs. 3,00,000/- out of agriculture income.
2. The appellant craves to alter, amend & modify any ground of appeal.
3. Necessary cost be awarded to the assessee.”
5. Succinctly, the facts as culled out from the records are that a search
& seizure operation under section 132(1) of the Act was carried out on 15.11.2017 at the various premises of 'Golden Group, Suket,
Ramganjmandi, Kota to which the assessee belongs. Several individuals and premises were covered under Section 132 of the Income-tax Act,
1961. Cash, jewellery and other documents found and seized from some individual's residence and business premises. The case of the assessee was also covered under search proceeding. Assessee is an individual and derives income from business, agriculture and other sources etc.
Consequent to search action, the case of assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota vide his order dated 20.12.2017 and accordingly notice u/s 153A of the Act was issued to the assessee on 19.06.2018 which was duly served. In response to a notice issued u/s 153A, the assessee furnished his return of income on 30.06.2018, declaring total income of Rs. 2,44,890/- and agriculture income of Rs. 40,000/-. Earlier the assessee had filed his return of income u/s 139
of the Act on 24.11.2012 at the total income of Rs. 2,44,890/- and agriculture income of Rs. 40,000/-. Thus, as such there was no difference between ITR filed under section 153A and 139 of the Act.
5.1 Notice u/s 143(2) of Act was issued on 11.09.2018 which was duly served. Further, notice under sub section (1) of Section 142 of the Act was issued on 06.12.2018 along with questionnaire/Annexure-A requiring certain details/information, which was served upon the assessee. In response to that, he furnished the desired details / information / documents
/ which were examined with respect to claims made in the return of income.
Further, notice under sub section (1) of Section 142 of the Act was issued on 28.08.2019 and served to the assessee due to change of incumbent as per section 129 of the IT. Act, 1961. The Id. AO noted that the search record regarding the assessee was also observed and examined thoroughly, while doing so he noted that the assessee purchased the agriculture land. During the search proceedings, some incriminating documents in the form of loose papers containing Page Nos. 1 to 87 of Exhibit-2 of Annexure AS were also found & seized and on asking about such loose papers, the assessee filed page wise details which was placed on record, in this exhibit-2, Page No.13 to 19 contain details of purchase of agriculture land amounting to Rs. 2,88,820/-, Page No. 20 to 26 contains other agriculture land purchased at Rs. 3,71,330/- and Pages No. 29 to 35
contains agriculture land purchased amounting to Rs. 2,78,050/-, pages no.
49 to 53 containing agriculture land purchased amounting to Rs. 2,81,840/- and from Pages No. 74 to 76 contains agriculture land purchased amounting to Rs. 4,20,300/-, thus, the total amount invested by the assessee for purchase of agriculture lands was Rs. 16,40,348/-.
5.2 On being asked about the sources of investment in such properties, the assessee had stated vide reply to Q. No. 11 of the statement recorded on 15/02/2018 that all the investment was made from his agricultural income. Further, on being asked about details of total area of agricultural land, type of agricultural land, proof of crops shown & grown along with means of irrigation and details of year wise yields of agricultural products and proof documents for selling those into the market etc. for earning such agriculture income, the assessee could not produce documentary evidence
/ proof by which it could be verified and inferred that the assessee had earned income from agricultural activity. Ld. AO also noted from the perusal of copy of ITRs of the last six financial years ie. F.Y. 2011-12 to F.Y. 2016-17, which were submitted by the assessee during the post search investigation proceedings, it had been noticed that the assessee had shown a very low amount of agricultural income in the said financial years i.e. F.Y. 2011-12 to F.Y. 2016-17. The assessee had further stated in his statement that due to lack of knowledge; he could not declare the complete agricultural income in his Income Tax Return of relevant financial year. The assessee had submitted in his reply at Q. No.11, wherein he stated that the above properties so earned/acquired by him were out of his undeclared agricultural income which was earned by him by way of the agricultural income earned from agriculture land purchased. The details of such land purchase from agricultural income is as under:
Date of FY
AY
Agricultural Income not shown in computation purchase
21.07.2011
2011-12
2012-13
2,78,050/-
22.12.2011
2011-12
2012-13
2,81,840/-
28.05.2013
2013-14
2014-15
2,88,820/-
01.12.2014
2014-15
2015-16
3,71,330/-
07.09.2016
2016-17
2017-18
4,20,300/-
Total
16,40,340/-
5.3 During search proceedings, also no evidences/documents of such agriculture land, where Khasra wise crop were shown/grown along with irrigations means, actual yields from crops and sale of these, yields for any sales proceeds also not found at any of the premises of the assessee group having any evidence / documents of agriculture income. Post search proceedings also the assessee could not produce any reliable documentary evidence in support of his Agricultural income actually earned by him during last six financial years i.e. F.Y. 2011-12 to 2016-17. Thus, the contention of the assessee, that all the investment for the purchases of agriculture land/immovable properties, was incurred & paid from his agricultural income, was not justified.
5.4 In the assessment proceeding post search also the assessee has filed his return of income for AY 2012-13 u/s 139 on 24.11.2012 declaring total income at Rs. 2,44,890/- with agriculture income of Rs. 40,000/- and in return filed u/s 153A on 30.06.2018 declaring total income Rs. 2,44,890/- with agriculture income of Rs. 40,000/-. Thus, Id. AO noted here the agriculture income shown by the assessee in both return filed were same i.
e Rs. 40,000/- even though the return u/s 153A was filed on 30.06.2018
almost 5 months later from the date of statement made by the assessee on 15.02.2018 that due to lack of knowledge he could not declare correct income from agriculture in his original return of income. The assessee had enough time to consider and calculate his actual agriculture income and declare the same in return filed u/s 153A after the search action. But the assessee declared the same amount of income as agriculture income i.e
Rs. 40,000/-. During the assessment proceeding assessee submitted a revised computation and declared agriculture income for Rs.3,12,998/- in place of Rs. 40,000/- and submitted details of crops cultivated in various agriculture lands owned by the assessee. However, the assessee has not submitted any documentary evidence in support of expenses incurred for cultivating the crops and selling the crop yields in the mandi. In absence of all these documents the revised computation filed by the assessee was not considered / accepted and accordingly the contention of the assessee that he had earned income from agriculture activities and purchased another agriculture land with the income from agriculture activity was not found convincing. Therefore, the amount of investment made by the assessee for the purchase of agriculture land in FY 2011-12 i.e. Rs. 5,59,890/-
(2,78,050+2,81,840) was added to his total income treating same as unexplained investment u/s 69 of the Act.
6. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the Id. CIT(A). Apropos to the grounds so raised the relevant finding of the Id. CIT(A) is reiterated here in below:
"Decision
The facts of the case are considered. There is no dispute over the amount of investment. Only dispute is with regard to source of investment. The assessee claimed that source was agriculture income. This was claimed in assessment proceedings. The claim of agriculture income was more than what is offered in the return of income. The assessee offered Rs. 40,000/- as agriculture income in the return filed u/s 139(1) of the Income Tax Act. The assessee claimed in the statement recorded during the search that correct amount of agriculture income is not shown in the return of Income. However, when return of Income was filed u/s 153A of the Act was furnished, the agriculture Income remained same at Rs.
40,000/-, The appellant was in knowledge of all the facts on the basis of which enhanced claim of agriculture Income is being made at the time of filing original return of Income u/s 139 of the Income Tax Act.
The claim of ignorance of law is not found to be acceptable as the appellant has shown the agriculture income in the retum of Income filed u/s 139 of the Income
Tax Act. If the assessee was not aware about agriculture income being exempt how the agriculture income is claimed as exempt in the return of income. Further, the assessee was aware about his land holdings and other activities. Therefore, ignorance of law is not found to be there in the present case. If the assessee was not aware, no reason explained as to why only Rs. 40,000/- was shown as agriculture income. The less aware person will show the true income and not hide the facts. Hence, the agriculture income shown in the return of income seems to be correct.
It is well settled principle of law that ignorance of law is no excuse. Though in the present case, the assessee has not able to prove ignorance of law.
Showing less income from the real income does not seem to be correct as the assessee is well aware of his real profits earned. Further, the agriculture income is exempt from the tax. Hence, there is no purpose is served by not showing correct income in the return of Income filed u/s 139 of the Income Tax
Act. It is important to note that the Agriculture Income was not revised by way of filing revised return. Further, the Agriculture income was not enhanced in the return filed in response to notice issued u/s 153A. In these facts, it is not admissible that the assessee came to know the fact that real income from agriculture was more than what is reported in the return of income filed only in the assessment proceedings u/s 153A of the Income Tax Act. This is only an afterthought to avoid tax liability when the assessee was found in possession of properties source of which is not found from explained sources. Hence, the claim made by the assessee in the assessment proceedings is not found to be acceptable.
Agriculture income is exempt from Income Tax. Hence, the claim of exemption from income Tax needs to be made in the return of Income furnished u/s 139(1) of the Income Tax Act. In the return filed u/s 153A only the undisclosed income can be further offered. However, further exemption which were not claimed in the return filed u/s 139 cannot be claimed. In this case, the assessee has not made any new claim of exemption in the return of Income furnished u/s 153A of the Income Tax Act, however, the claim is made in the assessment proceedings pending u/s 153A of the Income Tax act. Such claim is made after a long period of time (many years) has passed. The date of filing revised return is also over for this year. In view of these facts, the claim made by the assessee about exempt agriculture income is not found to be acceptable at this stage.
In essence, the assessee wanted to increase the exempt agriculture income when the declared sources were not adequate to explain the source of investment made by him. By this way, the assessee wanted to reduce the tax liability. In effect. the Income declared in the regular return of income u/s 139 was being reduced by offering more exempt income.
In this regard it is noted that any new claim in the return filed u/s 153A of the act is not acceptable as the Search Assessments are for the benefit of the revenue rather than assessee. The returns are filed u/s 153A of the act are as a consequence of action taken under Section 132 of the Act on a assessee and thus can't be advantageous for the assessee and moreover the proceedings u/s 153A are analogous to proceedings under Section 147 of the Act to the extent that these are proceedings for the benefit of Revenue and not that of the assessee. The assessee cannot be permitted, to convert these reassessment proceedings as his appeal or revision in disguise and seek relief in respect of items earlier not claimed in the original return of income. Reliance is placed on the judgment rendered by the Hon'ble Bombay High Court in K. Sudhakar S.
Shanbhag Vs ITO [2000] 161 CTR (Bom) 391 [2000] 241 ITR 865 (Bom). This decision was rendered by taking notice of the principle laid by the Hon'ble apex
Court in CIT Vs Sun Engineering Works (P) Ltd. [1992] 107 CTR (SC) 209 [1992]
198 ITR 297 (SC) to the effect that in reassessment proceedings, an assessee can neither claim nor be allowed a deduction that was not claimed in the original return. As such the assessment proceedings initiated on the basis of an action under Section 132 of the Act also cannot be utilised by the assessee to seek relief not claimed earlier.
The ITAT Chennai Bench 'C' in the case of Sella Synergy (India) Ltd. v.
Assistant Commissioner of Income-tax", Circle-VI, Chennai [2009] 117 ITD 264
(Chennai)/[2008] 117 TTJ 110 (Chennai) [14-09-2007] upheld the disallowance of section 10A benefit claimed in the covering letter of the return filed u/s 148 of the Income Tax Act. It is also well-settled on the anvil of Hon'ble Apex Court decision in SunEngineering Works (P) Ltd 's case (supra) that no fresh exemption/benefit can be claimed by the assessee in the course of reassessment proceedings. The ITAT held as under-
X
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The ITAT Delhi Bench 'B' in the case of Charchit Agarwal v. Assistant
Commissioner of Income-tax [2012] 20 taxmann.com 371 (Delhi)/[2011] 7 ITR(T)
35 (Delhi)[12-03-2010] held that in view of the decision of the hon'ble Supreme
Court in the case of CIT v. SunEngineering WorksP. Ltd. [1992] 198 ITR 297 the assessee cannot be permitted to claim the benefit of the closing stock by changing the method of valuation in the assessment proceedings under section 153A of the Act, which were initiated to assess or reassess the undisclosed income. The relevant part of judgment is reproduced as under-
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The ITAT Jodhpur Bench in the case of Suncity Alloys (P.) Ltd. v. Assistant
Commissioner of Income-tax [2009] 124 TTJ 674 (Jodhpur) [19-08-2009] held that there is no merit in the ground to make a new claim of deduction or allowance during assessment/reassessment under section 153A. Head notes of the decision are as under-
"The expression assessment or reassessment used in section 153A connotes determination of total income pursuant to return required to be filed in the case of a person where a search is initiated under section 132 or requisition is made under section 132A. The expression assessment or reassessment' used in this section has to be understood in the context of section 153A alone. The word 'assessment is used in a number of provisions in a comprehensive sense and it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer and the machinery for enforcement thereof. The concept of expression' assessment' is used in the Income-tax
Act at different places with different connotations.
In section 153A the expression signifies merely computation of undisclosed income that shall form part of total income' within the meaning of section 2(45) in respect of each of the assessment falling within such six assessment years that is required to be aggregated with the income already assessed in cases of completed assessments, more so when section 132 comprehends action to search of a person in possession of undisclosed income or property. In those cases where assessments are pending at the time of initiation of action under section 132, the computation of total income has to be done in a normal manner. The computation of total income so made shall meet the requirement of section 4
Having regard to the provisions of section 139(5) and since the assessments under section 153A are in relation to undisclosed income, it is precisely for this reason that new claim of deduction or allowance cannot be made in the completed assessments
The assessment or reassessment made pursuant to notice under section 153A is not de novo assessment, therefore, there is no merit in the ground to make a new claim of deduction or allowance during assessment/reassessment under section 153A as such where admittedly the regular assessments are shown as completed assessment on the date of initiation of action under section 132."
In the above decisions, it is held that no fresh exemption can be claimed by the assessee in the assessment proceedings u/s 153A
Further, Chapter XTV-B has been replaced by new provisions of section 153A to 153C, the object of legislation is to assess undisclosed income. New claim of deduction or exemption cannot be allowed to such searched persons. If it is so allowed, then the same shall become discriminatory to the other regular assessees who have lost a right as such to claim deduction by efflux of time or by mandate of the Act. Since, the assessee neither made any such claim in the original return filed under Section 139(1) of the Act nor in regular assessment proceedings by way of filing any revised return therefore returns filed in response to notice under Section 153A of the Act are not substitute of revised return for making claim of such benefits. Having regard to the provisions of section 139(5) of the Act and the assessments under section 153A are in relation to undisclosed income, it is precisely for this reason that new claim of deduction or allowance cannot be made in the completed assessments. It is a settled principle of law that what cannot be done directly can also not be done indirectly. Reference can be made on the judgment rendered by Hon'ble Allahabad High Court in Anupam
Sushil Garg v. CIT [2003] 185 CTR (AII) 505 [2004] 265 ITR 474 (All). When rules of interpretation are applied it would not allow making of fresh claims as such.
Principle of interpretation laid by Hon'ble apex Court in Poppatial Shah v. State of Madras 1953 AIR 274 (SC) reads as under:
"It is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statute are to be taken together and each word, phrase, or sentence is to be considered in the light of the general purpose and object of the Act itself. The title and preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intent and design of the legislature and indicate the scope and purpose of the legislation itself."
It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. ITO
[1981] 131 ITR 597/7 Taxman 13 as under-
"It is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided."
If a assessee is allowed to claim an allowance, deduction etc. u/s 153A not claimed earlier than it would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT (A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case of K.P. Varghese (supra).
In the following decisions it was held that the search proceedings under section 153A are for the benefit of the revenue and therefore any fresh claim is not allowable u/s153A of the act -
1. Jai Steel (India), Vs Jodhpur Assistant Commissioner of Income-tax [2013] 36
taxmann.com 523 (Rajasthan)
2 Charchit Agarwal Vs Assistant Commissioner of Income-tax, Central Circle 12. New Delhi [2009] 34 SOT 348 (Delhi)
3 Suncity Alloys Pvt. Ltd. V Asstt CIT (2009) 124 TTJ 674 (Jodhpur)
Assistant Commissioner of Income-tax [2013] 36 taxmann.com 523 (Rajasthan) clearly held as under-
“30. Consequently, it is hold that it is not open for the assessee to seok deduction or claim expenditure which has not been claimed in the original assessment, which assessment already stands completed. only because a assessment under Section 1534
of the Act in pursuance of search or requisition is required to be made.”
Following the above discussion based on judicial principles it is held that the AO was justified in rejecting the claim of enhanced agriculture income made by the appellant in the assessment proceedings u/s 153A which was not claimed in the return filed u/s 139(1) of the Act. It is a case where the claim of enhanced agriculture income is not even made in the return filed u/s 153A. No plausible reason explained by the assessee for not revising the claim of exempt agriculture income in the return filed after search in response to notice issued u/s 153A of the Income Tax Act. The claim of enhanced agriculture income was made in the assessment proceedings u/s 153A before the AO. Therefore, the facts of the case of the appellant are on weaker footing than the cases where the claim was made in the return filed in response to notice issued u/s 153A of the Income Tax Act.
Even the claim of exemption in the return filed in response to notice issued u/s 153A of the Income Tax Act is not found to be allowable as discussed above. In view of above discussion, the claim of enhanced agriculture income in the assessment proceedings has been rightly rejected by the AO. The addition made by the AO is accordingly upheld
In view of the above legal position, the enhanced claim of exempt agriculture income during the assessment proceedings u/s 153A is not found to be admissible. The facts with regard to earning of Income which were there at the time of filing return of Income u/s 139 of the Income Tax Act remained same even when the return of Income filed in response to notice issued u/s 153A of the Act.
Only because the assessee is found in possession of some investments source of which is not accounted, the fresh claim of agriculture income cannot be entertained. Therefore, the factual examination of the documents is not found to be necessary.
Therefore, the contention of the assessee that he had earned income from agriculture activities and purchased another agriculture land with the income from agriculture activity is not found to be acceptable. Therefore, decision of the AO in treating the amount of investment made by the assessee for purchase of agriculture land in FY 2011-12 i.e. Rs.5,59,890/- (2,78,050+2,81,840) as unexplained investment u/s 69 is found to be justified and upheld.
This ground of appeal is treated as dismissed."
7. As the claim of the assessee for earning enhanced agricultural income by filling in a revised computation was not considered because the same was not supported by sufficient evidence even the claim of the assessee was rejected by Id. CIT(A) and therefore, the present appeal before this tribunal. In support of the various grounds so raised by the assessee, Id. AR of the assessee filed a detailed written submissions for the appeal of all the years together which reads as under :
1. Assessee derives income from business, agriculture and other sources.
He has filed the income tax return regularly. A search was carried out on assessee on 15.11.2017. During the course of search certain loose papers, assets etc. were found which contains details of investment in purchase of agriculture land, vehicle, construction of residential house, advance given for purchase of immovable property, cash found, loans and excess stock & over sale of Kota stone. Statement of the assessee was recorded on 15.11.2017 where in reply to Q. No.24 (PB 104) when required to explain the source of investment in house construction, he stated that same is out of the savings of agricultural income/ from business.
2. In post search proceedings assessee furnished the details of agricultural land owned by him (PB 39-68), certificate of Patwari regarding yield per bigha of crop grown (PB 69), year wise sale price of the crop & orange grown (PB 70-71), order of Deputy Director, Horticulture, Reni Bag, Kota regarding subsidy granted to the assessee on the orange plant (PB 72) and the affidavit of various customers to whom oranges were sold (PB 73-90). On this basis total agriculture income statement was filed to ADIT(Inv.), Kota (PB 91-93). On this statement of agriculture income, statement of assessee was recorded on 15.02.2018 &
16.02.2018 where assessee in reply to Q. No.11 (PB 169-171) stated that source of various investments in agriculture land is out of the agriculture income earned by him which is not fully disclosed in the return and thereby surrendered such agricultural income for tax. Further assessee in reply to Q. No.12 (PB 171-172) stated that agriculture sales slip found in search represent his agriculture income but in respect of agriculture income earned from the garden no sales slip is prepared.
3. In response to notice u/s 153A, assessee filed the return of income on 30.06.2018 declaring same total income and agricultural income which was filed in original returns of income. During the course of assessment proceedings AO observed that assessee has made certain investments, the source of which remains unexplained. The assessee explained that all the investments are made out of agriculture income not disclosed in the return and thus filed revised computation declaring agriculture income in each year as under:-
AY
Actual Agriculture income
(in Rs.)
Agriculture income declared in return (in Rs.)
2012-13
3,12,998/-
40,000/-
2013-14
4,11,020/-
40,000/-
2014-15
4,48,257/-
40,000/-
2015-16
6,50,405/-
40,000/-
2016-17
8,02,086/-
58,642/-
2017-18
46,14,596/-
1,94,562/-
2018-19
52,73,503/-
Total
1,25,12,865/-
4,13,204/-
4. In support of agriculture income assessee has filed the following documents and supporting evidences:-
(i) Copy of Khasra Girdawari
(ii) Statement indicating crop grown in each agriculture land.
(iii) Document of subsidy received on growing of orange plants
(iv) Statement indicating net agriculture income in various years
(v) Certificate from Patwar Mandal certifying the per bigha crop grown
(vi) Copy of letter from Shree Dev Traders & Krishi Upaj Mandi Samiti showing the selling price of oranges and crops
Assessee further explained that he could not declare the complete agricultural income in the returns filed u/s 153A for respective financial years due to lack of knowledge.
5. The AO, however, rejected the revised computation of agriculture income by holding as under:-
(i)
No evidences or documents related to agricultural land such as actual yields from crops, sale of these crops, etc. were found in the search. Further assessee could not produce any reliable documentary evidence in support of source of agricultural income.
(ii) The returns filed u/s 153A of the Act was filed almost after 5 months after the date of statements made by assessee on 15.02.2018. Thus assessee was having sufficient time to consider and calculate his actual agricultural income and declare the same in return filed u/s 153A of the Act.
Accordingly AO did not allowed the claim of agriculture income and made addition on account of unexplained investment u/s 69, 69A & 69B of the Act as under:-
AY
Particulars of investment
Amount (Rs.)
2012-13
Investment in purchase of agricultural land
5,59,890/-
2014-15
Investment in purchase of agricultural land
2,88,820/-
2015-16
Investment in purchase of agricultural land
3,71,330/-
2016-17
Investment in purchase of motor cycle
1,25,000/-
2017-18
Investment in purchase of agricultural land
4,20,300/-
2018-19
Investment in construction of residential house, loan to Rani
Stone Supplier, Advance to Radhey Shyam, purchase of car, unexplained cash, stock of polished and rough kota stone and difference in sales and opening stock
74,86,599/-
Total
92,51,939/-
6. The Ld. CIT(A) called the remand report from AO (PB 19-29). The AO in the remand report (PB 28-29) accepted that assessee owns 42 bigha of agriculture land, khasra girdawari shows the various crops grown, assessee received subsidy for growing 840 orange plants, agriculture income from orange plant is shown at Rs.82,32,000/- in support of which agreement made with the parties for selling them was filed and the assessee's wife Antara Devi received compensation of Rs.89,68,192/- on acquisition of land & 298 orange plants. However, the contention of assessee was not accepted by holding that the facts & documents proved that assessee was having huge agriculture income but the same was neither fully declared in the regular return nor in the return filed u/s 153A.
Therefore even though the claim of agriculture income is verifiable from the documents filed but the same is not allowable in view of the decision of Hon'ble report of AO (PB 30-36). Reference was also made to the order of Hon'ble
Settlement Commission in Salaf Group cases where the additional agriculture income not shown in the return but offered before the Hon'ble Commission was accepted. However, the Ld. CIT(A) at Para 4.6 of the order for AY 2012-13 at Pg
25-32 confirmed the addition made by AO by holding that agriculture income is exempt from tax and therefore no purpose is served by not showing correct income in the return filed by the assessee. The claim is only afterthought to avoid tax liability. Further exemption which was not claimed in the return filed cannot be claimed in assessment proceedings u/s 153A. Reliance was placed on certain decisions to hold that search proceedings u/s 153A are for the benefit of revenue and therefore fresh claim is not allowable u/s 153A of the Act. Only because assessee is found in possession of some investment, source of which is not accounted, fresh claim of agriculture income cannot be entertained and therefore the factual examination of the documents is not found necessary. Accordingly addition made by the AO is confirmed. With respect to unexplained cash of Rs.4,09,510/- found during the search in AY 2018-19, the Ld. CIT(A) accepted the assessee's contention regarding petty cash balance of Rs.59,510/- kept at the residence and thus restricted the addition to Rs.3,50,000/-.
Submission:-
1. At the outset it is submitted that considering the documentary evidences filed, AO in the remand proceedings at Pg 10 (PB 29) has accepted that facts &
documents proves that assessee was having huge agriculture income. However he has not accepted the contention of assessee by referring to the decision of Hon'ble Supreme Court in case of Goetz India Ltd. (supra). The assessee in the submission on the remand report has explained that how the decision of Goetz
India Ltd. supports the case of assessee which has been accepted by Ld. CIT(A) in as much as he has not taken any adverse view with reference to the decision of Hon'ble Supreme Court in case of Goetz India Ltd.
2. It may be noted that out of the total agriculture income of Rs.1,25,12,865/- earned during AY 2012-13 to 2018-19, agriculture income of Rs.41,00,863/- was from sale of crop and agriculture income of Rs.84,12,002/- was from sale of oranges. In respect of sale of crop assessee has furnished evidence of cultivation in form of Khasra Girdawari and the yield & value of crop is determined based on the report of Patwari and Krishi Upaj Mandi Samiti. In respect of sale of oranges it may be noted that the orange plants were purchased from Deputy Director,
Udhyan, Reni Bagh, Kota in FY 2013-14. For growing plants of oranges and purchase of tractors assessee received subsidy of Rs.2,73,757/- (PB 72) during
FY 2013-14 to 2015-16. The orange fruits on the plants grow after 3 years of plantation and thus the orange plants planted during FY 2013-14 to 2015-16
started giving fruits in FY 2016-17 & 2017-18 which is also mentioned in the Khasra Girdawari. The orange fruits were sold to various persons during AY 2017-
18 & 2018-19 for which the affidavits of these persons is at PB 73-88. The amount received on sale of oranges is as under:-
Khasra Name of No.
Address
AY
AY
Total person
2017-18 2018-19
217
Badri Singh
Biram Lal
Beedmandi, Kota
99, Narayanpura,
6,60,000 7,40,000 14,00,000
Beedmandi, Kota
Guman
Ward No.11, Narayanpura,
218
Singh
Beedmandi, Kota
13,19,000 14,63,000 27,82,000
Om Nath
Madan Singh
Ward No.8, Nathan Mandi,
219/273 Nand Lal
Suket, Kota-
Beedmandi, Suket, Kota
6,60,000 7,40,000 14,00,000
Yogi
Ward No.8, Nathan Mandi,
24
Prabhu Nath
Nathan Mandi, Suket,
Jagdish
Kota
13,90,000 15,60,000 29,50,000
Beedmandi, Suket,
Ramganjmandi, Kota
Bal Chand
Ward No.8, School ke pass, Nathan Mandi,
Suket, Kota
Total
40,29,000 45,03,000 85,32,000
3. Now the only issue which is left for consideration is whether in assessment proceedings u/s 153A the assessee can claim the source of investment from the agriculture income not disclosed in the return filed u/s 139/
153A or not. It is submitted that section 153A(b) provides that in case of a search, the AO shall assess or reassess the total income of six preceding years of the date of search and for the AY relevant to the date of search. The cases relied by the Ld.
CIT(A) is with reference to new claim of deduction or allowance during assessment/ reassessment u/s 153A. In the present case, assessee is not making any new claim of deduction or allowance. The claim of assessee is that it has earned agriculture income which is not fully disclosed in the return and such undisclosed agriculture income is the source of investment found in search.
Therefore, the observation of Ld. CIT(A) that the exemption which was not claimed in the return cannot be considered to explain the source of investment is not as per law. Reliance in this connection is placed on the decision of Hon'ble Karnataka
162 where the Hon'ble Court at Para 10 of the order held as under:-
10. Sec. 153A of the Act starts with a non-obstante clause. The fetters imposed upon the AO by the strict procedure to assume juri iction to reopen the assessment under ss. 147
and 148, have been removed by the non-obstante clause with which sub-s. (1) of s. 153A opens. The time-limit within which the notice under s. 148 can be issued, as provided in s.
149 has also been made inapplicable by the non-obstante clause. Sec. 151 which requires sanction to be obtained by the AO by issue of notice to reopen the assessment under s. 148 has also been excluded in a case covered by s. 153A. The time-limit prescribed for completion of an assessment or reassessment by s. 153 has also been done away with in a case covered by s. 153A. With all the stops having been pulled out, the AO under s. 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by s. 153A, by even making reassessments without any fetters, if need be. Therefore, it is clear even if an assessment order is passed under s. 143(1) or 143(3) of the Act, the AO is empowered to reopen those proceedings and reassess the total income taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the AO is empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of s. 153A is there should be a search under s. 132. Initiation of proceedings under s. 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid sub-section on the date of initiation of the search under s. 132, the said proceeding shall abate. If such proceedings are already concluded by the AO by initiation of proceedings under s. 153A, the legal effect is the assessment gets reopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple assessments. Under s. 153A, however, the AO has been given the power to assess or reassess the "total income" of the six assessment years in question in separate assessment orders. The AO is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by s. 153A, by even making reassessments without any fetters.
This means that there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under s. 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Reopened means to deal with or begin with again. It means the AO shall assess or reassess the total income of six assessment years.
Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or/and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order.
4. It is submitted that the agriculture income is included for the purpose of calculation of tax. Therefore, it is incorrect to presume that agriculture income do not suffer any tax in as much as because of inclusion of agriculture income for calculation of tax, the other heads of income of an assessee gets taxed at higher slab rate. An agriculture income not declared in the return or declared lower in the return than what is actually earned is also undisclosed subject to assessment u/s 153A. Such undisclosed agriculture income is not a case of making a claim for deduction and therefore the decisions relied by the Ld. CIT(A) are not applicable on the facts of the present case. At the same time such undisclosed agriculture income can be a source of investment found in search. The Hon'ble Settlement
Commission in case of Saraf Mineral/Arpit Mineral/Tejmal Jain/Gautam Kumar
Jain/Mohd Sahid/Mohd. Tosif/Mohd. Aslam/Mohd Aalam/Mohd. Akil Khan vide order dt. 24.02.2023 at Point No.8, Para 8.1 to 8.3, Pg 11-12 of the order observed as under:-
“8. Agricultural Income
8.1 In the SOF, it has been stated that the investments in properties were made out of agriculture Income part of which is declared in the return of income and part not declared.
Accordingly, the agriculture income not disclosed in the return is estimated considering the factors mentioned in para 6.3 below and the same is offered in their respective Settlement
Applications. The details of agricultural income estimated, agricultural income shown in the returns of income and the income offered in the SOF are as under:
Name of the applicant
Total
Agricultural income
Agricultural income shown in return
Agricultural income not shown in return but offered in SOF estimated
AY
AY
AY
Sh.
Tejmal
Jain
2012-13 to 30,75,339
2018-19
2012-13 to 12,82,820/-
2018-19
2012-13 to 17,92,519
2018-19
Sh.
Gautam 2017-18
2012-13 to 21,85,136
2017-18
2012-13 to 2017-18
2012-13 to 21,85,136
2017-18
Kumar
Jain
Sh.
Mohd.
Sahid
2012-13 to 1,01,56,689
2017-18
2012-13 to 2017-18
2012-13 to 1,01,56,689
2017-18
Mohd.
Tosif
2012-13 to 40,56,287
2017-18
2012-13 to 2,50,765
2014-15
2012-13 to 38,05,522
2017-18
Sh.
Mohd.
Aalam
2012-13 to 36,27,516
2017-18
2012-13 to 1,39,322
2013-14
2012-13 to 34,88,194
2017-18
Sh.
Mohd.
Akil
Khan
2012-13 to 59,30,860
2016-17
2013-14 to 4,55,612
2016-17
2012-13 to 54,75,248
2016-17
Mohd.
Shakhi
2012-13 to 25,36,817
2016-17
2013-14 to 3,18,086
2016-17
2012-13 to 22,18,731
2016-17
8.2 The PCIT submitted that the applicants have failed to establish that the income shown above have been earned from agricultural activity. The applicants have not filed any proof of reliable documents/evidences of agricultural yields realised and sale proceeds by selling any of quantum of such agricultural products to any adatiya in the market etc. It is the stand of the applicants that they are not in a position to establish whether the investment/expenses were met out of agricultural income or kota stone business in the absence of documentary evidences. The PCIT has claimed that the agricultural income disclosed by the applicants is not a true and full disclosure and the entire scheme of earning such income is a sham and after thought.
8.3 The applicants in their replies submitted that they have estimated the agricultural income considering agricultural land holdings, Khastra/Girdwari report of Patwari, crop grown, yield of crop and average sale rate of the crop. Further, the ownership of agricultural land and the crop grown on it were supported by documentary evidences and the same was not disputed by the PCIT. No evidences were found during the search to prove that the applicants have other sources of income for making investment in immovable/movable properties. The applicants Sh. Gautam Kumar Jain and Sh. Mohd Sahid have not disclosed agricultural income in their returns for AYs 2012-13 to 2017-18 and however they have offered Rs. 21,85,136/- and Rs. 1,01,56,689/- for these AYs respectively in their settlement Applications.”
It was pointed out also that the Settlement Commission in the absence of complete evidence accepted 50% of the income declared as agriculture income by giving following finding at Para 25.1 & 25.2 of the order:-
“25.1 In respect of individual applicants, we see that certain agricultural income has been offered to tax in their settlement applications, either for the first time or in addition to the agricultural income already offered in the regular returns of income. All the applicants have sought to explain certain part of undisclosed investments in stock, movable and immovable properties to be out of such agricultural income now offered in the settlement applications. The CIT(DR) drew our attention to the fact that the agricultural income offered is just based on average yield rates and is without any regard for the season, soil conditions, vagaries of nature etc that would affect the crop yield. It was argued that in the absence of quantitative details, estimation of agriculture income submitted by the applicants was hypothetical and deserved to be rejected as an afterthought.
25.2 We have given careful consideration to the issue at hand. It appears that the applicants have introduced agricultural income in the settlement applications in an attempt to explain the sources of undisclosed/unexplained investments unearthed during the search. We find this to be self serving story and do not find any need for these applicants to suppress agricultural income in their regular returns as agricultural income is exempt under section 10(1). We are inclined to concur with the Department that agricultural income is a make-believe story and is clearly an afterthought. At the same time, the applicants have produced evidences regarding ownership of agricultural land; however, no evidence whatsoever has been produced to prove that such agricultural land has been subjected to agricultural activity resulting in huge quantum of agricultural income as has been claimed by the applicants in their settlement applications. In the circumstances, we hold that 50% of the investments sought to be explained through agricultural income as per SOF to be out of undisclosed sources. Such unexplained investments of 50% will attract the provisions of Sec. 69 of the Act. Section 115BBE shall apply as applicable in the relevant AYs. Considering the facts and circumstances of the case, it is deemed fit that penalty u/s 271(1)(c) read with explanation 1 r.w.s 245H(1) for AYs 2012-13 to 2016-
17 and u/s 271AAC r.w.s 245H(1) for AYs 2017-18 to 2018-19 (as applicable) is leviable in these cases. The levy of penalty is considered separately in this order.”
Therefore, when the revenue accepted the view of the settlement commission that the undisclosed agriculture income can be a source for explaining the investment found in search the same cannot be denied to the assessee. As submitted in the submission after considering the agriculture income vis-à-vis the investment found in search, the source of investment is fully explained as tabulated hereunder and therefore, there is no reason to sustained the addition which was fully explained as sourced from agricultural income :-
Particulars/ AY
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Past savings
(Openin g)
3,00,00
0
53,108
4,64,12
8
6,23,56
5
9,02,640
15,79,726
57,74,022
Agriculture income
3,12,99
8
4,11,02
0
4,48,25
7
6,50,40
5
8,02,086
46,14,596
52,73,503
Investment made
5,59,89
0
2,88,82
0
3,71,33
0
1,25,000
4,20,300
74,27,089
Closing
Balance
53,108
4,64,12
8
6,23,56
5
9,02,64
0
15,79,726
57,74,022
36,20,436
In the light of the discussion so recorded we do not find any reason to sustain the addition so made as per provision of section 69 of the Act in the hands of the assessee and therefore, we direct the Id. AO to delete the same.
Based on the above observation ground no. 1 raised by the assessee in ITA no. 931/JP/2024 stands allowed. Ground no. 2 being general in nature does not require any finding and as regards the ground no. 3 the assessee has not raised any contention before us and therefore, we do not consider it for educative in nature.
Resultantly the appeal filed by the assessee in ITA no. 931/JP/2024
stands allowed.
13. The bench noted that the ground of appeal raised by the assessee and facts of the case in ITA no. 932/JP/2024 for A.Y. 2014-15, 933/JP2024
for A.Y. 2015-16, and 934/JP/2024 for A. Y. 2016-17 are similar with that of the grounds of appeal raised by the assessee in ITA no. 931/JP/2024 for assessment year 2012-13. Therefore, it is not imperative to repeat all the facts and finding so given by us again in the appeal of the assessee in ITA no. 932/JP/2024 for A.Y. 2014-15, 933/JP2024 for A.Y. 2015-16, and 934/JP/2024 for A. Y. 2016-17 and the decision taken by us in ITA no.
931/JP/2024 for assessment year 2012-13 shall apply mutatis mutandis to that three appeal of the assessee for A.Y. 2014-15, 2015-16 & 2016-17. Based on this observation the appeal of the assessee in ITA no.
932/JP/2024, 933/JP2024 and 934/JP/2024 stands allowed.
14. Now, we take up appeal of the assessee in ITA No. 935/JP/2024 for A.Y 2017-18. In this appeal, the assessee has raised following grounds: -
"1. The Id. CIT(A) has erred on facts & in law in confirming the addition of Rs
4,20,300/- u/s 69 of the Act on account of alleged unexplained investment in purchase of agriculture land by not accepting the explanation of assessee that the source of same is out of agriculture income of Rs 46,14,596/- earned during the year on the ground that assessee has not disclosed the enhanced agriculture come in the return filed in response to notice issued us 153A of the Act but has disclosed the same in assessment proceedings /s 153A which is not admissible.
2 The Ld. CIT(A) has erred on facts & in law in confirming the trading addition of Rs. 9,45,887-by applying the n.p. rate of 8% on the alleged undisclosed turnover of liquor business of Rs. 1,18,23,601/- by invoking section 44AD of the Act ignoring that in the return turnover is mistakenly shown at Rs.96,84,679 against the correct turnover of Rs.2,15,08,280/- on which income declared is Rs. 7,74,775/- supported by books of accounts.
3 The Ld. CIT(A) has erred on facts & in law in not allowing the set off of the alleged trading addition against the alleged unexplained investment resulting into double addition and further erred in taxing the alleged investment u/s 115BBE of the Act
4 The appellant craves to alter, amend & modify any ground of appeal
5. Necessary cost be awarded to the assessee."
15. The bench noted that the issue raised vide ground no 1 is similar to the one raised by the assessee in ITA no. 931/JP/2024. Therefore, it is not imperative to repeat all the facts and findings given by the bench and the decision taken by us in ITA no. 931/JP/2024 while dealing with the ground no 1 of that appeal shall apply mutatis mutandis to the ground no. 1 raised in ITA no. 935/JP/2024. Thus, ground no. 1 raised by the assessee in this appeal stands allowed.
16. Now coming to ground no. 2 raised by the assessee, the brief facts related to this ground are that as per the ITR filed, the assessee has shown total turnover of Rs. 96,84,679/- from liquor business and shown profit u/s 44AD considering 8% NP of Rs. 7,74,775/-. During the assessment proceeding the assessee was asked to submit the details and documents in this regard and in reply assessee submitted P&L account of the wine business, as per that account assessee had shown NP of Rs. 7,74,775/-
3.6% of the total turnover of Rs. 2,15,08,280/-. Therefore, there was difference of RS. 1,18,23,601/- (2,15,08,280-96,84,679) in turnover as shown in ITR and as found during assessment proceeding. Since the assessee has shown less turnover of Rs. 1,18,23,601/- and has also not got his books audited as per provision of section 44AB of the Act.
Therefore, net profit of Rs. 7,74,775/- offered by the assessee which come
3.6% was not acceptable to Id. AO. Considering that facts of the case, net profit was calculated @ 8% of total turnover Rs. 2,15,08,280/- which comes to Rs. 17,20,662/- and since the assessee has already offered profit of Rs.
7,74,775/- the difference of Rs. 9,45,887/- (17,20,662-7,74,775) was added to the total income of the assessee treating the difference as undisclosed profit from wine business.
17. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the Id. CIT(A). Apropos to the grounds so raised the relevant finding of the Id. CIT(A) is reiterated here in below:
Ground No. 2
5.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
In this case, the AO noted that as per ITR filed, the assessee has shown total turnover of Rs. 96,84,679/- from liquor business and shown profit u/s 44AD considering 8% NP of Rs. 7,74,775/-.
The assessee has submitted P&L account of the wine business. As per P&L
Account assessee had shown NP of Rs.7,74,775/- @ 3.6% of the total turnover of Rs.2,15,08,280/-. Therefore there is difference of Rs. 1,18,23,601/-
(2,15,08,280-9684679) in turnover as shown in ITR and as found during assessment proceeding.
As the assessee has shown less turnover of Rs.1,18,23,601/- and also no audit has been done of his books of accounts as per provision of section 44AB of the IT Act. Therefore net profit of Rs. 7,74,775/- as shown by the assessee @ 3.6%
is not acceptable. Considering the facts of the case, net profit is calculated @ 8%
of total turnover Rs.2,15,08,280/- which comes to Rs. 17.20,662/-. As the assessee has shown net profit of Rs.7,74,775/- the difference of Rs.9,45,887/-
(17,20,62-7,74,775) is added to the total income of the assessee treated as undisclosed profit from wine business.
Per contra the appellant stated that the profit of Rs.7,74,775/- declared by assessee was on turnover of Rs.2,15,08,280/- but turnover was wrongly mentioned in the return at Rs.96,84,679/-, AO on the other side has accepted this turnover of the assessee amounting to Rs.2,15,08,280/- but did not considered the expenditure of Rs. 2,07,33,505/- incurred on this turnover. The said expenses are debited to profit & loss account and are incurred wholly and exclusively for the purpose of his business and supported by bills and vouchers.
The facts of the case are considered. The books of accounts of the assessee are not audited. The assessee himself declared profit @8 per cent as per provisions of section 44AD of the Income Tax Act. When AO found that the actual turnover is more than declared in the return of income, then the AO applied the rate of profit as per provisions of 44AD of the Income Tax Act which is as per the provisions of Income Tax Act. If the assessee wanted to show less profit then the assessee should have got his books of accounts audited. It is not done by the assessee. In these circumstances, no fault is found in the addition made by the AO. The addition made by the AO of Rs. 9,45,887/- is therefore found to be justified and upheld.
This ground of appeal is treated as dismissed.”
18. Aggrieved from the said finding of the Id. CIT(A) the assessee preferred the appeal before this tribunal on raising there ground no. 2 in this appeal. The Id. AR of the assessee in support of this ground filed the detailed written submission as consolidated submission reproduced while dealing with the appeal of the assessee in ITA no. 931/JP/2024. In addition, that written submission the Id. AR of the assessee vehemently argued that the assessee has filed all the details in support of the that profit and loss account. In any case if the contention of the Id. AO was accepted estimating the profit at Rs. 17,20,662 then the due taxes in the form of composite fees for an amount of Rs. 9,75,000/- in any case is required to be deducted from the estimated profit if the same is reduced the profit comes to Rs.
7,45,662/- whereas against that the assessee has offered the income of that business at Rs. 7,74,775/- which is higher and no addition is warranted.
19. Per contra, Id. DR relied upon the finding recorded in the orders of the lower authority. She vehemently argued that the assessee has not reported the correct income, did not get the books of accounts audited and therefore, the claim of the assessee not in accordance with law.
20. We have heard the rival contentions and perused the material placed on record. As is evident that the assessee while filling the ITR for the year under consideration reported the turnover of Rs. 96,84,679/- from liquor business and offered the income as per provision of section 44AD of the Act, considering income at 8% of Rs. 7,74,775/- [ 96,84,679 8% ].
Assessee in the assessment proceeding submitted Profit & Loss account
* wherein the wine business turnover of Rs. 2,15,08,280/- was reported therefore, Id. AO estimated the income @ 8 % on that turnover and added the difference as income in the hands of the assessee. Considering that facts of the case, net profit was calculated @ 8% of total turnover Rs.
2,15,08,280/- which comes to Rs. 17,20,662/- and since the assessee has already offered profit of Rs. 7,74,775/- the difference of Rs. 9,45,887/-
(17,20,662-7,74,775) was added to the total income of the assessee treating the difference as undisclosed profit from wine business. When the matter carried before the Id. CIT(A) he has confirmed the addition on the ground that the assessee has not get his books of accounts audited. The assessee himself disclosed profit @ 8 % declaring less turnover when the assessee caught with the higher turnover he cannot show less profit and thereby he justified the addition. The bench noted that arguments of the Id.
AR of the assessee that though the assessee has not got his books of account audited but from the same profit and loss account filed Id. AO or that of the Id. CIT(A) did not dispute any of the claim of the assessee and therefore, the profit declared cannot be disputed. Alternatively, Id. AR argued that in any case the taxes and levy so paid are required to be reduced from the estimate of profit of Rs. 17,20,662/- and the assessee undisputedly paid a sum of Rs. 9,75,000/- as composite fees for the year
01.04.2016 to 31.03.2017 [ APB-142] as the sales is inclusive of indirect tax and the same was not disputed if the same get reduced from the estimated profit then the net figure comes to Rs. 7,45,662/ [ 17,20,662 less 9,75,000/-
] as against that profit so arrive the assessee has already offered the profit at Rs. 7,74,775/- which is better than what is to be taxed. Thus, looking to this aspect of the matter the assessee cannot be denied the credit of indirect taxes so paid by the assessee and if that is considered the income offered by the assessee is higher and therefore, we are of the considered view that no addition to that income of Rs. 7,74,775/- is required to be made in the hands of the assessee. Considering this observation ground no. 2
raised by the assessee stands allowed. Ground no. 3 being consequential does not require our finding. Ground no. 4 being general and ground no. 5
for which the assessee does not advanced any argument it becomes educative in nature.
In the results the appeal of the assessee in ITA no.935/JP/2024
stands allowed.
21. Now, we take up appeal of the assessee in ITA No. 936/JP/2024 for A.Y 2018-19. In this appeal, the assessee has raised following grounds: -
1. The Ld. CIT(A) has erred on facts & in law in confirming the addition of Rs.74,27,089/- u/s 69/69B of the Act on account of alleged unexplained investment in purchase of car (Rs.1,00,000/-) unaccounted investment in construction of residential house (Rs. 9,40,000/-), unexplained advance given to Radhey Shyam for purchase of immovable property (Rs.4,65,000/-), unexplained cash found (Rs.3,50,000/-), unexplained loans (Rs.6,27,177/-) and excess stock
& over sale of Kota stone (Rs. 49,44,912/-) by not accepting the explanation of assessee that the source of same is out of agriculture income of Rs.52,73,503/- earned during the year and out of past agricultural income on the ground that assessee has not disclosed the agriculture income in the return filed in response to notice issued us 153A of the Act but has disclosed the same in assessment proceedings u/s 153A which is not admissible.
2 The Ld. CIT(A) has further erred on facts & in law in considering the unaccounted investment in construction of residential house at Rs.9,40,000/- as against Rs.7,48,966/- claimed by the assessee.
3 The appellant craves to alter, amend & modify any ground of appeal.
4 Necessary cost be awarded to the assessee.”
22. The bench noted that the issue raised vide ground no 1 is similar to the one raised by the assessee in ITA no. 931/JP/2024. Therefore, it is not imperative to repeat all the facts and findings given by the bench and the decision taken by us in ITA no. 931/JP/2024 while dealing with the ground no 1 of that appeal shall apply mutatis mutandis to the ground no. 1 raised in ITA no. 936/JP/2024. Thus, ground no. 1 raised by the assessee in this appeal stands allowed.
23. Now coming to the ground no. 2 raised by the assessee the brief facts related to the dispute are that the assessee was constructing a residential house at Beedmandi, Suket, Teh. Ramganjmandi, Kota. During the search & post search proceedings, he was asked about the sources of such construction expenses which were incurred for new house. During the post search proceedings, the assessee had stated that total expenses incurred on construction of residential house were Rs. 31,00,000/- till the date of search. Out of the total expenditure of Rs. 31,00,000/-, an amount of Rs. 15,61,000/- had been paid from the known & declared sources of income from his HUF, which was recorded in the books of account of his
HUF's. For remaining expenses, the assessee stated during the post search proceedings on 16/02/2018 by submitting the details of Rs.15,39,000/- for which he also had produced list of pending bills of construction expenses. Out of this balance amount which was still unpaid was for Rs.15,39,000/-, the assessee has offered for taxation of Rs.
9,40,000/- treating the same as investment made during the current financial year which had incurred out of books and from unaccounted/
unexplained sources. In the assessment proceeding Id. AO noted that the assessee has not included the said amount in return filed by him on 31.08.2018. During the assessment proceeding, the assessee was asked to explain the reason for the same. In response the assessee submitted a reply on 12.12.2019 on this issue where in he contended that total unpaid bills as on the date of search was Rs. 7,90,034/ in place of Rs. 5,99,000/- and offered Rs. 7,48,966/- as undisclosed income of the assessee as it was not recorded in the books of accounts. Further the assessee contended that the undisclosed income of Rs.7,48,966/- used for the constriction of house was out of his undisclosed agriculture income and submitted revised agriculture income of Rs. 52,73,503/- in place of Rs.
NIL/- as declared in his return. Ld. AO considered this submission of the assessee but not found convincing as the assessee has not submitted any documentary evidences in support of expenses incurred for cultivating the crops and selling the crop yields in the mandi. In absence of all these documents the revised computation filed by the assessee was not considered/accepted. Therefore the contention of the assessee that he had earned income from agriculture activities was not found convincing.
Therefore, the amount of investment made by the assessee for the construction of house i.e. Rs.9,40,000/- as offered by the assessee during search action was added to his total income treated as unexplained investment u/s 69 and tax is charged as per provisions of section 115BBE of the IT Act.
24. Aggrieved from that finding of the assessing officer the assessee carried the matter before the Id. CIT(A) he confirmed the addition because the assessee disclosed that amount in the statement u/s. 132(4) of the Act but assessee has not adopted the disclosure while filing the return of income.
25. On this aspect of the matter the Id. AR of the assessee fairly admitted based on the written submission that the unrecorded expenditure on construction was Rs.7,48,966/- as against Rs.9,40,000/- offered during the search. Accordingly, AO be directed to consider the correct unaccounted investment in construction at Rs.7,48,966/- as against Rs.9,40,000/- considered by him.
26. On the other hand, Id. DR relied upon the finding recorded in the orders of the lower authority.
27. We have heard the rival contentions and perused the material placed on record so far as the ground no. 2 is concerned the brief facts as emerges from the records are that during the course of search proceeding assessee in his statement u/s 132(4) dt. 17.11.2017, in reply to Q. No.36 of (PB 108) stated that the total expenditure incurred on the construction of residential house was Rs.31,00,000/- out of which Rs.15,61,000/- was recorded in the books of Dheeraj Singh Sisodiya HUF. Out of the balance amount of Rs.15,39,000/-, payment against some material & labour was pending and therefore he admitted that Rs.9,40,000/- (31,00,000-
15,61,000-5,99,000) invested out of his current year business and other undisclosed income. In course of assessment proceedings, assessee explained that the unpaid amount was Rs.7,90,034/- (PB 111) which was paid by cheque out of the housing loan taken from State Bank of India.
Thus, the correct unrecorded expenditure was worked out at Rs.7,48,966/-
(31,00,000-15,61,000-7,90,034). However, AO without considering the same considered the unrecorded expenditure in construction at Rs.9,40,000/- since assessee has offered this amount in his statement u/s 132(4).
When the matter carried before the Id. CIT(A) he confirmed the unrecorded expenditure in construction at Rs.9,40,000/- on the basis of statement recorded u/s 132(4).
Before us the Id. AR of the assessee argued that in the statement u/s 132(4), assessee has not specified the amount of unpaid construction expenditure but only on estimation offered the unrecorded construction expenditure at Rs.9,40,000/-. In fact, the unpaid amount was Rs.7,90,034/-
(PB 111) as informed to the bank and ultimately the same was paid by cheque out of the housing loan taken from State Bank of India. The details of unpaid expenditure of Rs.7,90,034/- detailed herein below:
Name of the party
Bill No.
Amount
Paper Book
Panchwati Tiles and Granite
131,132,134
1,69,562/-
112-114
Jagdish Building
Material Supplier
78,75,87,79,53,55,56,
60,63,66,100,96,94,92,
91 & 104
1,92,972/-
115-130
Jagdish S/o Onkar Lal
02/17-18
2,02,500/-
131
Onkar Lal Keshu Ram
01/2017-18
2,25,000/- 132
Total
7,90,034/-
Thus, the unrecorded expenditure on construction can be added at Rs.7,48,966/- as against Rs.9,40,000/- offered during the search on estimated basis. Accordingly, Id. AO is directed to add the correct unaccounted investment in construction at Rs.7,48,966/- as against
Rs.9,40,000/-. In the result the ground no. 2 raised by the assessee is partly allowed.
In the result the appeal of the assessee in ITA no. 936/JP/2024 is partly allowed.
Order pronounced in the open court on 28/01/2025. (डा० एस. सीतालक्ष्मी )
(Dr. S. Seethalakshmi)
न्यायिक सदस्य/ Judicial Member ( राठोड कमलेश जयन्तभाई )
(Rathod Kamlesh Jayantbhai)
लेखा सदस्य / Accountant Member
जयपुर/ Jaipur
दिनांक/Dated:- 28/01/2025
*Ganesh Kumar, Sr. PS
आदेश की प्रतिलिपि अग्रेशित / Copy of the order forwarded to:
1. The Appellant- Sh. Dheeraj Singh Sisodiya, Kota
2. प्रत्यर्थी / The Respondent- DCIT, Central Circle, Kota
3. आयकर आयुक्त / The ld CIT
4. आयकर आयुक्त (अपील) / The ld CIT(A)
5. विभागीय प्रतिनिधि, आयकर अपीलीय अधिकरण, जयपुर/DR, ITAT, Jaipur
6. गार्ड फाईल / Guard File (ITA Nos. 931 to 936/JP/2024)
आदेशानुसार / By order,
सहायक पंजीकार / Asst.