MOHD. AHAMAD,SONBHADRA vs. ITO, WARD - III(3), SONBHADRA

The Ld. CIT(Appeals) erred in not taking in care and adjudicating the transaction of cash repetition, interest and receipt from LIC in the banks amounted to Rs. 12,66,291/- and wrongly confirmed as trading receipts.

The appellant craves leave to add, alter, amend, abrogate or modify any grounds of appeal

The assessee challenged the action of the Assessing Officer before the CIT(A) and contended that the assessee is basically an agriculturist. He has four brothers and father of the assessee are doing farming and growing Tomato and Onion on their land measuring 38.466 Bigha land owned by the father. The assessee also produced the land record showing the ownership of the land as well as crop growing on the land as recorded by the Land Revenue Department. The assessee further explained that assessee used to sell Tomato of other farmers with his own proceeds and for this purpose, he has got license under U.P. Krishi Utpadan Mandi Samiti Adhiniyam. Thus the turnover declared by the assessee of 32,45,900/- as per the sale register kept and maintained in accordance with R-9 issued by the Mandi Samiti. The CIT(A) was not impressed with the contention and explanation of the assessee and confirmed the addition made by the Assessing Officer.

Before the Tribunal, the learned AR of the assessee has reiterated his contention as raised by the authorities below and submitted that the bank deposits are out of sale proceeds of the Tomato and Onion of the five family members of the assessee on agricultural land. The turnover declared by the assessee is duly recorded in the register maintained under R-9 issued by the Mandi Samiti. Some of the amounts about Rs. 19,00,000/- belongs to the other farmers who sold their agriculture produce through the assessee. The learned AR has further contended that the Assessing Officer has also not considered the transactions relating to the cash repetition, interest on saving account and LIC receipts which comes to Rs. 12,66,291/-. Thus he has contended that the Assessing Officer was not justified in taking the entire deposits in the bank accounts as turnover of the assessee by ignoring the other facts to show the source of the deposits, therefore, the assessee 3

On the other hand, learned DR has submitted that the assessee has not produced any record or books of accounts to show that the deposits in the bank account is not representing the sale proceeds of the assessee in the business of wholesale trading of agriculture produce. The assessee has only made verbal submissions without support of any record therefore, once the turnover of the assessee is found to be more than One Crore, the assessee is under obligation to maintain the books of accounts under section 44AA of the Income Tax Act. The assessee has not produced any record in support of the claim except R-9 which does not contain any details of name and address of the persons on whose behalf the trading was done by the assessee. No confirmation about the transactions of the other family members sale proceeds. The learned DR has further contended that even if the assessee has sold the agriculture produce of the other family members, how the sale proceeds would be deposited in the bank account of the assessee. He has relied upon the orders of the authorities below.

I have considered the rival submission as well as relevant material on record. The assessee declared the turnover of Rs. 32,28,791/- for the assessment year 2015-16 whereas the total deposited in three bank accounts of the assessee are as under:-

The only dispute in these appeals is computation of the turnover by the Assessing Officer as the total deposits in the bank accounts as against the turnover declared by the assessee at Rs. 32,45,900/-. Since the Assessing Officer took the deposits in the bank account as the turnover of the assessee from wholesale trading in the agriculture produce. The assessee himself has declared the business income as he is having the license for wholesale trading in the agriculture produce. The assessee explained that the amount over and above the sale proceeds declared by the assessee represents the assessee’s own sale proceeds of agriculture produce as well as his family members and some of the amounts belong to the other farmers who sold their agriculture produce through the assessee. The details of the deposits representing the sale proceeds of Tomato and Onion and other sources as stated by the assessee are as under:- “That the total deposits in bank accounts does not relates to his trading receipt only but rather there are five categories of transactions. These are produced as under:- a) Rs. 51,99,600/- is deposits from the sale proceeds of tomato and onion belong to the five members of the family. b) Rs. 32,45,900./- is deposit of the trading done by the appellant as per R-9. c) Rs. 1,52,500/- and Rs. 1,52,500/- belongs to him and his brother Mohd Abrar from sale of produce of their own land. d) Rs. 19,00,000/- of deposits relate to the agricultural sale proceeds of neighbor agriculturist. For this no. R-9 is maintained and these farmers have been paid in cash by the appellant. e) Rs. 12,66,291/- relates to the cash repetition, interest on saving a/c and LIC receipt.”

As a matter of fact the assessee has not produced any documentary evidence to show that certain deposits relate to the agriculture sale proceeds of neighbouring agriculturist and therefore, in the absence of any confirmation or documentary evidence, it is against the preponderance of probability that the sale proceeds of the agriculturists would be deposited in the bank account of the assessee. Similarly, the sale proceeds of the family members of the assessee is also 5

Accordingly, in the facts and circumstances of the case and in the interest of justice, the impugned order is set aside and the matter is remanded to the record of the Assessing Officer to re-adjudicate the same after considering the quantity and sale proceeds of the Tomato and Onion produced by the assessee from his own land holding as well as the interest income and LIC receipt which cannot be part of the turnover. The record of the land holding and the agriculture produce on the land belonging to the assessee is required to be verified and examined by the Assessing Officer and then to decide the issue afresh. Needless to say an appropriate opportunity of hearing be given to the assessee before passing the fresh order.

For the Assessment Year 2016-17 An identical issue is raised by the assessee. In view of the finding for the assessment year 2015-16, the matter is set aside to the record of the Assessing Officer with the same directions. 6

In the result, both the appeals of the assessee are partly allowed. Order pronounced in the open Court on 03.06.2022.