CHATHANKANDATH USHA,KOOTANAD vs. INCOME TAX OFFICER, PALAKKAD

PER SOUNDARARAJAN K., JUDICIAL MEMBER:

This appeal filed by the assessee is against the order of NFAC, Delhi dated 27.06.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2012-13. 2. Brief facts of the case are that the assessee is a doctor and, apart from the professional fees, she had also received agricultural income. She filed her return of income for the relevant year disclosing a total income of Rs.10,05,600/- and estimated agricultural income of Rs.45 lakhs. Subsequently, the case was taken up for scrutiny, and during the course of assessment proceedings, the ld. AO sought the documents in support of the agricultural income claimed by her. It is a fact that the assessee herself had given the agricultural income on estimation based on

ITA No.605/Coch/2023 Chathankandath Usha, Kootanad Page 2 of 5 the data published by the Rubber Board and not based on any books of account maintained by her. Therefore, the AOdisallowed20% of agricultural income i.e., a sum of Rs.9 lakhs, out of the total agricultural income of Rs.45 lakhs, assessing the same under the head “income from other sources”. 3. The assessee filed an appeal before the CIT(A),Thrissur challenging the order of the AO dated 30.03.2015, which was later migrated to the NFAC, and even before the NFAC the assessee did not submit any documents to substantiate her claim. Therefore, the ld. CIT(A)confirmed the disallowance of Rs.9 lakhs, against which the assessee has preferred this appeal before us on the ground that the agricultural income is exempt from the agricultural income tax in Kerala state and, therefore, not maintained the books of account, and also the income returned by the assessee is based on the data published by the Rubber Board, and there is no legal requirement to maintain the books of account for agricultural income and, therefore, the assessee contended that the adhoc disallowance made by way of estimation by the ld. AO is not correct. 4. None appeared on behalf of the assessee at the time of hearing, and the ld. Sr. DR brought to our notice the order passed by this Tribunal in the assessee’s own case (in ITA No.657/Coch/2022, dated 15.3.2024) for the assessment year 2013-14 on the same issue, i.e., the estimation of the assessee’s agricultural income in the absence of any record in its respect being maintained by her, and based on the material brought on record by her. The Tribunal, for that year, remitted the matter to the file of the AO for estimating the income on the basis of credible material, rather than on ad hoc basis, per a speaking order, after granting the assessee a reasonable opportunity to present her case. It was accordingly prayed that in the absence of any change in the facts

ITA No.605/Coch/2023 Chathankandath Usha, Kootanad Page 3 of 5 and circumstances of the case, the said order be followed for the current year as well. 5. We have perused the grounds of appeal filed by the assessee, and the order passed by the Tribunal cited (supra), and find the issue in both these appeals as common. It was this that had led us to proceed to hear the instant appeal ex parte the assessee- appellant. 6. We heard the ld. Sr. DR, and also perused the order by this Tribunal in the assessee’s own case for AY 2013-14 on the same issue cited (supra). The Tribunal, after a detailed examination of facts and the material on record, including the orders passed by it in the case of other family members of the assessee, issued findings, which stand summed up in the concluding part of it’s order, as under: 4. The assessee admittedly not maintaining any record, or otherwise leading any evidence in respect of agricultural income, returned on estimate basis, the Revenue, on verification of the conduct of agricultural operations, estimated it at a lower sum which, on confirmation in first appeal, results in the instant appeal. The assessee though returning income in the same manner as in the past, the only year for which her assessment was made under the verification procedure under the Act, is for AY 2012-13, which is per an identical order (copy on record), stated before us to be, filed subsequently, outstanding before the Tribunal. The assessment for AY 2014-15, though a regular assessment, is per a non-speaking order, without any finding and, therefore, of no assistance. The proceedings under the Act, a public law, it may be appreciated are not adversarial proceedings, in the nature of lis (see: Gadgil (S.S.) v. Lal & Co. [1964] 53 ITR 321 (SC)), but toward assessment of income chargeable to tax for the year. Assessment of income for that year at Rs.36 lakhs, as against returned Rs.40 lakhs, as for the current year, per a non-speaking order, would be of no consequence. The burden to prove that a receipt is in the nature of income is on the Revenue. However, once that is not in dispute, as in the instant case, the burden to prove that the same is exempt from tax, i.e., satisfying the condition for exemption, is on the assessee. The law in the matter is well-settled, for which we may refer to Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC); H.E. Nizam Religious Endowment Trust v. CIT [1966] 59 ITR 582 (SC); Commissioner of Customs v. Dilip Kumar & Co. [2018] 6 GSTR-OL 46 (SC), to cite some; and accords that the principle that it is the assessee who is to prove it’s return and the claims preferred thereby, being in the intimate know of its affairs

ITA No.605/Coch/2023 Chathankandath Usha, Kootanad Page 4 of 5 ((CIT v. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC) (also see: Lakshmiratan Cotton Mills Co. v. CIT [1969] 73 ITR 634 (SC); and which can further only be on the basis of proper materials (CIT v. R. Venkataswamy Naidu [1956] 29 ITR 529 (SC)). Further, the same would extend to the entire income claimed exempt. The Tribunal in the case of the assessee’s daughter (ITA No. 26 & 27/Coch/2022 dated 02.1.2023), as indeed in some others, allowed the assessee benefit by throwing this primary burden on the AO, contrary to the settled principles of law.

The matter was accordingly heard at length. The assessee has claimed before us to have not returned any agricultural income under the Kerala Agricultural Income Tax (KAIT) availing the composition scheme u/s. 13 of the said Act, providing for payment of tax on the basis of land holding. No evidence in this respect, stated to be Rs. 25,030, however, is brought on record. Further, even so, the same would only prove the nature of income, but not its extent, which the dispute essentially is about. This is as a physical verification caused by the AO proves conduct of agricultural operations, i.e., as far as rubber plantation is concerned. The assessee’s burden gets discharged to that extent. On quantum, the assessee’s reliance on data released from authentic sources is found acceptable, with the caveat that in the case of a range, conservative estimate shall prevail. The Revenue cannot deny the same without stating cogent reasons. The same has therefore found our acceptance, as indicated hereinabove. The yield declared, however, is with reference to tapped area, which varies significantly from the rubber area, on which the former has been applied, The matter, with a view to eliminate any prejudice being caused, is restored to the file of the AO, who shall decide per a speaking order, upon allowing assessee reasonable opportunity to present her case. As regards coconut plantation, as indeed for other crops, the assessee’s case continues to be wholly unproved, i.e., both as regards the nature and extent of income. The matter having been restored to the AO’s file qua rubber income, in the interest of justice it was for balance income as well, with that the caveat that the income of miscellaneous crops cannot exceed that admitted in assessment. The matter, with like directions, is restored to the file of the AO, making it clear that the burden of proof is on the assessee, even as the Revenue cannot, merely by adopting, convert good evidence to no evidence (Sreelekha Banerjee And Others v. CIT [1963] 49 ITR 112 (SC)). We decide accordingly. In the result, the assessee’s appeal is partly allowed and partly allowed for statistical purposes.” 6.1 In view of the above order of the Tribunal in the assessee’s own case for the assessment year 2013-14, which is on the very same issue, we find no reason to take a different view and,

ITA No.605/Coch/2023 Chathankandath Usha, Kootanad Page 5 of 5 accordingly, following the same, remit the matter to the file of ld. AO to decide the issue afresh in terms of the directions given by this Tribunal in the assessee’s own case in the order cited (supra). 7. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on May 20, 2024

Sd/- Sd/- (Sanjay Arora) (Soundararajan K.) Accountant Member Judicial Member

Bangalore, Dated 20th May, 2024. VG/SPS

Copy to:

Asst. Registrar, ITAT, Cochin.