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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. T. S. Kapoor
ORDER This is an appeal filed by assessee against the order of Commissioner of Income Tax (Appeals), Karnal dated 22.06.2018.
2. The assessee has taken following grounds of appeal:
1. That the Ld. Income tax Officer gravely erred in making addition as per para no. 3 of the order dated 27.12.2017 an addition of Rs. 3,26,711/- which is against the law, facts circumstances of the case is as under:- i) The assessee was running the business of Trading of Fertilizers and Pesticides and has declared Annual Income of Rs.2,58,740/- in the Income Tax Return Filed for the A.Y. 2015-16 but the Income Tax Officer have made addition in the income of that year stating that the assessee was not carrying on Business of Trading of fertilizers and Pesticides and concluded that the assessee made a story of doing Business. ii) The assessee was holding the 7 acres of agriculture land from which Income of Rs. 3,15,000/- was declared by the assessee but 2 Ram Bhaj Notna the Income Tax officer made the addition of Rs.162000 stating that the assessee has failed to substantiate the contention of carrying on the Agriculture Income. iii) The above point can be very well retrieved from the fact of CIT v/s. Kamal Wahal: (2013) 214 Taxman 287 (Del) and Madras High Court case of CIT vs Natrajan (2007) 287 ITR 271 (Mad.) wherein it was held that assessee is entitled to exemption u/s 54 even it is a purchase in the name of his wife. Similar view has been expressed in CIT vs Gurnam Singh (2010)327 itr (P&H) and CIT vs Ravinder Kumar Arora of Delhi High Court wherein it was held that the asset should be purchased by the assessee but not necessarily in his name.
The assessee may kindly be allowed to add, amend and delete the additional grounds of appeal
. It is therefore prayed that the relief as claimed in the grounds of appeal may be allowed.”
3. The brief facts as noted in the assessment order are that assessee filed its return of income declaring income of Rs.2,58,740/-. This return was filed u/s 44AD of the Act. The Assessing Officer rejected the contention of assessee that the income was from business and made the addition as income from unexplained sources. The Assessing Officer further made an addition of Rs.3,26,711/- as being unexplained cash deposits. The source of cash deposit was explained to be partly out of business and partly out of agriculture income. The Assessing Officer did not accept the contention of the assessee as in his opinion the assessee had failed to substantiate his claim of business as well as agricultural income.
The assessee carried the matter to ld. Commissioner of Income Tax (Appeals) who dismissed the appeal of the assessee.
3 Ram Bhaj Notna 5. Aggrieved the assessee is before me. The ld. Authorized Representative at the outset submitted that assessee was not required to maintain books of account as per the provisions of Section 44AD of the Act and therefore, the Assessing Officer and ld. Commissioner of Income Tax (Appeals) has wrongly made the addition. As regards the deposits in bank, the ld. Authorized Representative submitted that Rs.1,64,711/- was deposited out of business and Rs.1,62,000/- was deposited out of agricultural income. It was submitted that Assessing Officer at page 2 of his order has himself has noted that assessee enjoyed agriculture income and therefore, the addition made by Assessing Officer is not justified.
The ld. Departmental Representative, on the other hand, relied on the orders of authorities below.
I have heard the rival parties and have gone through the material placed on record, I find that assessee had filed return of income for the year under consideration on 31.03.2017 against the due date on 31.07.2015. The authorities below has rejected the claim of income from business only on the ground that assessee could not file any document to support his claim of any business. The authorities below further held that had the assessee been carrying out the business activities, he would have filed the return within time and therefore, has held that assessee had wrongly claimed the income from business. As regards the deposits in bank, the Assessing Officer rejected the claim of assessee of having deposited the amount in bank out of sale proceeds and out of agriculture income. I find that assessee had declared agriculture income to the tune of Rs.3,15,000/- which is apparent from the copy of acknowledgment of return. Further, I find that assessee had declared the income under the provisions of Section 44AD of the Act for which the assessee is not required to maintain any books of account. Before me, in the written submissions, assessee has filed a copy of license issued by 4 Ram Bhaj Notna Deputy Director Agriculture, cum- Licensing Officer, Karnal, certifying therein that the assessee was dealing in the business of fertilizers and insecticides. This document was not before the authorities below as the authorities below clearly held that no evidence was filed substantiating the business of the assessee. Therefore, I, deem it appropriate to remand the issue back to the Assessing Officer who should decide the issue keeping in view the evidence filed by assessee in the form of copy of license. The Assessing Officer is also directed to examine the claim of assessee of having deposited the amount in bank out of agriculture income as the assessee had declared agriculture income to the tune of Rs.3,15,000/-. The assessee cannot be expected to maintain books of accounts for agricultural income which itself is exempt from tax. Similarly, in a case where return is filed u/s 44AD of the Act the assessee is not required to maintain books of accounts. Since, the assessee has filed copy of license from Director Agriculture Karnal, the Assessing Officer should examine it to decide the issue in right perspective.
Needless to say that assessee will be provided sufficient opportunity of being heard.
In the result, the appeal of the assessee is allowed for statistical purposes. (Order pronounced in the Court on 29 t h day of May, 2019 at New Delhi)