DCIT, NEW DELHI vs. M/S. BRISK INFRASTRUCTURE AND DEVELOPERS PVT. LTD., NEW DELHI

ORDER PER H.S. SIDHU : JM The Revenue has filed this Appeal against the impugned Order dated 31.3.2014 of the Ld. CIT(A)-VI, New Delhi relevant to assessment year 2009-10.

2. The grounds raised in the appeal read as under:-

i) Without appreciating the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 7,16,28,089/- made by the AO u/s. 68 of the I.T. Act, 1961. ii) The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

“In this case the assessee has shown huge agriculture income. Accordingly the details of the same was called for from the assessee. The perusal of details filed by the assessee reveals that assessee entered into an agreement with 136 persons for Lease of land. Since the land is located in Orissa, therefore the Department officers and land Revenue Officers of the Orissa has to be requested for inquiry regarding ownership of land and also of agricultural produce in that particular land for the year ending 31.03.2009. The list of person alongwith copy of agreement submitted by the assessee is enclosed herewith for necessary action and issuing of commission to the officers of Orissa.”

3.1 The AC received an enquiry report from Shri R. Behera, ITO Ward - 1, Jey Pore, Orissa on 21.12.2011 in which he stated that he visited Mastiput to enquire about the activities of Brisk Agro Farms and he replied that he met one Shri Jeenabandhu Jani, Sarpanch of Mastiput Village at the Panchayat officer Mastiput and asked about the cultivation of agriculture land of villagers by the aforesaid company. The Sarpanch replied that no such activity has been carried out in the village of Mastiput. All the villagers are cultivating their own land. He has also mentioned in his report that he met Mr. Biswasoin Takri s/o Mr. D.N. Iswarden. Mr. Biswasion Takri is the husband of Mrs. D.N. Badaseba. She is about 58 years of age.

Regarding cultivation of land by Brisk Agro Firm, Mr. Biswasoin replied as under:-

Mrs. D.N. Badaseba, Mrs. D.N. Subasini Lily, Mrs.

D.N. Chandrika Ratnavati Estana and Mrs. D.N.

Christina Luisi are four sisters. They are having around fifty acres of agricultural landed property which is an ancestral property. The four sisters are having their own family, however they are cultivating the lands jointly. They haven’t signed any agreement with any company or any outsider.

They are solely enjoying their own property.

Regarding the types of crops being yielded in that area, I gathered information that ragi, alsi, dungar paddy and suan are presently cultivated in the surroundings of village Mastiput. The other villagers present on the spot, also denied to have signed any agreement with any company or person who is an outsider.

3.2 In response to this report, the A.R. of the assessee filed details of agriculture land taken on lease by the assessee. He has mentioned that only on the basis of report of one village, no conclusion can be drawn. He filed the details of expenses incurred by the assessee for carrying out Agriculture activities. He also filed details of sales of agriculture produce along with certificates from various Sarpanches, Revenue Inspectors, Money receipt for collection of market fees of the state of Orissa. He also filed confirmation from persons whose tractor was used in the cultivation along with confirmation from parties to whom the sale were made etc. The AO was bent upon making the addition and has mentioned in the Assessment Order while making the addition that assessee has created documentary evidences to claim exemption of Agriculture Income. He has mentioned that expenses claimed against Agriculture Income are not subject to verification, therefore gross receipts of Rs. 7,16,28,089/- introduced by the assessee in the name of agriculture receipts was added on the basis of report of one / two person and from one village only, in the total income of the assessee as income from undisclosed sources and income of the assessee was assessed at Rs. 7,74,26,749/- vide order dated 28.12.2011 passed u/s. 143(3) of the Act. Aggrieved with the assessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 31.3.2014 has partly allowed the appeal of the assessee by deleting the addition of Rs. 7,16,28,089/-. Against the impugned order, the Revenue is in appeal before the Tribunal.

Thus the expenses claimed against agriculture income are not subject to verification therefore, the gross receipts of Rs. 7,16,28,089/- introduced by the assessee in the name of agricultural receipts was rightly added in the total income as income from undisclosed sources, which does not need any interference.

5. On the other hand, Ld. counsel for the assessee has relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order which does not need any interference. He submitted that AO has made the addition of total receipts of Rs. 7,16,28,089/- as undisclosed income whereas assessee claimed exemption of agriculture income of Rs. 3,56,94,754/-. However, Ld. CIT(A) has rightly deleted the addition. He further submitted that the total land taken on lease was 2100.55 acres from 136 farmers and lease deed with 135 farmers was executed on 15.12.2008 and for one farmer was on 26.7.2008. On 2911.2011 DCIT sent a request for enquiry to the concerned authorities at Orissa and Enquiry report dated 21.12.2011 submitted by Sh. R. Behra ITO, Ward-1, Jeypore Orissa. The AO relied upon the statement of only two persons. One of Mr. Biswasion Takri who is husband of land owner Mrs. DN Badaseba who furnished affidavit and received payment of Rs. 24905/- vide cheque no. 217116 dated 10.2.2009 and cleared on 26.2.2009. He further submitted that other person was Sh. Jeena Bandhu Jani, Sarpanch of Village Mustiput. He was not one of the 136 landowners who later on confirmed vide certificate that one company named Brisk Agro Farms cultivated vegetables in the area of village Mustiput. The assessee submitted its reply of enquiry report consisting of reply, affidavit from various land owners, certificate from village Sarpanches, money receipt for payment of vegetables from market committees, certificate regarding use of Tractor, confirmation regarding purchase of vegetables from Uma Trading Co., from Krishna Trading Co., and other buyers, vegetables wise sales account phase-2. It was further submitted that income of the assessee company in AY 2010-11 was also comprising income from agriculture activities and agriculture income was Rs. 12,94,14,114/-, which was accepted by the Department vide assessment order dated 03.1.2013. In support of his contention, he filed a Paper Book containing pages 1-503 in which he has attached the statement of facts and arguments; acknowledgement of ITR, computation of income etc. ; copy of balance sheet Brisk Agro Farms; reply of assessee to enquiry report; copyo f remand report dated 14.3.2014; copy of reply to the remand report dated 26.3.2014; copy of letters dated 8.8.2011, 8.10.2011, 9.11.2011, 28.11.2011, 1.12.2011 and 12.12.2011; copy of agreement to lease of agriculture land by DN Badaseba of Village Mastiput; Bank statement of SBI showing payment of Rs. 24,905/-; agreement to lease of agriculture land by some of the land lord; copy of lease agreements details of 136 farmers statement showing the name, address, name of village, Tehsil Katha Number, area of land and amount paid for taking the land on lease; copy of letter dated 15.12.2011 sent by M/s Uma Trading Company to ACIT Circle 3(1), New Delhi for purchasing vegetables of Rs. 2,30,00,960/- from M/s Brisk Agro Farms and making payment of Rs. 1,43,47,875/-; copy of ledger account of Uma Trading Company; Copy of letter dated 15.12.2011 sent by M/s Krishna Trading company to ACIT, Circle 3(1), New Delhi; copy of ledger account of Krishna Trading company; copy of ledger account of Major Om Prakash Sandeep Kumar Saini, Devakar Anil Kumar Saini, Pradeep Kumar, Pehlad Kumar Saini, Shanti Swaroop Sunikl Kumar Saini to whom crdit sales were made in addition to Uma Trading Co and Krishna Trading Co; copy of ledger accounts showing sale of agriculture produce in two phases alongwith copy of ledger account of Brinjal, cabaage, capcium, carrot, cauliflower, frenchbin, green chilli, onion, radish tomato for sales produced in phase-II; copy of account of vegetables sold in phase I, in Berhampur and Koraput; details of expenses incurred by the company on seeds, pesticides, manure, diesel, labour charges, transportation, cess and copy of their ledger account; details of cash and credit sales; village wise and crop wise details of expenses and sales, head wise cost and product wise cost.

6. We have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A) and the Paper Book filed by the Assessee and the assessment order dated 3.1.2013 for the AY 2010-11 in assessee’s own case. We find that Ld. CIT(A) has elaborately discussed the issue in dispute vide para no. 5 to 5.1.3 at page no. 27-32 of the impugned order dated 31.3.2014. For the sake of clarity, we are reproducing hereunder the said relevant findings of the Ld. CIT(A).

“5. Decision in Appeal- I have carefully considered the submission of the appellant. I have also gone through the relevant orders passed in this case. Before taking decision on ground wise appeal, it would be appropriate to consider the Remand Report of the AO and Rejoinder to the Remand Report filed by the appellant on this ground of appeal.

5(a) The AO has submitted in his Remand Report on filing of Additional Evidence by the appellant under Rule

46A, as below:

“Kindly refer to your office letter No.CIT(A)/Remand

Report/2013-14/535 dated 29.10.2013 addressed to the undersigned for sending the comments ‘on the copies of ledger accounts of various concerns/individuals, to whom the appellant has sold on credit basis, agricultural produce during the F.Y. 2008-09’ amounting to Rs.4,28,43,545/- after verification from records.

In order to verify the identity, creditworthiness and genuineness of the transaction, information u/s 133(6) of the I.T. Act were called from the following parties:

3. Shri Divakar Anil Kumar Saini

4. Shanti Sarup Sunil Kumar Saini

In reply to the information called for u/s 133(6), the above mentioned parties submitted their copy of bank account, copy of ledger account and in some cases copies of ITR.

The parties mentioned at Sr. No.3, 5 & 6 above has not filed copy of ITRs. The party mentioned at Sr. No. 6 has stated that its income is below taxable.

On perusal of ledger account as well as assessment record it is found that there is credit sales in respect of M/s Krishan Trading and M/s Uma Trading while there is no credit in respect of remaining parties.

On perusal of bank statements filed in response to notice u/s 133(6), it is noticed that the sale proceeds received by the assessee are out of cash deposited of similar amount.

However, to verify the identity, creditworthiness and genuineness of the transactions, summons were issued to the above mentioned parties for personal deposition along with documentary evidence for the source of cash deposited, before issuing cheque to the assesee. . In response thereto none attended nor have any submissions been filed.

In view of the above facts, Ld. CIT(A) is requested to decide the appeal of the appellant accordingly.”

5(b) The appellant in its submission by way of Rejoinder to the Remand Report stated as below:

“The Assessee has made total sale of Rs. 7,16,28,089/- during the under assessment. Party wise details of sale made is as under:-

M/s Uma Trading Company - Rs. 2,30,00,960 M/s Krishna Trading Company- Rs. 1,76,27,110 M/s Diwakar Anil Kumar Saini - Rs. 5,44,000 M/s Pradeep Kumar Prahlad Kumar Rs. 5,21,675/- M/s Om Prakash Sandeep Kumar- Rs. 4,62,400/- M/s Shanti Swarup Sunil Kumar- Rs. 6,87,400/-

Balance sale is made in cash. Out of the above parties except Uma Trading Company and Krishan Trading

Company cleared there balance during the year under assessment. The assessee filed ledger copy of all the above mentioned parties before the AO during assessment proceedings. The Hon’able CIT Appeal wanted to verify from the AO whether the assessee has submitted ledger copy of these parties during assessment proceedings or not. Sir, the AO has confirmed on second page that all the above mentioned parties have submitted copy of ledger account of M/s

Brisk Agro in their books of accounts. The AO has not pointed out any difference etc. in the statement submitted by the parties in response to notice u/s 133(6) and submitted during assessment proceedings. He has also mentioned that from the perusal of ledger account as well as assessment record there is credit sale in respect of Uma Trading Company and Krishna Trading

Company and there is no balance outstanding in another accounts. Sir, the AO clearly confirmed that assessee has filed ledger accounts of these parties during assessment proceedings also.

As regards that parties did not attend in response to notice issued for personal deposition, please note that no notice issued by the AO was received back. It clearly shows that address of the parties is genuine. The AO issued only one notice. If their presence was so necessary then he should have followed the matter further but he did not do so, looks that he was satisfied with the papers/documents filed by the parties.

We are sure that from the above you will agree and appreciate that all the parties confirmed their transaction by filing copy of ledger accounts and other documents.

We hope that you will find the above in order”.

5(c) Considering the submission of the appellant & to arrive at a correct taxable income in the case of the appellant, the additional evidence which are more of the nature of supplementary evidences are hereby admitted for adjudication purposes.

5.1.1. It is contended that the order of the AO in making addition of Rs.7,16,28,089/- as income from undisclosed sources, which was shown by the appellant as agricultural receipts, only on the basis of statement of one or two persons and from only one village is highly objectionable & therefore, the order passed is a biased one & is totally wrong, bad in law & needs to be quashed.

5.1.2. The appellant company is carrying on the business of development of land as developers, sale/purchase of plots, cultivating & selling agricultural products & dealing in shares. It claimed Agricultural

Income amounting to Rs.3,56,94,754/- as exempt income u/s 10 of the Act, as per its computation for F.Y.

2008-09, relevant to the A.Y. 2009-10. While calculating net agricultural income, the assessee company has disclosed gross receipts of Rs.7,16,28,089/- & claimed various expenses at Rs.3,24,07,640/- (direct & indirect)

& therefore, the N.P. Ratio is worked out at 45.24% approximately on such Agricultural Income. On being asked, the assessee company filed details of land, that the assessee company used for cultivation along with names, addresses of farmers from whom the lands were taken on lease for agricultural purposes along with Mastiput Tehsil, Khata No. area etc. It also submitted copies of lease deed executed on December 15, 2008 with the 136 farmers. The assessee company also submitted copies of ownership documents in respect of Lessors and also stated that Land Rent/Cess/Revenue tax etc was to be paid by the lessor as per the Land Lease

Agreement (Clause No.6). The AO, however, issued commission to the concerned Authorities at Orissa & got an enquiry report, conducted by the local Income Tax

Office at Jeypora, Orissa, based on ITO/ITI report where the local enquiries at Village Mastiput reveal that two persons having confirmed that the no such cultivation activity was undertaken by the appellant company. One of them happened to be Sarpanch Sh. Jeenabandhu Jani of the Village Mastiput, who has however furnished a certificate dated 28.12.2011 through the appellant company before the AO, stating that various vegetables like Gobi, Brinjal, Shimla Mirch & tomato etc are being grown in the Village Mastiput & its surrounding areas for so many years & one company named Brisk Agro Farms did cultivate vegetables in the village Mastiput. Hence, not such credence can be given to his statement. The other person who the Inspector of Income Tax, met with Mr. Biswasion Takri S/o Sh. D.N. Iswardan, who happened to be the husband of Mrs. D.N. Badaseba, who stated that Mrs. D.N. Badaseba (Spouse), Mrs. D.N.

Subasini Lily, Mrs. D.N. Chandrika Ratnavati Estana &

Mrs. D.N. Christina Lulsi are four sister who are having approximately fifty acres of land as agricultural property, through having their own respective families, however, have been cultivating the lands jointly & that they have not signed any agreement with any company or outsider.

However, the I.T.I recorded the statement of the husband of Mrs. D.N. Badnseba & what precluded him from recording statement of the lessor herself is not clever. In any case, even Mrs. D.N. Badaseba has herself furnished a duly sworn affidavit to the effect that she did execute lease deed agreement dated 15.12.2008 with the appellant company & received a sum of Rs.24,905/- vide cheque No.217116 which could not be controverted by the assessing officer. Therefore, the statement given by Mr. Biswasion Takri is not reliable & moreover, there might be confusion in his mind as the appellant under took cultivation in the F.Y. 2008-09, while the statement of the two persons were recorded by ITI in the F.Y. 2011-

12 i.e. after approximately three years. The assessing officer also relied upon extracts of downloads from www.kzndae.gov.za/Link Click aspx? fileticket for Length of Growing period for crops & effects of temperature & also extracts downloaded from Orissa Tourism Site reg. climate in Orissa & it has been mentioned in Orissa

Tourism site that winter is not very sever except in some areas in Koraput (Tehsil Koraput in which Mastiput Manja exists) & Phulbani where minimum temperature may drop to 3-4C & crops such as cabbage, lettuce, onion & potato, the entire crops might be ready for harvesting within a few days, but usually down over a longer period.

Moreover, the appellant had taken the Total Area as per lease agreement of 2100.55 Acres by signing Lease

Agreement with 136 farmers. The AO also relied upon a news article from National Daily The Hindu’ with a Captioned Title This farmer earns Rs.22 lakh a year from 2.1 acres of land in Doddaballapur, Bangalore Suburb.

Going by AO analogy, assessee could have earned over

220 crores ion a year. Therefore not much reliance can be placed on such articles & downloads which are in effect supporting the case of appellant only. Moreover, the appellant has cited & number of documentary evidence in support of the claim.

5.1.3 Further, the Assessee has made total sale of Rs.

7,16,28,089/- during the under assessment. Party wise details of sale made is as under:-

M/s Uma Trading Company - Rs. 2,30,00,960 M/s Krishna Trading Company- Rs. 1,76,27,110 M/s Diwakar Anil Kumar Saini - Rs. 5,44,000 M/s Pradeep Kumar Prahlad Kumar Rs. 5,21,675/- M/s Om Prakash Sandeep Kumar- Rs. 4,62,400/- M/s Shanti Swarup Sunil Kumar- Rs. 6.87,400/- Rs.4,28,43,545/-

Balance sale of approx. 40% is made in cash. Out of the above parties, except M/s Uma Trading Company and Krishan Trading Company the other concerns cleared there balance during the year under assessment. The assessee stated to have filed relevant details of all the above mentioned parties before the AO during assessment proceedings. For verification purposes and as to whether the appellant has filed necessary details and has submitted ledger copy of these parties during assessment proceedings or not, the copies of Ledger accounts of various concerns/individuals to whom appellant has sold on credit basis agricultural produce during F.Y. 08-09 amounting to Rs.4,28,43,545/-, were forwarded to the AO. The AO has confirmed in the Remand Report that all the above mentioned parties have submitted copy of ledger account of M/s Brisk

Agro in their books of accounts, copy of bank statements and in some cases, copies of ITRs. The AO has in fact, not pointed out any difference etc. in the statement submitted by the parties in response to notice u/s 133(6) and the details submitted during assessment proceedings. He has also mentioned that from the perusal of ledger account as well as assessment record, there is credit sale in respect of Uma Trading Company and Krishna Trading Company and there is no balance outstanding in other accounts.

As regards the fact that parties did not attend in response to notice issued for personal deposition, it is seen that no notice issued by the AO was received back undelivered. It shows that addresses of the parties are genuine. However, the fact remained that they did not respond to the summons issued by the assessing officer, particularly in regard to the verification of identity creditworthiness and genuineness of the transactions including the banking transactions. However, they have confirmed the said transactions with other evidences.

Moreover, the AO has not made any other independent enquiry to disprove the identity, capacity and genuineness of such transactions, as established by the respective Ledger Accounts filed by the said parties, bank statement and in some cases, copies of ITRs as well.

Therefore, the dissatisfaction recorded by the AO in this regard is primarily based on surmises and conjectures and not on the basis of proper appraisal of evidence and therefore, not on the basis of sufficient records. The action of the Assessing Officer is also not justified merely on Inspector’s Report regarding non conduct of agricultural operations by the appellant company in the year under appeal, as the contents of the said report have been effectively controverted by the appellant company & which has not been out rightly rejected by the AO. Therefore, addition on account of ‘Agricultural

Receipts’ as has been treated by the AO as ‘Income from Undisclosed Sources’ is found to be based on unsubstantiated material on record & therefore, cannot be sustained, particularly when the assessee has filed the relevant details with evidence before the AO in an effective manner. Therefore, the plea of the appellant is accepted & the AO is hereby directed to delete the addition of Rs.7,16,28,089/- on account of his treating such income as ‘Income from Undisclosed Sources’.”

6.1 After perusing the aforesaid findings of the Ld. CIT(A), we are of the view that assessee company is carrying on the business of development of land as developers, sale/purchase of plots, cultivating & selling agricultural products & dealing in shares. It claimed Agricultural Income amounting to Rs.3,56,94,754/- as exempt income u/s 10 of the Act, as per its computation for F.Y.

2008-09, relevant to the A.Y. 2009-10. While calculating net agricultural income, the assessee company has disclosed gross receipts of Rs.7,16,28,089/- & claimed various expenses at Rs.3,24,07,640/- (direct & indirect) & therefore, the N.P. Ratio was worked out at 45.24% approximately on such Agricultural Income.

On being asked, the assessee company filed details of land, that the assessee company used for cultivation along with names, addresses of farmers from whom the lands were taken on lease for agricultural purposes along with Mastiput Tehsil, Khata No. area etc. It also submitted copies of lease deed executed on December 15, 2008 with the 136 farmers. The assessee company also submitted copies of ownership documents in respect of Lessors and also stated that Land Rent/Cess/Revenue tax etc was to be paid by the lessor as per the Land Lease Agreement (Clause No.6). The AO, however, issued commission to the concerned Authorities at Orissa & got an enquiry report, conducted by the local Income Tax Office at Jeypora, Orissa, based on ITO/ITI report where the local enquiries at Village Mastiput reveal that two persons having confirmed that the no such cultivation activity was undertaken by the appellant company. One of them happened to be Sarpanch Sh. Jeenabandhu Jani of the Village Mastiput, who has however furnished a certificate dated 28.12.2011 through the assessee company before the AO, stating that various vegetables like Gobi, Brinjal, Shimla Mirch & tomato etc are being grown in the Village Mastiput & its surrounding areas for so many years & one company named Brisk Agro Farms did cultivate vegetables in the village Mastiput. Hence, not such credence can be given to his statement. The other person who the Inspector of Income Tax, met with Mr. Biswasion Takri S/o Sh. D.N.

Iswardan, who happened to be the husband of Mrs. D.N. Badaseba, who stated that Mrs. D.N. Badaseba (Spouse), Mrs. D.N. Subasini Lily, Mrs. D.N. Chandrika Ratnavati Estana & Mrs. D.N. Christina Lulsi are four sister who are having approximately fifty acres of land as agricultural property, through having their own respective families, however, have been cultivating the lands jointly & that they have not signed any agreement with any company or outsider.

However, the I.T.I recorded the statement of the husband of Mrs. D.N. Badnseba & what precluded him from recording statement of the lessor herself is not clever. In any case, even Mrs. D.N.

Badaseba has herself furnished a duly sworn affidavit to the effect that she did execute lease deed agreement dated 15.12.2008 with the assessee company & received a sum of Rs.24,905/- vide cheque No.217116 which could not be controverted by the Assessing Officer. Therefore, the statement given by Mr. Biswasion Takri is not reliable & moreover, there might be confusion in his mind as the assessee under took cultivation in the F.Y. 2008-09, while the statement of the two persons were recorded by ITI in the F.Y. 2011- 12 i.e. after approximately three years. We further note that the Assessing Officer also relied upon extracts of downloads from www.kzndae.gov.za/Link Click aspx? fileticket for Length of Growing period for crops & effects of temperature & also extracts downloaded from Orissa Tourism Site reg. climate in Orissa & it has been mentioned in Orissa Tourism site that winter is not very sever except in some areas in Koraput (Tehsil Koraput in which Mastiput Manja exists) & Phulbani where minimum temperature may drop to 3-4C & crops such as cabbage, lettuce, onion & potato, the entire crops might be ready for harvesting within a few days, but usually down over a longer period. Moreover, the appellant had taken the Total Area as per lease agreement of 2100.55 Acres by signing Lease Agreement with 136 farmers. The AO also relied upon a news article from National Daily The Hindu’ with a Captioned Title This farmer earns Rs.22 lakh a year from 2.1 acres of land in Doddaballapur, Bangalore Suburb. Going by AO analogy, assessee could have earned over 220 crores in a year. Therefore not much reliance can be placed on such articles & downloads which are in effect supporting the case of assessee only. Moreover, the assessee has cited number of documentary evidence in support of the claim.

Further, the Assessee has made total sale of Rs. 7,16,28,089/- during the under assessment. Party wise details of sale made is as under:-

M/s Uma Trading Company - Rs. 2,30,00,960 M/s Krishna Trading Company- Rs. 1,76,27,110 M/s Diwakar Anil Kumar Saini - Rs. 5,44,000 M/s Pradeep Kumar Prahlad Kumar Rs. 5,21,675/- M/s Om Prakash Sandeep Kumar- Rs. 4,62,400/- M/s Shanti Swarup Sunil Kumar- Rs. 6.87,400/- Rs.4,28,43,545/- 6.1.1 We further note that the balance sale of approx. 40% is made in cash. Out of the above parties, except M/s Uma Trading Company and Krishan Trading Company the other concerns cleared there balance during the year under assessment. The assessee stated to have filed relevant details of all the above mentioned parties before the AO during assessment proceedings. For verification purposes and as to whether the appellant has filed necessary details and has submitted ledger copy of these parties during assessment proceedings or not, the copies of Ledger accounts of various concerns/individuals to whom assessee has sold on credit basis agricultural produce during F.Y. 08-09 amounting to Rs.4,28,43,545/-, were forwarded to the AO. The AO has confirmed in the Remand Report that all the above mentioned parties have submitted copy of ledger account of M/s Brisk Agro in their books of accounts, copy of bank statements and in some cases, copies of ITRs. The AO has in fact, not pointed out any difference etc. in the statement submitted by the parties in response to notice u/s 133(6) of the Act and the details submitted during assessment proceedings.

AO has also mentioned that from the perusal of ledger account as well as assessment record, there is credit sale in respect of Uma Trading Company and Krishna Trading Company and there is no balance outstanding in other accounts. As regards the fact that parties did not attend in response to notice issued for personal deposition, it is seen that no notice issued by the AO was received back undelivered. It shows that addresses of the parties are genuine. However, the fact remained that they did not respond to the summons issued by the Assessing Officer, particularly in regard to the verification of identity creditworthiness and genuineness of the transactions including the banking transactions. However, they have confirmed the said transactions with other evidences.

Moreover, the AO has not made any other independent enquiry to disprove the identity, capacity and genuineness of such transactions, as established by the respective Ledger Accounts filed by the said parties, bank statement and in some cases, copies of ITRs as well. Therefore, the dissatisfaction recorded by the AO in this regard is primarily based on surmises and conjectures and not on the basis of proper appraisal of evidence and therefore, not on the basis of sufficient records. The action of the Assessing Officer was also not justified merely on Inspector’s Report regarding non conduct of agricultural operations by the assessee company in the year under appeal, as the contents of the said report have been effectively controverted by the assessee company and which has not been out rightly rejected by the AO. Therefore, addition on account of ‘Agricultural Receipts’ as has been treated by the AO as ‘Income from Undisclosed Sources’ was found to be based on unsubstantiated material on record and therefore, cannot be sustained, particularly when the assessee has filed the relevant details with evidence before the AO in an effective manner.

Therefore, Ld. CIT(A) has rightly accepted the plea of the assessee and directed the AO to delete the addition of Rs.7,16,28,089/- on account of his treating such income as ‘Income from Undisclosed Sources’, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.

Order pronounced on 26/02/2019.