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Income Tax Appellate Tribunal, BENCH ‘C’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri Waseem Ahmed, AM ]
ORDER
PER N.V.VASUDEVAN, JM:
This is an appeal by the Revenue against the order dated 18.03.2013 of CIT(A) I, Kolkata, relating to AY 2009-10.
Ground No.1 raised by the Revenue read as follows: “1. Ld. CIT(A) erred in law and on the facts and in circumstances of the case by allowing agriculture income of Rs. 35,04,109/ - by violating the provisions of Rule 46A and allowing the claim of the assessee without due verification of the Agriculture income/expenditures declared by the assessee. “ 3. Notice of hearing of the appeal was sent to the assessee by registered post with AD but the same has been duly served on the assessee. When the case was called for hearing none appeared on behalf of the assessee. We therefore decide to proceed to hear the appeal in the absence of the assessee after hearing the submissions of the ld. DR. 4. As far as ground no.1 raised by the revenue is concerned the facts are that the assessee is an individual. He derives income in the form of commission on contract work for removal of overburden by transportation. In the course of assessment proceedings AO noticed that the assessee has earned agricultural income of Rs.40,04,109/-. AO called for the details of the agricultural land holding and evidence to prove the quantum of agricultural income. According to the order of AO the assessee filed only the photo copies of the two lease agreements which proved the Damanjit Singh Grewal acquisition of land on lease. The assessee did not furnish any evidence to show the quantum of agricultural income by use of the said land. There was no evidence produced by the assessee to prove the details of actual agricultural produce and evidence to show sale of the same. In these circumstances, the AO held that the income declared by the assessee under the head income from agriculture was income from other sources and accordingly brought the same to tax.
Before CIT(A) the assessee filed the following additional evidence :- (a) Two Lease agreements dated 10.07.2005 with Shri Ved Parkash of Himachal Pradesh, leasing out 13-17 bighas of agricultural land to the appellant for 7 years at the annual lease money amount of Rs.l ,00,000/- and another dated 10.07.2005 with Shri Devinder Kurnar and others, also of Himachal Pradesh, leasing out 30-33 bighas of agricultural land at the annual lease money amount of Rs.1,20,000/-. (b) Copies of various certificates issued by the different Mandy Samities testifying to sale of agricultural products like apples etc., on different dates covered by the year under consideration by M/s Apple Distributors Growers & Traders/ Apple Fruit and Vegetable Distributor, through those Mandies. (c) Affidavit filed by the appellant dated 17.02.2011, stating that he is the proprietor of the concern “Apple Distributors Growers & Traders." (d) Income & Expenditure Account of the appellant for the relevant year, showing net agricultural income of Rs.40,04, 109/- 6. The CIT(A) considered the aforesaid additional evidence and deleted the addition made by the AO by observing as follows :- “The ground no.2 to 5 relates to disallowance of agriculture income for Rs.40,04,109/- u/s 10. It was contended by the appellant that AO did not consider the evidences filed before him and certain evidences relating to agriculture income of the appellant were already available in the past records of assessment as assessee had claimed net agriculture income of Rs.37,30,000/- in Ay-2007-08 and AO disallowed on the part of the agriculture income in that year i.e. Rs.5,00,000/- was disallowed by the AO. The appellant had produced two lease agreements for seven years dated 10.07.2005 with Shri Ved Prakash of Himachal Pradesh along with certificates issued by Mandi Samiti regarding sale of agriculture products like Apples on different dates along with the relevant income and expenditure account showing net agriculture income of Rs.40,04,109/- in form of various annexures. The detailed receipts in the financial year by Apple distributors' proprietary concern of the assessee were Rs.64,40,017/- along with the Mandi receipts of HP Agriculture Board Shimla as per Rule-68(4)[ Form-J] of Himachal Pradesh Govt. was filed. Against these receipts assessee had shown net agriculture income of Rs.40,04,109/- after debiting various expenses for seeds, fertiliser, lease rent etc. Keeping in vies above facts and circumstances and the past history of the case a sum of Rs.5,00,000/- is disallowed out this net agricultural income and addition Damanjit Singh Grewal of Rs.5,00,000/- is confirmed under the head the income from other sources. Therefore ground is partly allowed.” 7. The grievance of the revenue is that the CIT(A) entertained all additional evidence and did not afford opportunity for examining the additional evidences and clearly violated the mandate laid down under Rule 46A of the IT Rules, 1962. We have perused the grounds of appeal
of the revenue and we find that the CIT(A) has entertained additional evidence and contrary to the requirements of Rule 46A of the IT Rules. It is incumbent on the part of CIT(A) before admitting the additional evidence to give the finding as to how the additional evidence could be permitted to be filed at the appellate stage and should also afford opportunity to the AO to look into the additional evidences and to raise objection with regard to the admissibility and veracity of the additional evidence filed by the assessee. The CIT(A) has clearly violated the mandate of Rule 46A of the IT Rules. We therefore set aside the order of CIT(A) on this issue and remand the issue to CIT(A)for fresh consideration with the direction that the CIT(A) should confront the additional evidence to the AO and after getting his objections on admissibility of additional evidence and if CIT(A) admits the additional evidence then allow the AO opportunity of putting forth his objections on the veracity of the claim made by the assessee in the form of additional evidence.
8. Ground No.2 raised by the revenue reads as follows :- “2. Ld. CIT(A) is erred in law and on the facts and in circumstances of the case by deleting the addition of Rs. 1,21,212/- on account of security service charge based on the belief which is contrary to documentary evidence available on the record.”
9. The AO in the course of assessment proceedings noticed that the assessee had claimed as deduction while computing the total income of a sum of Rs.4,84,850-/- under the head “Security Service charges”. The assessee explained that the aforesaid sum was paid to the chowkidar engaged for guarding the product and that considering the payments made to them there was no requirement of deducting tax at source. The AO was of the view that the details of the expenses were not furnished by the assessee and were therefore not verifiable. He therefore disallowed 25% of the expenses claimed which resulted in addition of Rs.1,25,212/- to the total income of the assessee. The CIT(A) however deleted the addition made by the AO, accepting the Damanjit Singh Grewal submissions of the assessee that these expenses were necessary expenses for running the business of the assessee.
10. Aggrieved by the order of CIT(A) the revenue has raised ground no.2 before the Tribunal. 11. After considering the submissions of the ld. DR, we are of the view that the nature of these expenses has not been properly explained by the assessee. The assessee carries on the business of transportation of overburden. He also claims to have income from agriculture. As to whether the security service charges relate to the income from agriculture or other business is not clear from the order of CIT(A). There was failure on the part of the assessee to give the details before AO. In the circumstances we are of the view that this issue also requires fresh examination by the AO and accordingly order of CIT(A) is set aside and the issue is remanded to the CIT(A) for fresh consideration. 12. In the result the appeal of the revenue is treated as allowed for statistical purposes. Order pronounced in the Court on 03.08.2016.