AHSAAN QURESHI,NAGPUR vs. ACIT CIRCLE-2, NAGPUR

Following grounds have been raised by the assessee:–

On the facts and circumstances of the case and in law the learned CIT (A) erred by Considering that gross receipt from sale of agriculture produce is Rs.10,08,570/= instead of Rs.11,05,025, as declared by assessee, by doubting genuineness of cash sale of agriculture produce.

The appellant crave leave to add, amend, alter or delete any other ground, with the permission of your honour.”

Facts in Brief:– Brief facts of the case are that the assessee filed his return of income on 29/09/2009, declaring total income at ` 20,15,329, and showing agriculture receipt of ` 11,05,025, as against expenses of ` 2,44,297. The case of the assessee was selected for scrutiny.

During the proceedings, the Assessing Officer also noted that the assessee paid salary of ` 6 lakh to his wife Smt. Zeenat Parveen Qureshi, as she worked as a personal assistant of assessee and looks after his Railway and Airline bookings, liaisoning with clients, financial accounts etc. But the Assessing Officer did not agree with assessee’s submission and disallowed the amount of ` 3 lakh under section 40A(2)(b) of the Act. The learned CIT(A) confirmed the addition made by the Assessing Officer being not justified.

Having heard both the parties and on a perusal of the material available on record, we find that the Assessing Officer has made addition of ` 3 lakh by disallowing 50% of salary paid to Smt. Zeenat P. Qureshi, who is wife of the assessee for the reason that ` 50,000 per month salary is excessive hence he

Further, the Assessing Officer also disallowed the amount of ` 1 lakh, under section 40a(ia) of the Income Tax Act, 1961 ("the Act") as assessee failed to deduct the TDS as per provisions of section 194H of the Act. The learned CIT(A) held that the in view of the amendment made in section 40a(ia) of the Act and in section 201(1) of the Act by Finance Act, 2012, has no retrospective effect and the case laws relied upon by the assessee are not relevant with the facts of the case and therefore, the learned CIT(A) did not 4 Ahsaan Qureshi ITA no.323/Nag./2023 find any merit and held that the Assessing Officer was right in adding the commission payment to the assessee’s income.

Before us, during the course of hearing, the learned A.R. for the assessee submitted that the recipient has already paid taxes. The learned Departmental Representative could not controvert the submissions of the learned A.R. for the assessee. Since the recipient has already paid taxes, there remains no dispute and hence, we set aside the impugned order passed by the learned CIT(A) on this issue and direct to delete the addition. Ground no.2, is allowed.

During the assessment proceedings, the Assessing Officer noted that assessee sold agriculture produce totalling to ` 11,05,025, out of which ` 4,82,272, was received in cash. As the assessee failed to produce sales bills of agricultural produce sold in cash, the Assessing Officer considered the total receipts from agricultural activities at ` 4,87,343, (being an amount received through Cheques from the FCI) and estimated the total expenses at ` 1,94,937, i.e., 40% of ` 4,87,343, and calculated the total agriculture income at ` 2,92,406, and added the balance amount of ` 5,68,322, to the total income of assessee as "Income from other sources". The learned CIT(A) allowed agricultural income to the extent of 90% of the total expenses claimed by the assessee i.e., ` 2,19,867.

I have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. I find that the Assessing Officer has disallowed the amount received in cash as the assessee failed to produce any documentary evidence and also disallowed the amount receive through cheque. The learned CIT(A) allowed agricultural income to the extent of 90% of the total expenses claimed by the assessee. I agree with the submissions of the assessee that more than 56% receipt was sold by cheque and most of the agriculture produce are sold in cash and it was not uncommon to sell agriculture produce in cash and it is very routine and acceptable phenomena and many a times agriculturist refused to sell except in cash and in our considered opinion, such method of sale of agricultural produce, as stated by the assessee, cannot be denied. I also find that the assessee is in possession of 20 acre of land and as such the addition of ` 96,000, cannot be said to be justified. Consequently, I set aside the impugned order passed by the learned CIT(A) on this issue and allow ground no.3, raised by the assessee.

In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 09/09/2024