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Income Tax Appellate Tribunal, DELHI BENCHES: ‘SMC’, NEW DELHI
This is an appeal filed by the Department against the Order dt. 07.11.2016 of Ld.CIT(Appeals)-13, New Delhi. Following grounds have been raised in this appeal.
“(i) ‘Whether on facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.46,00,000/- on account of unexplained cash deposits u/s 68 of the Act. (ii) ‘Ld.CIT(A) has erred taking cognizance of the additional evidences, despite the fact that the same was rebutted in the remand report.’ (iii) ‘The appellant craves to leave, to add, alter or, amend any grounds of appeal raised above at the time of the hearing.’ It is prayed that the order of the CIT(A) being contrary to the facts on record and the settled position of law, be set aside and that of the A.O. be restored.
2. From the above grounds, it is gathered that the only grievance of the department relates to deletion of addition of Rs.46 lakhs made by the A.O. on account of unexplained cash deposits u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).
3. The facts of the case in brief are that the assessee filed the return of income on 19.3.2012 declaring an income of Rs.22,161/- and agricultural income of Rs.35,00,000/-. Later on the case was selected for scrutiny. During the course of assessment proceedings the A.O. noted that the assessee had deposited Rs.33 lakhs on 10.07.2009 and Rs.11,00,000/- on 14.07.2009, in his bank account maintained with Union Bank of India, Mukhmelpur Branch, Delhi. The claim of the assessee was that he had agricultural income and the cash deposits in the bank account were the sale proceeds of agricultural product. Since the assessee had not furnished documentary evidence in the form of Khasra Khatauni to substantiate his claim of agricultural income, the A.O. made addition of Rs.46 lakhs. Being aggrieved the assessee carried the matter to the Ld.CIT(A) and furnished the written submissions which have been reproduced by the Ld.CIT(A) in para 5 of the impugned order. The assessee also filed an application for admission of additional evidences in the form of Khasra Khatauni which he was unable to obtain earlier during the course of assessment proceedings. The additional evidences comprising the land records in the form of Khasra Khatauni of land ad measuring about 13 acres which was a joint family holding and the evidence of cultivating 25 acres of agricultural land owned by his cousin brothers. The Ld.CIT(A) referred those additional evidences to the A.O. for his report. In response the A.O. furnished the remand report stating therein as under.
"Kindly refer to your office letter No. CIT{A}/RR/2016-17/31 dated 11/04/2016 vide which supplementary evidence u/r 46A of the Income Tax rule 1961 was provided and remand report was sought after conducting necessary enquiries and providing opportunity of being heard to the assessee.
Assessment in this case completed u/s 143{3} on 14.03.2013 making an addition of Rs.46,00,000/- on account of unexplained cosh credits u/s. 68.
Further, Perusal of records reveals that assessee was requested vide this office letter dated 04.02.2013 to submit this office nature and source of cosh deposits made by him in his saving bank account along with relevant and reliable documentary evidence in support of his explanation, certificate duly issued by local revenue authority indicating his ownership, statement of income and expenditure along with bills/vouchers, acres of agricultural land in your possession and agricultural income per acre.
In this regard, Sh. Amit Jain, Accountant Member attended and he was again requested vide note sheet entry dated 27/02/2013 to submit the details as called for vide letter dated 04/02/2013. Neither anybody attended nor any submissions have been filed on the stipulated date. From the above it is crystal clear that the assessee has given sufficient opportunity for approximately one and half month to file the submission.
In this regard, kind attention is also drawn to rule 46A wherein in the following circumstances additional evidences con be produced namely:-
{a} Where the A.O. {Assessing Officer} has refused to admit evidence which ought to have been admitted; or {b} Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the {Assessing Officer}; or {c} Where the appellant was prevented by sufficient cause from producing before the {Assessing Officer} any evidence which is relevant to any ground of appeal; or {d} Where the {Assessing Officer} has made the order appealed against without giving lent opportunity to the appellant to adduce evidence relevant to any ground of appeal.
Hence, the assessee's case does not fall under any of the above four clauses. Therefore, the additional evidences filed before your goodself may not be deserved to be admitted.
In this connection, it is humbly submitted that as directed documentary evidences in support of assessee's claim regarding agricultural income have been coiled for vide this office letter dated 25/05/2016. It was further asked from the assessee that Khasra/Khatoni in respect of agricultural land submitted before the appellate authority, is not in the name of the assessee, hence, nothing new has been brought on record by the assessee during the course of appellate proceedings.
In response to above letter assessee vide written submission dated 02/06/2016 claimed that ownership of land is not necessary in case of agricultural income.
From the above, it is gathered that:-
The assessee has not submitted even single document which substantiate his claim regarding agricultural income such as evidence expenses related to cultivation like sowing, watering, seeding of land etc.
2. The assessee has not submitted any documentary evidence such as form V in support of his claim of sale of agricultural produce. 3. The assessee has not submitted any agreement between assessee as cultivator and owner of the agricultural land. 4. Assessee has submitted Khasra/Khatoni of agricultural land and that too is not in the name of the assessee. In short nothing new has been brought on the record to substantiate assessee's claim of agricultural income.
The assessee also stated before appellate authority that pass book is not fall under the definition of books of account hence section 68 is not applicable in his case placing reliance on various case laws. In this regard it is submitted that by bank transactions we mean all those transactions relating to the business of the assessee, which are considered for the purpose of accounting which have their effect on bank account. Further, the main issued which assessee failed to explain credit/cash deposits in his bank account and hence the same remained unaccounted and need to be added back in the income of the assessee.
In view of the above submission, addition made by the then AO is strongly justified."
4. The assessee also filed rejoinder to the remand report which read as under. "1. On 04-02-2013, the assessee was asked to produce the documentary evidences certified by revenue authorities indicating his ownership, bills and agricultural income per acre. All other documents were denied to be considered for assessment and that is why these documents were submitted before your good self as additional evidences. The Id. Assessing Officer has at page 2 confirmed that all the documents submitted now and during appellate proceedings were already in assessment file and nothing new has been brought on record by the assessee during appellate proceedings, which means she has no objection in giving consideration to these documents for deciding the appeal.
The Assessee had pressed to consider his case in the light of definition of agriculture income as given in the Income Tax Act but The Id. Assessing Officer has again stressed upon his opinion that to claim agricultural income, ownership of the agricultural land is necessary and also that the assessee is required to produce all the documents beyond doubt to substantiate his income and source of income where it is claimed to be an agricultural income as she has asked for the evidences of expenses on agriculture, sale by form J, agreement between the owner of land and the cultivator assessee and Khasra/Khatoni in the name of the assessee.
Now the assessee is to submit here that Khasra/Khatoni are the documents describing ownership of agricultural land even if there is no title deed of those land are there with the owner. The assessee has already confirmed that he was not the registered owner of the land but only a cultivator and a deemed owner.
This is because the land was owned and registered in the name of the father and other family members of the assessee. Under these peculiar circumstances there was no need to enter into any formal document of agreement. In Indian culture, the real life context must had been considered by the Id. Assessing Officer instead of stressing upon legal context only. The Id. Assessing Officer had asked for documentary evidences relating to income and expenditure on agriculture for the year 2009-10 relevant to the assessment year 2010-11 after a gap of three years i.e. on 04-02-2013. Again the assessee, being agriculturist only, was not required by law to maintain such records nor he was supposed to maintain all these information for such a long period. His father had also expired on 26-12-2011 and in villages, when total family and the neighbours come together to console the family and the assessee was required to perform various rituals, it is not possible for a person to look for and maintain the records of his agricultural operations without any reason or requirement of that time.
3. The Assessee had declared his agricultural income to be Rs. 35 lacs for the financial year 2009-10 and he was not having any other source of income. The deposit in the bank account was made out of this income. The Id. AO has not enquired about this claim of the assessee that his income was from agriculture only and that he neither was nor is having any other source of income. Under these facts and circumstances, just to enrich the revenue, the Id. AO has taken the declared agricultural income to be income from undisclosed sources without any information contrary to the explanation and without any finding, reasoning or basis.
4. The Assessee has declared his agricultural income to be Rs. 35 lacs in his return of income and the Id. Assessing Officer has taken it to be income from other sources by invoking the provisions of section 68 of the Income Tax Act. Agricultural income is also an income and chargeable to tax for the rate purposes only. Provisions of section 68 applies where an income found credited in the books of the assessee is not explained to the satisfaction of the AO but in no case, it authorizes to change the head of income without any finding to the contrary. Nothing was found or established by the Id. Assessing Officer against the explanation of the assessee to hold the same to be false or unreliable either during the assessment proceedings or during the proceedings taken for the purpose of remand report.
The claim of the assessee that pass book is not books of accounts of the assessee supported by various rulings has been countered by the Id. Assessing Officer in a very casual and illegal way. She has claimed that 11 we mean all those transactions relating to the business of the assessee, which are considered for the purpose of accounting which have their effect on bank account. What a presumption ? that all bank transactions in saving account by any person are his business transactions only, whether the person is minor or major, employee, landlord or agriculturist, resident or non resident. The Id. Assessing officer at no stage had any bit of information or doubt that the assessee was carrying on some business, rather he had never carried nor is carrying any business. Further if, she was so sure of carrying on some business by the assessee, she must had taken the income of his business also and had asked for his books of accounts, business licences, source of investment in business, address from where business was being carried but nothing such has been done or found by the Id. Assessing Officer. The law do permits an AO to presume amount credited in the books of accounts of the assessee if no satisfactory explanation is given by the assessee but does not permit the Id. AO to presume and agriculturist to be a businessman if he is unable to furnish documentary evidences in support of his ownership of agricultural land.
The Id. Assessing Officer has claimed the amount deposited in the bank to remain unaccounted and need to be added back in the income of the assessee. Here also the assessee is to submit that the amount deposited into the bank can not be called as unaccounted when the assessee has not maintained any accounts. It is also not unexplained as the assessee has claimed it to be out of his agricultural income declared in his return of income. It is not a case where the amount has been claimed as deduction, hence the statement of the Id. Assessing officer that it needs to be added back in the income of the assessee is quite wrong on facts. This amount has already been taken as income by the assessee in his return of income, though agricultural income and the Id. Assessing Officer has no authority of law to change the source of income as if it is a business income or income from undisclosed sources, unless something to the contrary is established by him. She cannot reject the source of income declared by the assessee in his return of income at his own whims, surmises and conjectures.
7. Thus, the Id. Assessing Officer in her remand report has confirmed that the documents submitted in appellate proceedings were before the Id. Assessing Officer during the assessment proceedings also. She has confirmed that ignoring the definition of agricultural income given in the Act, she had stressed for the documents describing ownership of agricultural land for the purpose of claiming an income to be agricultural income. She had no finding contrary to the claim of the assessee in his return of income or against the explanation given during the course of assessment proceedings, still she has taken this amount credited in the bank account of the assessee by changing the source of income at her own as if it is income from undisclosed sources u/s 68 of the Income Tax Act and going against the ruling laid by the Hon'ble Jurisdiction High Court in the case of CIT vs Mayavati (2011) 243 CTR (Del) 9. The Assessment order as well as the remand report is thus quite wrong on facts and bad in law. It is therefore, requested very humbly to please delete the additions made by the Id. Assessing Officer while framing the assessment.” The A.O. again filed the remand report to the Ld.CIT(A) stating therein as under. “4. Aggrieved by the above additions, the appellant has filed the present appeal. On behalf of the appellant, Shri RR Singla, CA, appeared and made submissions which have been carefully considered.”
4.1. On the aforesaid report of the A.O. the assessee also furnished rejoinder which read as under.
"1. The Id. AO has confirmed that Sh. Harvinder Singh, Sh. Bhupinder singh and Sh.Bhisham Singh have responded to the summons issued by the Id. AO and have also confirmed the fact that they had leased their agricultural land measuring 25 acres to their cousin brother Sh. Manish Kumar.
2. They have also confirmed that the said lease agreement was verbal only and it was not written at that time considering their close family relations.
The Id. Assessing Officer has stated that the agricultural income from the said land may not be considered as there was no evidence for sake if agricultural produce. In this regard, it is hereby submitted that the evidence in support of the fact that the agricultural activities were being carried on the said land has already been provided vide Girdavari which is an Official Revenue record of two major Rabi and Kharib crops sown. Under no provisions of the Income tax Act, The assesses are not required to maintain the books of accounts or to maintain the record and evidences for his agricultural income or sale, hence the same were not maintained by these persons and it cannot be taken the basis to deny the fact that agricultural income was generated from the said agricultural land.
The Id. AO has further stressed not to consider the evidences produced in view of rule 46A{1}. In this regard, it is hereby submitted respectfully that the Id. AO was not ready to consider and accept any secondary evidence rather he had clearly stated that first of all there should be land in the name of the assessee himself. After getting the title deeds in the name of the assessee himself, only then the other evidences will be asked and accepted from the assessee, hence the assessee was prevented by sufficient cause from producing the evidences relevant to ground of appeal before the AO.
In view of the above submissions and for the sake of natural justice to the assessee, it is hereby submitted that the evidences submitted by the assessee may please be considered. The same may please be relied upon as the Id. AO has reported nothing contrary to these in her remand report. Accordingly, the additions made by the Id. AO may please be deleted.
4.2. The Ld.CIT(A) after considering the remand report of the A.O. and submissions of the assessee, deleted the addition by observing in paras 11.1, 11.2 and 12 of the impugned order as under.
11.1. The A.O. was provided with the additional evidences for examination, and was required to summon and examine the lessors (owners) of the land. The three owners of the leased land, Shri Harvinder Singh, Shri Bhupinder Singh and Shri Bhisham Singh, attended the proceedings before the A.O. and their statements were recorded. All of the three persons have confirmed that the appellant was cultivating their agricultural land of about 25 acres. As per the verbal agreement between them, the appellant paid the lease rent as half of the wheat crop, and the remainder of the wheat crop, as well as entire crop of paddy and vegetables were retained by him. As they are closely related, being cousin brothers, there was no need for a written or formal lease agreement. The appellant also filed before the A.O. a report from the SDM (Alipur) dated 19.7.2016 that “it is reported by the halqa patwari/field staff that the land kh.no.103 belongs to Shri Manish Kumar and others and the Kh.no.103 has the area of 27 bigha 19 biswa. It is also reported by the Patwari that the village land produces approximately 25 qtl per acre for the crop of wheat and rice in respective season.
11.2 The AO, in her remand report, has disbelieved the explanation that agricultural operations were carried out by the appellant, as he had no written evidence of the lease, or evidence of sale of the agricultural produce. She has stated that the appellant did not furnish evidence of expenditure on the agricultural operations. Hence the AO has stated that the appellant's explanation should not be accepted. In his rejoinder, the AR of the appellant has vehemently argued that the statements recorded of the lessors of the agricultural land have confirmed the claim of the appellant. The appellant being a farmer and belonging to a typical rural family fully dependent on agriculture, had not maintained records of his expenditure, or sales. Nor was he required to do so, under any provision of the IT Act. The cash had been deposited in the bank account only to make a payment for purchase of agricultural land at village Nilokheri, Dist Karnal, Haryana. The registered sale deeds dated 31.08.2009 have been filed.
All the above submissions, statements recorded, and evidences filed, of land holding and agricultural land, have been looked into. The appellant admittedly did not file the vital evidences during the assessment proceedings. But he has filed the evidences in the appellate proceedings, and also further evidences before the AO in the remand proceedings. It is seen that the appellant belongs to a joint family whose traditional occupation is agriculture. He has filed the land ownership documents in the form of khatoni (Form P-6) and khasra girdawari (Form P-4) of his family as also of the persons from whom he leased the agricultural land. These persons have attended before the AO, and their statements have been recorded. No fault in these evidences, or in the statements, has been pointed out by the AO. No material has been brought on record to disprove the submissions, and evidences filed by the appellant. The appellant's submissions that he has no other sources of income, and deposited cash only to enable a purchase of more agricultural land is also taken note of. The lessors' statements recorded by the AO are not controverted in any way. As argued by the appellant, suspicion cannot take the place of evidence. When a particular explanation is furnished and evidence in support thereof is adduced, the onus shifts to the department to prove such evidence false or bring new material on record. The appellant has, moreover, argued that the addition could not have been made u/s 68 of the Act, as the appellant did not maintain any books of account, being purely an agriculturist. It is submitted that credit in the bank passbook cannot be brought to tax as income under sec. 68 in the hands of the appellant, and reliance is placed on the case of CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom.) wherein it was held that a bank passbook is not a book maintained by the assessee, or under his instructions by the bank. This is also the view taken by the ITAT, Delhi, in the case of Mayawati Vs. DCIT (2008) 1 DTR 68, and the appeal of the Department was dismissed by the Delhi High Court, reported at 338 ITR 563 (2011). The ITAT, Delhi, in the case of DCIT vs. Ashok Tiwari at dated 18.07.2014, held that when returns disclosing agricultural income were regularly filed and accepted' by the Department, and the AO could not controvert the appellant's claim that the cash deposited in the bank a/c was out of his agricultural income, the addition made u/s 68 was not justified. After careful consideration of the facts of the case, and the judicial pronouncements, it is held that the appellant has discharged the burden of proving his claim of agricultural income. Hence the addition made of Rs.46,00,000/- u/s 68 of the Act is deleted, and ground of appeal no. 3 is allowed.
5. Now the department is in appeal. The Ld.D.R. strongly supported the order passed by the A.O. and further submitted that the assessee did not furnish any detail of land held by his family and the evidence of land taken on lease from his cousin brothers, therefore, the addition was rightly made by the A.O. It was further submitted that no evidence was produced to substantiate that the amount deposited in the bank account was earned by the assessee from agricultural operations. In his rival submissions the Ld.Counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the impugned order.
6. I have considered the submissions of both the parties and perused material available on record. In the present case it appears that the A.O. disallowed the claim of the assessee for the reasons that vital evidences relating to the holding of agricultural land were not produced before the A.O. during the course of assessment proceedings. However those were produced as additional evidences before the Ld.CIT(A) who asked for the remand report from the A.O. and after considering the same, he admitted the additional evidences. The A.O. also recorded the statements of cousin brothers of the assessee who confirmed that the assessee was cultivating agricultural land of over 25 acres. The assessee also filed a report from the SDM, Alipore dated 13.7.2016 which revealed that the halka field stock register reported that Khasra no.103 measuring 27 bighas 19 viswa belonged to the assessee and others. It was also reported that the agricultural land in that village produced approximately 25 quintal per acre for crop of wheat and rice in respective seasons. In the present case the Ld.CIT(A) categorically observed that no faults in the evidences produced by the assessee or in the statements of three persons who had given land on lease to the assessee had been pointed out by the A.O. and that no material was brought on record to disprove the statements and evidences filed by the assessee. The said observation of the Ld.CIT(A) was not rebutted. Therefore the addition made by the A.O. was rightly deleted by the Ld.CIT(A). In view of the aforesaid discussion and considering the totality of the facts, I am of the view that the impugned order passed by the Ld.CIT(A) does not require any interference on my part. In that view of the matter, I do not see any merit in this appeal of the department.
In the result the appeal of the department is dismissed.