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Facts
The assessee filed two appeals against the CIT(A)'s orders for AY 2012-13 and AY 2014-15. For AY 2012-13, the assessment was reopened after four years, alleging that agricultural income had escaped assessment due to non-disclosure of material facts. For AY 2014-15, the original assessment completed under Section 143(3) led to a partial disallowance of agricultural income, which was subsequently disallowed in its entirety following a Section 263 order.
Held
For AY 2012-13, the Tribunal held that the reopening was based on a mere change of opinion, as the original assessment had accepted the agricultural income, and thus quashed the reassessment. For AY 2014-15, based on a remand report confirming extensive agricultural land cultivation and proper banking channel receipts for produce, the Tribunal deleted the additional disallowance of agricultural income, maintaining only the undisputed initial disallowance.
Key Issues
1. Whether the reassessment proceedings for AY 2012-13, initiated after four years, were valid when based on a change of opinion. 2. Whether the disallowance of agricultural income for AY 2014-15 was justified despite evidence supporting the assessee's claim.
Sections Cited
143(3), 147, 148, 153, 139, 142, 263
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
O R D E R Per Bench : These two appeals filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, both dated 27.12.2024 for assessment years 2012-2013 & 2014-2015.
(AY : 2012-2013) 2. In this appeal, it was the submission of the ld. AR that the original return of the assessee was filed on 27.09.2012, the same was processed and the assessment came to be completed u/s.143(3) of the Act on 26.02.2015 wherein certain additions have been made. In the assessment order under the headnote “Not for the Assessee”, the Assessing Officer has mentioned as follows :-
It was the submission that subsequently on 05.12.2019, the assessment was proposed to be reopened with the following reasons :-
4. It was the submission that the reopening was in fact challenge to the agriculture income declared by the assessee. It was the submission that the reopening was based on change of opinion. The Assessing Officer in the original proceedings had considered the agricultural income of the assessee. The explanation of the assessee had been called for and the same have been accepted. The reopening consequently was clearly based on a change of opinion and no fresh evidence had come to the attention of the AO or in the possession of the Assessing Officer which could lead the Assessing Officer to have any reason to reopen the assessment.
In reply, ld.Sr. DR submitted that the area of land owned by the assessee has not been examined by the AO and there was no discussion of what was examined in respect of agricultural income in respect of original assessment. It was the submission that the reopening is liable to be upheld.
We have considered the rival submissions. A perusal of the facts of the present case clearly shows that in the course of original assessment the AO has categorically given a finding in regard to agricultural income disclosed by the assessee. He has also recognized the source of agricultural income. The note also talks of the explanation having been sought from the assessee. In the earlier years also, the agricultural income disclosed by the assessee has been accepted. In fact, the agricultural income offered by the assessee is much higher than the agricultural income shown during the impugned assessment year. Those assessments have not been reopened but have been accepted. Now, the reopening in respect of agricultural income mentioning that the assessee has not shown the quantity of the crops produced, and to whom sold, sale purchase registers, bills and vouchers, ledger account, are nothing but afterthought, especially when in the course of original assessment the AO has categorically admitted that the agricultural income is from the sale of eucalyptus trees, the amount has been received by cash as well as cheque. Thus, clearly the reopening of the assessment as proposed is nothing but a change of opinion. There is no failure on the part of the assessee to disclose fully and truly all material facts when the original assessment was completed. This being so, we are of the view that the reopening as done by the AO and upheld by the ld. CIT(A) is unsustainable and consequently we quash the same and the consequential assessment order stands quashed. Thus, the appeal of the assessee in is allowed.
2014-2015) 7. In this appeal, ld.AR submitted that original assessment in the case of the assessee came to be completed u/s.143(3) of the Act on 22.04.2016. The assessment was completed disallowing 1/6th of the agricultural income. An order u/s.263 of the Act came to be passed for making a thorough enquiry in regard to the assessee’s claim of agriculture income and low sdrawings. Consequently, assessment came to be passed wherein agricultural income disclosed by the assessee came to be disallowed in its entirety. It was the submission of the ld. AR that during the assessment year 2009-2010 a remand report had been called for by the then ld. CIT(A) and in the order of the ld. CIT(A) for A.Y.2009-2010 in para 6.2.1, the remand report has been extracted which reads as follows :-
It was the submission that the remand report clearly showed that the 88.62 acres of land was under cultivation and out of the same approximately 45 acres of land was used for cultivation of eucalyptus trees. The Inspector had visited the land and given the report. It was the submission that now again the ownership of land of the agricultural operation have been re-examined. It was the submission that in the earlier years also the assessee has been showing agriculture income and the same has also been accepted. It was the prayer that the addition as made by the AO and as confirmed by the ld. CIT(A) is liable to be deleted.
In reply, ld. Sr. DR submitted that the assessee has not been able to prove the ownership of the land. It was the submission that the order of the ld. CIT(A) is liable to be upheld.
We have considered the rival submissions. A perusal of the remand report, which is extracted in the order of the ld. CIT(A) for the assessment year 2009-2010, as extracted above, clearly shows that 88.62 acres of land is under cultivation by the assessee and 45 acres of land is used for cultivation of eucalyptus trees. The documents on the leasehold land has also been examined. The bills for the purchase of saplings of eucalyptus trees are also examined there. The proceeds of the agricultural produce have been received through banking channel. There is field enquiry report by the Inspector. A certificate from the local Tahasildar is also available. This being so, we are of the view the addition made on the agricultural income by the AO and confirmed by the ld. CIT(A) is liable to be deleted and we do so.
Here, it must specifically be mentioned that the disallowance of Rs.7,82,416/- as made in the original assessment order is not in dispute before us, insofar as the same has not been challenged in the appeal, therefore, that disallowance of the agricultural income shall remain and only the disallowance as made in the assessment order passed u/s.143(3)/263 of the Act to the extent of additional disallowance of the agricultural income