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Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. Commissioner of Income tax (Appeals)-3, Surat [for short to as “Ld. CIT(A)”] dated 12.07.2017for assessment year (AY) 2013- 15, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide order dated 28.10.2015.The assessee has raised following grounds of appeal:-
(A.Y.13-14) Sh. Bhuptabhai K Vavdiya “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 confirming the action of assessing officer in making addition of Rs.2,20,057/- by treating the agriculture income as income from other sources.
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 the action of assessing office in of enhancing the disallowance of claim of agriculture income by Rs.6,74,710/- by treating the same as Income from Other Sources.”
2. On perusal of record, we find that Ld. CIT(A) passed impugned order on 12.07.2017, however, this appeal was filed on 01.05.2019. Thus, there is a delay of 591 days in filing the appeal before Tribunal. The assessee has filed an application for condonation of delay, which is supported by affidavit of assessee. In the application for condonation of delay, the applicant/assessee contended that the order passed by Ld. CIT(A) was not received, thus, the assessee was not having any knowledge about the order of Ld. CIT(A). Subsequently, the assessee received penalty order on 24.04.2019. On receipt of such penalty order assessee approached his counsel for consultation. After consultation, the counsel of assessee logging into the e-filing portal of department and found that there was two similarly worded orders of Ld. CIT(A) being order No. ITBA/APL/S/250/2017-18/1005673766(1) and 2 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya order No. ITBA /APL /S/ 2502017-18 /1007536212(1) dated 16.08.2017 & 03.11.2017 respectively. The Ld. counsel advised assessee file immediately against the quantum order passed by Ld. CIT(A) as well as also to file against penalty order. The assessee then approached Department and obtained a copy of order No. CAS/3/299/2015-16 passed by Ld. CIT(A) which is different from the order uploaded on-line on e-filing portal. The assessee filed appeal against the penalty under section 271(1)(c) on 24.04.2019 and this appeal was filed on 28.04.2019. The appeal was immediately on coming to know about the dismissal of appeal by Ld. CIT(A) in April 2019. The assessee has a good case on merit and required consideration, if the delay is not condoned, it would cause irreparable loss to the assessee. The assessee prayed for condoning the delay.
The Ld. AR for the assessee submits that the delay in filing of appeal was neither intentional, deliberate nor with mala fide intention. The real fact is that the assessee was not aware about the dismissal of appeal by Ld. CIT(A). The assessee received the order of penalty under section 271(1)(c) dated 3 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya 28.04.2019 and realised that the appeal in the quantum assessment is dismissed. The assessee came to know only by the assistance of his Ld. Counsel on logging into the e-filing portal that appeal of assessee in quantum assessment has already been dismissed. The Ld. AR for the assessee submits that assessee has a good case on merit and is likely to succeeds, if the delay of condoned and the assessee is allowed to contest the appeal on merit. In fact, assessee will not be benefited by filing the appeal belatedly. To support his contention, the Ld. AR for the assessee relied upon the decision of Hon'ble Supreme Court as well as Hon'ble High Courts. Collector of Land Acquisition Vs Mst Katiji (1987) taxmann.com 1072(SC), N. Balakrishnan Vs M. Krishnamurthy (2008) (228) ELT 162 (SC), Jayvantsing N Vaghela Vs ITO (2013 40 taxmann.com 491 (Gujarat), 4. On the other hand, Ld. Sr. DR for the Revenue opposed the application for condonation of delay. Ld. Sr. DR for the Revenue submits that in Form-36, the assessee has categorically written the service of communication of order as 4 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya on “19.07.2017” and now the assessee has come with this plea that order was not served. The Ld. Sr-DR for the Revenue submits that assessee has not filed any evidence that the order passed by ld CIT(A) was not served upon the assessee within the prescribed time.
In the short rejoinder submissions the ld AR for the assessee submits that that in Form—36, the date of service is not correctly mentioned. It may have been recorded that usually the order of ld CIT(A) is receive within one or two weeks. In fact in the present case the order of ld CIT(A) was not served on the assessee.
We have considered the rival submission of both the parties and perused the orders of lower authorities. We find that there is no dispute that the impugned order passed by Ld. CIT(A) on 12.07.2017. Further, there is no dispute about filing the appeal before Tribunal on 28.04.2019. Before us Ld. AR for the assessee vehemently submitted that order was not served upon the assessee and on e-portal of Department that there were similarly worded two orders of Ld. CIT(A) dated 16.08.2017 & 03.11.2017 respectively. We find that Ld. AR for the assessee 5 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya submitted that assessee approached for filing appeal by taking remedial action of service of penalty order dated 24.04.2019 and against such penalty order the quantum appeal was filed by assessee on 24.04.2019 and this appeal was filed before the Tribunal on 28.04.2019 which was registered on 01.05.2019. Considering the fact that the appeal against the penalty order was filed on 24.04.2019 and this appeal was filed immediately thereafter. Hence, we find that the submission of Ld. counsel for the assessee cannot be disbelieved that assessee came to know about the dismissal of his appeal only that appeal of assessee has been dismissed. The ld. Sr DR for the revenue objected that the assessee has not shown any evidence that the order was not received in time. We are not convinced with mere objection of the revenue, unless the revenue shows that the order of ld CIT(A) was served on the assessee within reasonable time, when the assessee specifically stated in his application that the order impugned in the appeal was not served on the assessee.
The Hon’ble Apex Court in Collector of Land Acquisition Vs Mst Katiji (supra), while condoning the delay in filing appeal held 6 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserve to be preferred, the other side cannot claim to have vested right in injustice being done because of non-deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence or on account of mala fides. The litigant does not stand to benefit by resorting delay, in fact he runs a serious risk. Further, the Hon’ble Jurisdictional High Court in Jayvansing N Vaghela Vs ITO (supra) it was held that unless there is gross negligence or mala fides intention, delay in filing appeal to be condones. Considering the aforesaid facts and legal position that there was no mala fides on the part of assessee in filing the appeal, rather, the assessee is under serious risk. Thus, keeping in view that the assessee has contended that he has good case on merit, therefore, the delay of 591 days in filing the appeal is condoned and appeal is admitted for decision on merits. Now, we will advert to discuss the merit of the appeal.
The brief facts of the case, qua the grounds of appeal raised by assessee are that assessee is an individual engaged in 7 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya brokerage of diamonds, construction work and agricultural activity. The assessee filed its return of income declaring income of Rs.2,09,060/- and in computation of income, the assessee has shown agricultural income of Rs.22,93,000/-. The case was selected for scrutiny, during the assessment proceedings, the Assessing Officer asked the assessee to furnish the details of agricultural holding, details of agricultural produce, bills vouchers and expenses. The assessee furnished details of agricultural holding, by filing copy of abstract Form 8A, 7/12 of agricultural lands and bills issued by Kamrej Vibhag Sahakari Mandli and Shri Khedut Sahakari Khand Udhyog Mandli. The assessee also furnished working of gross agricultural income of Rs.26,97,150/- from different three sugar Mandali and net agricultural income at Rs.22,93,000/- after deducting expenses of Rs.4,04,150/-. The Assessing Officer noted that assessee has claimed agricultural expenses at 14.98% (about 15%), which is abnormal low. The Assessing Officer issued show cause notice on such low percentage of expenses. The assessee filed his reply on 04.09.2015 and submitted that he has total land is 31 hectare 8 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya 47 are 82 guntha (31-47-82). The assessee received Rs.26,97,150/-from various Sahakari Khand Udyog Mandali. The assessee furnished bills and vouchers of various Sahakari Khand Udyog Mandali. On analysing such details, the Assessing Officer noted that no proof of Rs.2,20,057/- was furnished, however, remaining amount in gross agricultural income was reconciled with bills & payments from Shree Khedut Sahakari Khand Udhyog Mandli. The assessing officer made addition of Rs. 2,20,057/- and treated said addition as ‘income from other source’.
9. The Assessing Officer further noted that the expenses shown by assessee are on lower side. The Assessing Officer disallowed 40% of the gross receipt, the assessee has already showed expenses of Rs.4,04,150/- thereby the Assessing Officer worked out the disallowance of expenses of Rs.6,74,710/- and treated the same under the head ‘income from other sources’.
10. On appeal before Ld. CIT(A) the assessee filed detailed written submission. The submission of assessee is recorded in para-7 of the order of Ld. CIT(A). On the addition of Rs.2,20,057/-, the assessee submitted that assessee has received said agricultural 9 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya income on sale of sugarcane to Shree Khedut Sahakari Khand Udhyog Mandli Ltd. in cash on 13.09.2012. And on the disallowance of agricultural expenses, the assessee submitted that he is a member of sugar factory during the relevant year, the total sale of Rs.26,97,150/- and the total expenses was at Rs.4,04,150/- and thus net agricultural income of Rs.22,93,000/- which was shown in the capital account and for the purpose of calculation in computation of income. The Assessing Officer treated the expenses as insufficient so he worked out the expenses of Rs.6,74,710/-. The assessee submitted that he is a member of sugar factory and sugar factory has provided all expenses like seeds, fertilizer, medicine, cutting of labour etc. and that assessee paid normal expenses.
The Ld. CIT(A) after considering the submission of assessee upheld both the disallowances and treatment of such disallowances under the head “other sources”. On the treatment of Rs.2,20,057/-, which was claimed as received in cash, the Ld. CIT(A) held that the assessee has not produced any evidence to prove that said amount was received by 10 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya assessee in cash. On the disallowance of expenses, the Ld. CIT(A) held that assessee’s claim that expenses was borne by sugar factory but no evidence with any agreement /letter (confirmation) is filed. Thus, the contention is remained unsubstantiated and upheld the action of Assessing Officer. Further aggrieved the assessee has filed present appeal before the Tribunal.
We have heard the submission of Ld. Authorized Representative (AR) for the assessee and the Ld. Senior Departmental Representative (Sr. DR) for the Revenue. Ground No.1 relates to addition of Rs.2,20,057/-. The ld. AR for the assessee submits that assessee has received Rs.1,51,500/- from Shri Kantha Vibhag Sahakari Khand Udyog Mandali and Rs.17,94,840/- from Shree Khedut Sahakari Khand Udyog Mandali and Rs.7,50,810/-from Shree Kamrej Vibhag Sahakari Khand Udyog Mandali Ltd. The assessee has incurred expenses of Rs.4,04,150/-. Thus, the net agricultural income of assessee is Rs.26,97,150/-. The assessee has filed on record the relevant voucher and receipt. The assessee was also having Rs.2,20,057/- as cash-in-hand and was deposited in account 11 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya on 13.09.2012 and this amount was received in cash being a part of sale proceed of sugarcane. The assessee was having sufficient agricultural holding. The agricultural holding is not disputed by Assessing Officer as well as Ld. CIT(A) also. The Ld. CIT(A) confirmed the action of Assessing Officer by taking view that document furnished by assessee is Gujarati language and does not show any specific amount paid in cash.
On the other hand, Ld. Sr. DR for the Revenue submits that assessee failed to substantiate that the amount added by assessing officer was part of agriculture receipt. The assessee tried to mix up the “cash-in-hand” with the payment of Shri Khedut Sahakar Khand Udhyog Mandli.
We have considered the rival submission of the parties and have gone through the order of lower authorities. We find that lower authorities treated the amount of Rs.2,20,057/- as it was not a part of agricultural receipt and was shown as “cash”. We find that assessee failed to substantiate by any documentary evidence that any amount was received in cash from Shri Khedut Sahakari Khand Udhyog Mandli Ltd. Thus, we do not find any merit in the ground of appeal
raised by assessee, 12 (A.Y.13-14) Sh. Bhuptabhai K Vavdiya hence, we affirm the order of Ld. CIT(A). This ground No1 of assessee’s appeal is dismissed.
15. Ground No.2 relates to disallowances of expense on agricultural income. The Ld. AR for the assessee submits that assessee is a member of various sugars Mandali/ factories and various expenses were incurred by such sugar Mandali. The ld AR for the assessee submits that disallowance of 40% is a higher side and various coordinate benches of Tribunal estimated similar expenses ranging from 20-30% of gross total receipt on agricultural income. The Ld. AR for the assessee submits that co-ordinate Bench of ITAT Ahmedabad Benches “B” in the case of Narendrasinh Anopsinh Jadeja (HUF) Vs Income Tax Officer, in 2007 for AY 2004- 05 dated 22.03.2010 restricted the similar disallowance of expenses @ 30% against disallowance @ 40% estimated by Assessing Officer. The ld AR for the assessee also relied on the decision of Chandigarh Tribunal in ACIT Vs Shri Karanbir Singh Sandhu in ITA No.545/Chd/2010 A.Y 2006-07 dated 30.03.2010.