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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.557/SRT/2019 Assessment Year: (2010-11) (Physical Court Hearing) Pranav Dolatrai Desai, Vs. The ITO, Ward-7, Desai Bunglow, Gautam Colony, Vapi. Balakhadi, Killa Pardi, Valsad-396125. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AIRPD2160R (Appellant) (Respondent) आयकर अपील सं./ITA No.558/SRT/2019 Assessment Year: (2010-11) (Physical Court Hearing) Archana Pranav Desai, Vs. The ITO, Ward-7, Pranav Bunglos, Gautam Colony, Vapi. Balakhadi, Killa Pardi, Valsad-396125. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AIRPD2161Q (Appellant ) (Respondent) Assessee by Shri Suresh K. Kabra, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 30/06/2022 Date of Pronouncement 24/08/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned two appeals filed by different assessees, pertaining to the Assessment Years (AY) 2010-11, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai 2. First, we shall take assessee`s appeal in ITA No.557/SRT/2019 for assessment year 2010-11, wherein the grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in upholding the reassessment proceedings u/s 148 of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming disallowance on account of agriculture expense at the ad hoc rate of 30% to the extent of Rs.4,21,537/- as unexplained cash in hand. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming addition of Rs.28,888/- towards short term capital gain. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming addition Rs.32,357/- towards Speculative Gain in share market transaction. 5. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming addition of Rs.19,800/- pertaining to Stamp duty paid in cash. 6. On the fact and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeal) has erred in confirming the addition of Rs.3,21,982/- towards the LIC premium paid in cash. 7. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted. 8. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
At the outset, we note that Learned Counsel for the assessee, did not argue ground No.1, raised by the assessee, therefore we dismiss ground No.1 raised by the assessee, as not pressed/argued.
In ground No.2 the main grievance of the assessee is that learned Commissioner of Income Tax (Appeals) has erred in confirming disallowance on account of agriculture expense at the ad hoc rate of 30% to the extent of Rs.4,21,537/- as unexplained cash in hand.
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai 5. Brief facts qua ground No.2 are that assessee did not file his return of income of income for the year under consideration. The assessing officer noticed that in the year under consideration, the assessee found to have deposited cash amounting to Rs.13,00,000/- in his bank account which he maintained with Dena Bank. In view of the same, a query letter was issued to the assessee on 08.03.2017. However, the assessee did not furnish any reply in response to this letter. Accordingly, after recording reasons and taking approval from appropriate authority, notice u/s 148 of the Act was issued to the assessee, on 28.03.2017, which was sent through speed post. In response to notice under section 148 of the Act, the assessee filed letter of authority and also filed return of income (ROI), declaring income of Rs.1,39,530/-, after claiming deduction of Rs.1,00,000/- under Chapter VI-A of the Act. In view of the return filed by the assessee, reasons recorded for reopening of the assessment were provided to assessee, vide letter dated 13.10.2017. It has been noted by the assessing officer that there were certain cash deposits and certain credit entries in bank accounts, the details of the same are as under:
Sr. Name of Bank Account No. Cash Other Total No. Deposit Credit Credit Entries Entries 1. Bank of Baroda 02360100006297 5,50,000 3,17,989 8,67,989 2. Dena Bank 110310005878 13,00,000 29,62,231 42,62,231 3. SBPP Co-op 1000/22391 2,62,000 1,07,169 3,69,169 Bank Total 21,12,000 33,87,389 54,99,389
The assessing officer conducted detailed inquiries as also recorded statement of the assessee as well as the witness Ranjit L. Thakur and after giving detailed analysis the assessing officer made addition to the tune of Rs.59,29,739/-.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has restricted the addition from Rs.59,29,739/- to Rs.4,21,537/- . Aggrieved, the assessee is in further appeal before us.
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai 7. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. Learned Counsel submitted that once agriculture income was proved on the basis of record of title and possession and agriculture land and evidence of agriculture operations earning income there form, the same has not to be proved every year separately therefore, ld Counsel for the assessee prayed the Bench that addition restricted by ld CIT(A) to Rs.4,21,537/- is part of agricultural income and therefore such addition should be deleted. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.
We note that ld CIT(A) deleted the substantial addition, observing that AO tried to disprove the claim of agriculture income by referring to discrepancies in the statement of Ranjit L. Thakur (mango contractor who entered into Kabala agreement with the assessee). However, the fact of land holdings of the assessee and agriculture income shown in the past years including the assessment year 2007-08 where the agriculture income explaining cash deposits were found to be approved at the level of ITAT Surat Bench. In that assessment year also, the assessee had filed Kabala agreement and other relevant documents which were enquired into by the AO and cash deposits from agriculture income was allowed. The order u/s. 263 of the Act was set-aside by Hon'ble ITAT Surat Bench wherein it was observed that the AO had made proper inquires of all relevant documents, Kabala agreement etc. before allowing agriculture income claim. In view of these facts, the assessee's claim of agriculture income cannot be brushed aside out rightly in the current A.Y. The assessee had furnished the copy of bills of sales for agriculture produce, copy of Kabala agreement etc. to support the claim for quantum of agriculture receipts at Rs.20,69,028/- which was claimed to be utilized for cash
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai deposits in the 3 bank accounts. The assessee has also furnished cash flow statements explaining receipt of Rs.20,69,028/- from agriculture produce sale, Rs.6,63,904/- pertaining to agriculture expenses leading to net cash availability of Rs.14,05,124/- from agriculture income and cash withdrawal of Rs.6,81,500/- explained the total cash deposit of Rs.21,12,000/-. The evidences and submission of the assessee as well as AO's observations of discrepancies related to the Kabala agreement implied that the assessee's claim for net agriculture income of Rs.14,05,124/- is not fully verifiable neither the assessee being a farmer can be expected to maintain such proper records of agriculture income. In such a situation, the ld CIT(A) held that the decisions of Hon'ble ITAT Ahmedabad Bench in the case of Dhirubhai Narola (ITA 2190 to 2192/AHD/2004), can be applied wherein the Hon'ble Bench had accepted upto 60% to 70% of agriculture income shown by the assessee as derived from agriculture and disallowing 40% to 30% of the agriculture income towards unverifiable bills/expenses. The assessee's cash flow statements pertaining to agriculture receipts & expenses were considered by ld CIT(A). In such a situation, approximate agriculture income was computed by applying the decision of ITAT Ahmedabad Bench in the case of Dhirubhai Narola. Thus, 30% of the net agriculture income of Rs.14,05,124/-, that is, Rs.4,21,537/- disallowable towards unverifiable bills/expenses and only balance amount of Rs.9,83,587/- can be considered as available cash from agriculture income. Thus, to the extent of Rs.4,21,537/-, there will be shortage of cash for deposit in the bank accounts. Hence, out of total cash deposit of Rs.21,12,000/-, Rs.4,21,537/- is treated as unexplained cash in the hands of assessee. As regards the other credit entries, ld CIT(A) find that the assessee has explained the credit entries properly and the AO has not brought out any concrete evidences to reject the same. Most of the credit entries are found to be pertaining to opening balance in the said bank accounts, FD closure proceeds and other sources receipts. Thus, the addition of Rs.59,29,739/- pertaining to cash deposits and other credits was restricted to Rs.4,21,537/- by ld CIT(A). We note that ld CIT(A) failed to prove that amount of Rs. 4,21,537/- is out of
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai unaccounted income. The assessee submitted enough proof and ld CIT(A) has not refuted or discredited these evidences. The ld CIT(A) does not mention why he is not accepting these evidences. Therefore, we delete the balance addition of Rs. 4,21,537/-.
Ground No.3 and 4 raised by the assessee relates to addition of Rs.28,888/- as STCG on share market transactions and Rs.32,357/- pertaining to speculative gain in share transactions. In the assessment order, the assessing officer noted that assessee had earned short term capital gain of Rs.28,888/- and speculative gain of Rs.32,357/- from share transactions which was not declared in the return of income. On the other hand, the ld Counsel contended before us that losses incurred in the trading in share transactions were adjusted against the STCG and speculative gain, and these were shown in original return of income. However, Ld DR stated that since losses were not claimed in original return of income therefore addition made by the assessing officer may be upheld. We have heard both the parties and noted that losses incurred in the trading of shares were adjusted in short term capital gain therefore these were not appearing in the original return of income, that is, losses were claimed in the original return of income, however, because of set off from short term capital gain, they disappeared. Hence, we do not find any merit in the submission of ld DR and therefore, the addition of Rs.28,888/- and Rs.32,357/- respectively are hereby deleted. Hence, we allow ground No. 3 and 4 raised by the assessee.
Coming to ground No. 5 and 6, we note that before ld CIT(A), the assessee has challenged the addition of Rs.19,800/- pertaining to stamp duty in cash and Rs.3,21,982/- pertaining to LIC premium paid in cash. In the assessment order, the AO noted that assessee had made cash payment of Rs.19,800/- towards stamp duty for immovable property purchase and total LIC premium of Rs.3,17,544/- and Rs.4,438/- were paid through cash. It was observed by the AO that the assessee did not establish the availability of cash
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai in hand for LIC premium payment of Rs.3,21,982/-. Thus, the addition of Rs.19,800/- and Rs. 3,21,982/- was added by the AO. The ld Counsel contended before us that LIC premium payment of Rs.1,66,455/- were from assessee's bank account and balance amount was from the bank account of wife and parents. That is, part of the payment was made by his parents. We note that assessing officer did not disprove this fact. However, ld DR for the Revenue supported the findings of assessing officer. We do not agree with ld DR for the Revenue, as the assessee explained the source of payment stating that part payment was made from his wife account and from his parents. Considering these facts, we delete the addition pertaining to Rs.19,800/- and Rs.3,21,982/-. Thus ground No. 5 and 6 raised by the assessee are allowed.
In the result, assessee’s appeal is partly allowed.
Now, coming to ITA No. 558/SRT/2019 for AY.2010-11, wherein grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in upholding the reassessment proceedings u/s 148 of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-Tax (Appeals) has erred in confirming disallowance on account of agriculture expenses at the ad hoc rate of 30% to the extent of Rs.4,79,529/- u/s. 69A of the Act. 3. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted. 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 13. At the outset, we note that Learned Counsel for the assessee, did not argue ground No.1, raised by the assessee, therefore we dismiss ground No.1 raised by the assessee, as not pressed/argued. 14. Ground No.2 raised by the assessee relates to disallowance on account of agriculture expenses at the ad hoc rate of 30% to the extent of Rs.4,79,529/- u/s 69A of the Act.
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai 15. Succinct facts qua ground No.2 are that assessing officer made addition of Rs.19,50,000/- pertaining to cash deposit in the bank account. In the assessment order, the AO noted that assessee had deposited cash of Rs.19,50,000/- in saving bank account. In reply to AO’s query, the assessee had claimed that the cash deposits were made out of agriculture income. The assessee had also submitted copy of 7/12 & form 8-A, copy of some purchases & sales bills and copy kararnama/kabala for selling agriculture produce. However, the AO rejected the claim of the assessee by stating that the cash deposits made during the year is more than agriculture income claimed in her Return of Income. The AO further stated that the assessee failed to furnish complete details/documents in respect of agriculture income therefore made addition to the tune of Rs.19,50,000/-. 16. On appeal, ld CIT(A) restricted the addition at the ad hoc rate of 30% to the extent of Rs.4,79,529/- u/s 69A of the Act. Aggrieved, the assessee is in further appeal before us. 17. Learned Counsel pleads that with respect to the cash deposits of Rs.19,50,000/- in the bank account, the cash deposit of Rs.15,98,429/- was pertaining to agriculture income Rs.2,50,000/- was pertaining to cash withdrawals made from the same bank account and Rs.1,01,571/- was deposited out of opening cash balance. Apart from furnishing relevant details pertaining to earning of agriculture income and the ld Counsel stated that agriculture income earned during the past year were accepted by the department, therefore addition may be deleted. 18. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 19. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai including the findings of the ld CIT(A) and other materials brought on record. We note that assessee has stated that agriculture income of Rs.22,26,421/- in A.Y. 2006-07 and net agriculture income of Rs.4,40,733/- for A.Y. 2011-12 were accepted by the AO. It was also submitted by the assessee that during scrutiny of agriculture income for AY 2006-07, the inspector of ward/circle had visited the agriculture land and even statement of Mr. Alikhan Pathan (Mango Contractor) was recorded by the AO. Thus, ld Counsel contended that there was well accepted fact of agriculture income in the case of assessee for AY 2006-07. Furthermore, the assessee's husband's claim of agriculture income of Rs. 21,96,314/- in A.Y. 2006-07 was accepted by the AO, agriculture income of Rs.23,15,500/- for A.Y. 2007-08 was accepted at the level of ITAT, agriculture income of Rs.13,98,666/- for A.Y. 2008-09 was accepted by the AO, agriculture income of Rs.6,13,306/- for A.Y. 2011-12 was accepted by the AO. The ld Counsel enclosed the order of ITAT in assessee and husband case for A.Y. 2007-08 (ITA no. 123/SRT/2017) dated 27.11.2018 wherein the order u/s. 263 of the Act was challenged. In the said order, the Hon'ble bench set-aside the order u/s. 263 of the Act by observing that the AO had made inquiries of cash deposits in bank account as derived out of agriculture income as per Kabala agreement, evidences of land holding of 21 acre, Satakhat and land records displaying crops grown thereon. Thus, it was contended by the ld Counsel that the assessee and her husband had been showing agriculture income regularly in the past years and such income was accepted at the level of AO as well as also at the level of ITAT (A.Y. 2007-08) in past assessment years. The ld Counsel has also referred to the decisions of Hon'ble Allahabad High Court in the case of CIT vs. Neel Giri Krishi Farms Pvt. Ltd. 38 taxmann.com 69 wherein it was held that once agriculture income was proved on the basis of record of title and possession and agriculture land and evidence of agriculture operations earning income therefrom, the same has not to be proved every year separately. Hence based on this factual position, we delete the addition.
557 & 558/SRT/2019/AYs.2010-11 Pranav D. Desai & Archana P. Desai 20. In the result, appeal filed by the assessees is partly allowed.
In combined result, both appeals filed by the assessees are partly allowed in above terms.
Registry is directed to place one copy of this order in all appeals folder / case file(s).
Order is pronounced in the open court on 24/08/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963.
Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat �दनांक/ Date: 24/08/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File
By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat