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Facts
The assessee, Umiya Agriculture, filed its return declaring Nil income for AY 2021-22. The case was selected for scrutiny due to large agriculture income claimed. The AO disallowed the claimed agriculture income of Rs. 1,16,15,022/-, treating it as unexplained income, primarily because the expenses were claimed in the name of a partner's director and the assessee failed to provide supporting evidence or participate in virtual hearings. The CIT(A) confirmed the AO's action.
Held
The Tribunal noted that the assessee, a firm run by two lady entrepreneurs, one facing medical issues, had multiple opportunities to present its case but failed to comply. The expenses were not properly substantiated, and virtual hearings were missed. However, considering it was the first year of operation and the assessee claimed to be deprived of justice due to non-examination of facts by the CIT(A), the matter was remanded back.
Key Issues
Whether the assessee was provided with adequate opportunity to present its case and substantiate its claim of agriculture income, and whether the CIT(A) had properly adjudicated the grounds of appeal.
Sections Cited
143(3), 69
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “A” JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 664/JPR/2023
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM deys’k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ fu/kZkj.k o"kZ@Assessment Year : 2021-22 cuke Umiya Agriculture, ITO, Vs. Flat No. TB 908, Urban Jewels off Ward-7(2), Jaipur SEZ Road, Opposite Muhana Terminal Market, Sanganer, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGFU 6945 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Ruchesh Sinha (Adv.) jktLo dh vksj ls@ Revenue by : Sh. Dinesh Badgujar (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 04/01/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 18/01/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M. This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [Here in after referred as (NFAC)] for the assessment year 2021-22 dated 06.09.2023, which in turn arises from the order passed by the AO, passed under Section 143(3)of the Income tax Act, 1961 (in short 'the Act') dated 29.12.2022.
Umiya Agriculture vs. ITO 2. The assessee has taken following grounds in this appeal;
“1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in passing exparte order in the case of the Appellant. thereby confirming the assessment order. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has not appreciated that the representation could not be made before the CIT (A), as the appellant could not have received the notice of hearing. 3 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in law in conducting the appellate proceedings in a complete haste and hurried manner and completing the same within a span of only one month. 4 That whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in law in not sending any separate notice for hearing to the appellant for hearing and while merely sending the same through emails, which remained undelivered. 5 That whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in impliedly confirming the addition of Rs. Rs.1,16,15,022 made by the Id. AO U/s 69 of the Income Tax Act in the in the case of the appellant. 6 That the appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal before or at the time of hearing of the appeal.”
The fact as culled out from the records is that the assessee is a firm and filed its return on 09.03.2022 declaring Nil income which was processed by CPC u/s 143(1) of the IT. Act, 1961, on 27.05.2022 at returned income.
3.1 The case selected for complete scrutiny through CASS with reason “Large Agriculture income where return of income for last
Umiya Agriculture vs. ITO two A.Yrs. not filed. During the year under consideration the assessee shown gross agriculture income of Rs. 1,16,15,022/-, and after deduction of agriculture expenditure of Rs. 44,82,220/- declared Net agriculture income of Rs. 71,32,802/- only, which is not chargeable to tax in Col. 2 of Sch. EI of the ITR filed for A.Y 2021-22. Notice u/s 143(2) was issued on 28.06.2022 and was duly served upon the assessee.
3.2 A detailed SCN dated 19.12.2022 was issued to the assessee for uploading the documents/submission by 23.12.2022 which comprised pages 1 to 32, wherein all discussion in respect of expenses and income which is declared by the assessee as bogus agriculture income of Rs. 1,16,15,022/- have been discussed in length. On examination of details furnished bills/ invoices, it is seen that all invoices of expenses are in the name of Mrs. Yashoda Shah, director of the firm. Since all bills/invoices in the name of Mrs. Yashoda Shah, cannot be treated for the expenses of firm M/s Umiya Agriculture. The material which has been shown as purchased in these bills/invoices, all these are being used at the time of preparation of farming and middle of the Umiya Agriculture vs. ITO yielding, when the crop is ready for cutting after ripen, it is illogical and not acceptable. Secondly, why all these bills were not shown in the middle of the proceedings. Their value also does not match with the amount any seeds, urea which was stated in the proceedings. It is mentioned here that the expenses are being incurred when the ripen time starts of plants. It is further mentioned here that why copies of these bills were not furnished during the entire proceedings. What is the reason or purpose behind this, Submitting these bills after SCN. These bills are not related to the firm, and also not allowable due to in the name of Yashoda Shah.
Therefore, in this because the source of cash to incur these expenses, has not been furnished during entire proceedings. The ld. AO noted that the assessee deliberately does not want to avail the chance through VC to prove genuineness of contract, and identity of farmers, who gave their land to their firm for farming.
Stating a technical fault is not a valid reason. The assessing officer was waiting till 2.00 p.m on 24.12.2022, for the assessee firm partner to join the VC which was scheduled for 90 mins. From 12.30 p.m onwards. Vide letter dated 21.12.2022, and letter dated 26.12.2022, the assessee requested apologies for VC. Another
Umiya Agriculture vs. ITO chance through sue-moto VC for attending on 26.12.2022 has also been provided to the assessee, however the assessee/partners of the firm, or any farmer, have not been attended the VC nor replied at all. The assessee vide its authorized CA, submitted the reply in response to VC provided on 26.12.2022 at 12.30 P.M. in which the partner and 15 farmers, who gave their land to firms M/s Umiya Agriculture, were requested to attend the VC. However, neither any partner, nor farmers has attended the VC. It is also pertinent to mention here that many opportunities were provided to the assessee firm, to produce these 15 farmers in the Video Conference, but the assessee every time did not attend the VC facility, giving reply of technical glitch, and filling medical report of un-registered ayurvedic doctor, for the lady partner that she is suffering from backache, and the other lady partner is taking care of first lady partner. There are only 2 partners in the firm. The assessee was provided sufficient opportunity to prove its claim of gross receipt of exempted agriculture income of Rs. 1,16,15,022/- declared for A.Y 2021-22. However, the assessee choose option not to co-operate and prove the genuineness of transactions of agriculture activities as well as contracts made between farmers
Umiya Agriculture vs. ITO and M/s Umiya Agriculture, Firm. In the absence of supporting documentary evidences, satisfactory reply to the questionnaire issued as mentioned above, the genuineness of agriculture receipt of Rs. 1,16,15,022/- could not be verified in view of agriculture activities and other relevant factors to prove the transactions of cultivation of crops, therefore, your claim of Gross Receipt of agricultural income of Rs. 1,16,15,022/- for this year i.e. A.Y 2021- 22 is not acceptable and the same amount of Rs. 1,16,15,022/- is being treated as unexplained income under the head of income from other sources and earned from undisclosed sources.
Being aggrieved from the said order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC here also. The ld. CIT(A) has given three opportunities of being heard to the assessee as detailed in below:-
Date of compliance Status 26.07.2023 No compliance 21.08.2023 No compliance 30.08.2023 No compliance
Umiya Agriculture vs. ITO 5. Final opportunity was given to the assessee on 30.08.2023, the notices were sought to e-mail id given in form No. 35 despite services of three notices, there is no compliance at the end of the assessee and therefore, the ld. CIT(A) confirmed the action of the ld. AO.
Being aggrieved from the order of ld. CIT(A), the assessee has preferred the present appeal on the grounds as stated herein above in para 2. The ld. AR of the assessee vehemently argued that this being the first year of operation both partners being lady having aged and also have their own medical problem. Though, the ld. CIT(A) has granted 3 opportunities of being heard and ld. CIT(A) and not discussed merits of the case and the ld. AO without giving any deduction to the expenses incurred has added the whole sale consideration shown by the assessee. Therefore, even on merits if given a chance, the assessee has very much hope to reduce tax burden on the firm which is operated by lady entrepreneur and therefore, humbly prayed that if given a chance, the assessee will remain compliant before the ld. CIT(A).
Umiya Agriculture vs. ITO 7. Per contra, the ld. DR representing revenue has relied upon the orders of the lower authorities and vehemently argued that, the assessee has two time avoided the virtual hearing granted by the AO. The bills for expenditure produced are in the name of partner of the firm and therefore, the deduction has rightly been disbelieved Based on these arguments the ld. DR supported the order of AO adding the entire sale consideration as income of the assessee.
We have heard the rival contentions, perused the material placed on record. The bench noted that though firm is run by two lady entrepreneur and one partner is facing medical problem and therefore, though the notices were issued in the email account of one of the partners of the firm it remained non complied on account of medical exigency. The bench also noted that in the case of the firm, the entire sale consideration is added without giving any deduction on account of expenses incurred to earn the income offered by the assessee. The ld. AR of the assessee submitted that these facts are not examined by the ld. CIT(A) and if given a chance the assessee would like to plead these contentions before the ld. CIT(A) and based on these arguments he prayed to set
Umiya Agriculture vs. ITO aside the issue to the file of the ld. CIT(A). On the other hand, we found that the ld. DR did not raise any specific objections to the prayer of the assessee and also not disputed the contentions so raised. Therefore, we are of the considered view that the assessee is deprived of justice and based on these set of facts we are inclined to accept the request of the ld. AR of the assessee to set aside the case to the file of the ld. CIT(A), to decide the case of the assessee after giving proper opportunity of being heard to the assessee. At the same time, the assessee is directed to represent and present all the facts before the ld. CIT(A) and should not ask for adjournment of trifle grounds. At this stage, we remand back the matter without commenting upon the merits of the case and ld. CIT(A) is directed to pass an appropriate order in accordance with law as there is no prejudice caused to the revenue if the same is again remanded back to the ld. CIT(A) looking to the fact that the firm has the first year of operation and same being run by two lady entrepreneurs and entire sales is considered as income. Thus, looking to the facts presented before us the bench feels that it would be in the interest of justice to grant one more chances to the assessee firm to remain present before the ld. CIT(A). But, looking
Umiya Agriculture vs. ITO to the non compliance attitude at both the level of the assessee, the bench feels that time of revenue officer are also important.
Considering the non-compliant attitude and lapses on laps on the part of the assessee the assessee should bear some costs of these lapses and therefore, the bench direct the assessee firm to pay a sum of Rs. 1,000/- being the cost of non-appearance before the ld. AO and Rs. 1500/- for not availing opportunity before the ld. CIT(A) and thus in total the assessee is directed to pay a sum of Rs. 2,500/- to Prime Minister Relief Fund.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(A) independently in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18/01/2024.