NATBAR NATH,KORAPUT vs. ITO, JEYPORE

This is an appeal filed by the assessee against the order of CIT(A)-

Berhampur, dated 24.2.2014 for the assessment year 2009-2010.

the CIT(A) erred in confirming the action of the Assessing Officer making

addition of Rs.5,94,651/- as bogus sundry creditors.

authorities and materials available on record. In the instant case, the

Assessing Officer found that the assessee has disclosed sundry creditor of

Rs.5,94,651/-. He also found that the identical amount has been shown

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under the asset side as gold received for repair and gold received

replacement. The assessee did not furnish any details of the persons from

whom the gold was received. Therefore, the Assessing Officer added

Rs.5,94,651/- as bogus credit.

received gold and silver for repair and replacement of gold jewellery with

the new ornaments. During the year, the assessee carried out the activity

of accepting the old gold for replacement and repair. At the end of the year,

the unfinished work was accounted for and the value of gold received for

repair and replacement was kept separately. The name, address and phone

numbers of the persons whose gold was left with the assessee at the end

of the year were furnished to the Assessing Officer. However, the same

was not considered and the Assessing Officer treated the entire amount as

bogus and added to the income of the assessee.

letter dated 17.1.2014 stated that the addition of Rs.5,94,651/- was

justified as the creditors could not be established during the assessment

proceedings.

the same, the assessee reiterated the submissions made earlier and argued

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that since the income of the assessee was offered to tax u/s.44AF, no

separate addition towards sundry creditors can be made.

the remand report of the Assessing Officer observed that he had no

hesitation in agreeing with the Authorised Representative of the assessee

that sundry creditors representing payables cannot be added to the

business income if the same has been offered on estimate u/s.44AF of the

Act and that for the said reason, he deleted the addition in related appeals

in the case of Smt. Suna Nath and Khetrabasi Nath. He held that the facts

in the instant case are quite different. The amount of Rs.5,94,651/- was

strictly not sundry creditors. This amount represents allegedly those

persons from whom gold of the identical amount received by the assessee

which was shown in the asset side. This sundry creditor amount was not

towards purchase and thus was not related to the profit and loss account

to which the estimated profits related to but this entry attempts to explain

the gold of Rs.5,94,561/- shown by the assessee in his balance sheet.

Therefore, it was incumbent on the assessee to file details of the persons

as well as the confirmations from whom this gold was received. Perusal of

assessment records showed that no such details were filed nor these details

have been filed before him. Thus, the source of gold of Rs.5,94,651/- was

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not explained by the assessee and hence, he confirmed the addition made

by the Assessing Officer of Rs.5,94,651/- as unexplained gold.

appeal before me.

submissions made before the lower authorities. He could not file any

evidence and details of the persons from whom gold was received even

before me. Hence, I do not find any good and justifiable reason to interfere

with the order of the CIT(A), which is hereby confirmed and ground of

appeal of the assessee is dismissed.

the CIT(A) erred in confirming the action of the Assessing Officer in

estimating the interest on term deposit in bank.

authorities and materials available on record. In the instant case,

Assessing Officer observed that the assessee had fixed deposits of

Rs.3,44,000/- with Micro Finance. He estimated the interest @ 10% on the

deposit on accrual basis and added Rs.34,400/- to the income of the

assessee, which was confirmed by the CIT(A).

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family members of the assessee in the case of Bhagaban Nath in ITA

No.205/CTK/2014 for Assessment Year 2009-2010, wherein, I have

decided the issue vide order of even date, observing as under:

“ In the instant case, the Assessing Officer observed that the assessee had fixed deposits of Rs.1,05,000/- with Micro Finance. He estimated the interest @ 10% on the deposit on accrual basis and added Rs.10,500/- to the income of the assessee. On appeal before the CIT(A), the assessee argued that the assessee shown income from fixed deposit on receipt basis as it was following cash system of accounting. The interest income is deemed to accrue only on the date of due date of fixed deposit. The interest income is not calculated year to year. He relied on the decision of Hon’ble Bombay High Court in the case of DIT vs. Credit Suisse First Boston (Cyprus) Ltd., (2012) 23 Taxman 424 and prayed that the addition of Rs.10,500/- should be deleted. The CIT(A) called for a remand report from the Assessing Officer, who vide letter dated 17.1.2014 stated that the addition of accrued interest of Rs.10,500/- was justified and did not offer any comment. The remand report was confronted to the assessee, who reiterated the submissions made earlier. The CIT(A) after considering the submission of the assessee and remand report of the Assessing Officer held that the assessee has invested in fixed deposit during the year and has not shown any interest income from the said deposit in the return. The interest on the fixed deposit accrues by the end of the year and, therefore, the Assessing Officer cannot be faulted for taking such interest on an estimated basis on 10% which is quite reasonable and, accordingly, dismissed the ground of appeal of the assessee. Being aggrieved by the said order, the assessee is in appeal before me. Ld Authorised Representative of the assessee reiterated the submissions made before the lower authorities. He contended that interest income of fixed deposit was offered to tax on consistently method of accounting followed by the assessee for interest as income

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in the year of receipt. When questioned by the Bench what is the evidence that the assessee has offered to tax the interest income on fixed deposit of Rs.1,05,000/- in the year on receipt basis or in the subsequent year, ld Authorised Representative of the assessee expressed his inability to produce any such evidence. In absence of the same, I do not find any good reason to interfere with the order of the CIT(A),which is hereby confirmed and ground of appeal of the assessee is dismissed.” 13. Following the same, I confirm the order of the CIT(A) and dismiss the

ground of appeal of the assessee.

the CIT(A) erred in confirming the action of the Assessing Officer in

disallowing agricultural income of Rs.92,300/-.

authorities and materials available on record. The Assessing Officer

observed that the assessee had disclosed agricultural income of

Rs.92,300/-. The assessee explained that the assessee had agricultural

land of Ac.3.00 from which he has produced sugar cane worth

Rs.1,82,400/-. The Assessing Officer made enquiries through Income tax

Inspector who reported that the assessee could not produce any details of

such landed property and other details relating to agricultural income.

Therefore, the Assessing Officer did not accept the claim of the assessee

about agricultural income and made addition of Rs.92,300/- as income from

other sources, and on appeal, the addition was confirmed by the CIT(A) .

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family members of the assessee in the case of Bhagaban Nath in ITA

No.205/CTK/2014 for Assessment Year 2009-2010, wherein, I have

decided the issue vide order of even date, observing as under:

“ I have heard the rival submissions and perused the orders of lower authorities and materials available on record. The Assessing Officer observed that the assessee had disclosed agricultural income of Rs.60,240/-. The assessee explained that the assessee had agricultural land of Ac.2.00 from which he has produced sugar cane worth Rs.1,19,400/-. The Assessing Officer made enquiries through Income tax Inspector who reported that the assessee could not produce any details of such landed property and other details relating to agricultural income. Therefore, the Assessing Officer did not accept the claim of the assessee about agricultural income and made addition of Rs.60,240/- as income from other sources. Before the CIT(A), the assessee submitted that he carried out agricultural activity and received income from the same for Rs.60,240/-. He furnished details like ownership of the land, agricultural activity carried out and yield received etc. The Assessing officer rejected the claim and alleged that the assessee has not furnished any details. He relied on the report furnished by the report of the Inspector who confirmed that the assessee did not carry the agricultural activity during the assessment year. Without keeping any material on record to say that the assessee has not carried out the agricultural activity, treating the agricultural income as taxable income and added the same to the returned income was unjust and arbitrary. The CIT(A) called for a remand report who vide letter dated 17.1.2014 stated that the assessee could not furnish the source of agricultural income of Rs.60,240/- and the addition was justified as income from other sources.. In response to the remand report, the assessee reiterated the submissions made earlier.

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The CIT(A) after considering the submissions of the assessee observed that it was a settled principle of law that the burden is on the assessee to prove that the income was agricultural income. He relied on the decision of Hon’ble Supreme Court in the case of CIT vs. Genkateswamy Naidu, 29 ITR 529 (SC), wherein, it has been held that in order to claim an income which the assessee considers as agricultural income, the assessee has to put before the authorities materials which will enable them to come to a conclusion that the income which was sought to be assessed was agricultural income. It was not for the authorities to prove that it was not agricultural income. He observed that from perusal of assessment records, it is seen that the assessee filed a lease deed ostensively showing that he had taken agricultural land on lease from 1.2.2008 to 31.9.2009 for Rs.4,000/-. The assessee stated that he produced sugar cane on such leased land and the income was derived therefrom. He observed that most of the family members of the assesse, whose appeals are being disposed of namely, Natabar Nath, Smt. Suna Nath, Pradip Kumar Das, Khetrabasi Nath, Batakrushna Nath and Ranjan Kumar Nath have all claimed that they had derived agricultural income by way of sale of sugar cane out of leased land. If their contentions are accepted then the total sugar cane apparently sold by the family members of the assessee will exceed Rs.8 lakhs. He observed that it was surprising that the assessee was unable to give a shred of evidence in support of his sugar cane cultivation or in support of sale of such sugar cane which will normally be to a sugar mill. In absence of any such evidence, he was not inclined to accept the contention of the assessee regarding its claim of agricultural income. Therefore, he confirmed the order of the Assessing Officer treating the agricultural income shown by the assessee as income from other sources and dismissed the ground of appeal of the assessee. Being aggrieved, the assessee is in appeal before me.

Ld Authorised Representative of the assessee reiterated the submissions made before the lower authorities. I find after considering the facts and circumstances of the case in totality that the Assessing Officer has not considered the income of Rs.60,240/- shown by the assessee as agricultural income but treated the same as income from other sources of the assessee on the ground that the assessee failed to produce evidence being sugar cane cultivation and sale of sugar cane. Before me also the assessee has failed to produce any evidence in that regard. Therefore, I find

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no good and justifiable reason to interfere with the orders of the lower authorities and dismiss the ground of appeal of the assessee.” 17. Following the same, I confirm the order of the ld CIT(A) and dismiss

the ground of appeal of the assessee.

Cuttack; Dated 28/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Natabar Nath, Post Office Road, Koraput 2. The Respondent. ITO, Ward-2, Jeypore 3. The CITA), Berhampur 4. Pr.CIT, Bhubaneswar. 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack