IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `E' : NEW DELHI)
BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER
and
SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No.5380/Del./2013
ASSESSMENT YEAR : 1996-97
ITO, Ward 6 (2), vs. M/s. Marudhar Services Limited,
New Delhi. 4, Community Centre,
East of Kailash,
New Delhi 110 065.
(APPELLANT) (RESPONDENT)
ASSESSEE BY : None
REVENUE by : Shri P. Dam Kanunjha, Senior DR
DATE OF HEARING : 23.02.2015
DATE OF PRONOUNCEMENT : .02.2015
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
This appeal filed by the revenue emanates from the order of the CIT (Appeals)-
IX, New Delhi dated 22.07.2013 for the assessment year 1996-97.
2. The return of income was filed on 24.02.1998 declaring a loss of Rs.8,45,240/-.
The CIT (A) has granted the relief to the assessee. Now, the revenue is in appeal by
taking the following grounds :-
"1. Whether in the facts and circumstances of the case, the Ld.
CIT(A) erred in deleting the entire addition of Rs.16,35,636/- made by
the A.O. by treating the agricultural income claimed by the assessee of
Rs.24,80,876/- as income from other sources, by following the order of
the Hon'ble ITAT in the case of assessee itself for the A.Y. 1993-94 and
1994-95 (ITA No. 2983 & 2984, dated 23.11.2007) whereas the hon'ble
ITAT allowed only part relief to the assessee in the above order by
2
ITA NO.5380/Del/2013
holding Rs.4,70,000/- out of Rs. 10,15,000/- claimed as agricultural
income, and Rs.5,10,000/- , out of Rs.21,85,184/- claimed as agricultural
income, respectively for the A.Y. 19993-94 and 1994-95, and directed
the A.O. to treat the balance amount as income from other sources?
2. Whether in the facts and circumstances of the case, the order of
Ld. CIT(A) is perverse in nature in confirming the decision of the AO to
reject the revised return filed on 16.03.1999 returning the
agnculturaI1ncome at Rs.80,876/- only but accepted the same at the time
of passing the appellate order?
3. That the order of the Ld. CIT(A) is erroneous and is not tenable
on facts and in law.
4. That the grounds of appeal are without prejudice to each other.
5. That the appellant craves leave to add, alter, amend or forgo and
ground(s) of the appeal raised above at the time of the hearing."
3. Ground Nos.3 to 5 are general in nature and do not require any adjudication.
4. Ground No.1 is against the deletion of addition of Rs.16,35,636/- made by the
Assessing Officer by treating the agricultural income claimed by the assessee of
Rs.24,80,876/- as income from other sources following the order of the ITAT in the
case of assessee for assessment years 1993-94 and 1994-95. Ground No.2 is
regarding accepting the revised return.
5. The CIT (A) has granted the relief on these issues as under :-
"3. Brief facts and background of the case
The assessed did not file return of income for the AY 1996-97. Therefore
the AO issued notice U/S 142 (1) calling for the return of income.
Accordingly the appellant filed return of income on 24.02.1998 declaring
a loss of Rs.8,45,24/-. Another return was filed on 16.03.99 declaring
loss of Rs.41,4801-. On the basis of decision in the case of Kumar
Jagadish Chandra Sin ha Vs CIT (1996) 220 ITR 67 (SC) the AO
ignored the revised return and completed the assessment based on the
financial statements filed along with the return of income. In the return
of income the appellant claimed agricultural income of Rs.16,35,365/-
and expenses of Rs.8,45,240/-. Stating that the assessed did not file any
evidences regarding agricultural income and the expenses, the AO added
back the entire amount as the income from other sources and after
3
ITA NO.5380/Del/2013
adjustment of declared loss of Rs.8,45,250/- arrived at total taxable
income of Rs.16,35,636/-.
4. Aggrieved by the additions made to declared taxable income, the
appeal is filed. On behalf of appellant, Shri. Anil Sharma, Advocate,
appeared and written and oral submission were made. The issues that
came up for consideration are discussed hereunder.
5. The first Ground of appeal is of general nature on which no
specific submissions have been made by the appellant and hence no
adjudication is required thereon. The Grounds 5 & 6 are not specific and
adjudication of other Grounds will automatically address these Grounds.
The assessment order was received by the appellant on 06.04.99 and
accordingly the last date for filling the appeal before the CIT (A) was
05.05.99 as provided U/S 249(2). However the appeal was filed on
10.05.99. The appellant applied for condonation of delay on the Ground
that the requisite fee was deposited on 05.05.99 itself but appeal could
not be filed due to non availability of staff in the office of the CIT(A).
But my Ld. predecessor CIT (A) rejected the plea of the appellant
holding that there was no sufficient cause for such delay and dismissed
the appeal. The appellant contested the order of the CIT (A) before the
Hon'ble ITAT Delhi.
The Hon'ble ITAT, Delhi vide order dated 16.02.2005 in the appellant's
case ITA NO. 2715 and 2716/0e1l2001 directed the CIT (A) "to decide
the appeal of the assessee on merit after condoning the delay in filing the
same". The Hon'ble ITAT observed that the delay is only 5 days that too
including a Saturday and a Sunday. Since the assessee deposited the
requisite fee on 05.05.99 there is no benefit for assessee by filling the
appeal after 5 days. In view of the direction of the Hon'ble ITAT, the
delay of 5 days is hereby condoned and appeal is considered as valid for
discussion and decision.
6. While examining the case on merit the following issues emerges
Whether the revised return of income filed on 16.03.99 is a valid
return?
Whether the financial statements furnished along with the return
filed on 16.03.99 as claimed by the appellant as revised return and
final balance sheet and profit and loss account and documents
filed before the AO to claim agricultural income can be
considered to examine the claim of the appellant?
Whether the lease rent received by the appellant from leasing out
of land is agricultural income or to be treated as income from
other source?
4
ITA NO.5380/Del/2013
7. In the second and the third Grounds of appeal the appellant
submitted that the revised return was filed on 16.03.9~ i.e. before the
completion of the assessment proceedings and hence valid. The appellant
submitted that the original return was based on the provisional financial
statements and filed with unsigned balance sheet and P&L accounts. The
provisional lease rent receivable of Rs.24,00,000/- was erroneously taken
into income and when it was noticed. the financial statements were
finalized with correct income and expenditure. The appellant relied on
several judicial pronouncements. Citing the case of Dhampur Sugar Mills
Ltd. Vs CIT (1973) 90 ITR 240 (All) appellant's argue that if the
assessee files an application for correcting a return already filed or
making some amendments there in, it would not mean that he has filed a
revised return.
The AO mentioned in the remand report that since the assessee filed the
original return U/S 139(4), it has lost the privilege to file the revise
return. For relevant AY, the due date for assessee to file the return of
income was 31.10.1997. But no return was filed. Later on in response to
the notice of AO U/S 142(1) of the Act the assessee file the return on
24.02.1998. In the remand report the AO relied on the decision of the
Apex court in the case of Kumar Jagadish Chandra Sinha Vs CIT (1996)
220 ITR 67 (SC). In this case the Hon'ble court held that
"no revised return can be filed under sub-section (5) of section
139 in a case where the return is filed under section 139(4).
Once this is so, the revised returns filed by the assessee for both
the said assessment years were not valid in law and could not
have been treated and acted upon as revised returns
contemplated by sub-section (5) of section 139, which means
that section 153(1)(c) was not attracted in instant case."
Hence, as per the provisions of the Act as well as the decision of Hon'ble
Supreme Court, the return has to be treated as non-est return. Since the
assessee did not file voluntary return and the return filed on 24.02.1998
was in response to the notices issued by the AO calling for the return of
income, the revised return is not acceptable. Hence, the decision of the
AO to reject the return filed on 16.03.99 is confirmed.
8. In the fourth Ground of appeal, the appellant raise the issue of
agricultural income.
The assessee owns agricultural land and earns rent through Sanjha
Scheme signed with the farmers. This income clubbed with some small
income from sale of agricultural produce and scrub is declared as the
income from operations and claims as agricultural income for exemption
under the Income Tax Act. The appellant argues that the lease rent
received from farmers is the main activity and hence cannot be treated as
income from other sources. This issue has been dealt with in the case of
appellant in the earlier years also. In the case of the appellant, for the AY
5
ITA NO.5380/Del/2013
93-94 and AY 94-95, this issue has been dealt with. The AO treated the
income as the `income from other source' denying the exemption of
Income Tax. However, Hon'ble ITAT, Delhi in the case of the appellant
vide order dated 23.11.2007 in ITA Nos. 2983 & 2984 (Del) 2004 have
decided that the lease rent received is agricultural income. In these two
assessments the AO treated the income as the income from other source
mainly due to non production of evidence in support of the claim. The
appellant contested these orders before the CIT(A) and the CIT(A)
accepted the evidences under Rule 46A of the IT Rule as the assessment
was completed in 14 days and assessee was not given sufficient time to
produce the evidence. The Ld. CIT(A) accepted the Girdawari of the
land produced by the appellant that proved the crops grown on the land
owned by the appellant company as evidence of agricultural activity. As
per the direction of the my predecessor Ld. CIT(A), the AO conducted
inquiry by field visit and statement of the three major cultivators Shri
Santraj, Sh. Badam Singh and Sh. Jairaj was taken. The AO reported that
the claim regarding agricultural income was established. But the Ld.
CIT(A) did not accept the report of the AO and held that the income
from leasing is not agricultural income. Against the orders Ld. CIT (A)
for AY 93-94 and AY 94-95 the Hon'ble ITAT has given the decision in
favor of the assessee after considering following evidences.
(a) Evidence regarding ownership of agricultural land.
(b) Evidence in the shape of Girdawari showing that some crop has
been grown in the said land.
(c) Sanjha agreement with various persons giving right to the other
persons to cultivate the land and specifying that certain amount was
receivable by the assessee on account of sharing of the crop.
Based on the verification made by the AO and on the basis of the
evidences mentioned above the Hon'ble ITAT held that
"The assessee was receiving certain income being agricultural
income but the fact that how much income is earned cannot be
ascertained in the absence of certain details."
Since the facts of the case remaining same for this year also, following
the decision of the Hon'ble ITAT, the income from lease rent received
from farmers is to be treated as agricultural income.
9. During the year under consideration the assessee claimed
expenses of Rs.8,45,240/- and declared agricultural income of
Rs.16,35,635/-. The AO disallowed the exemption of Rs.16,35,635/- as
agricultural income and taxed it as income from other source. The AO
also disallowed entire expense of Rs.8,45,240/- as non verifiable and
assessed the total income at Rs.24,80,876/-. But again AO reduced the
loss declared by the assessee in the return of income to the tune of
Rs.8,45,2401- which is nothing but the expenses claimed by the assessee
6
ITA NO.5380/Del/2013
in the original return itself. Thus, as per the assessment order of the AO
the taxable income is Rs.16,35,635/- which is nothing but the agricultural
income declared by the assessee in the original return itself. Thus
following the decision of the Hon'ble ITAT in the case of assessee for the
AY 93-94 and AY 94-95, the fact of agricultural income is established
and the amount of income arrived by AO has to be deleted. The AO has
allowed the expenses claimed by the assessed to the tune of
Rs.8,54,240/- by allowing the loss claimed in the return of income. The
balance Rs.16,35,635/- is disallowed by AO treating as income from
other source and rejecting the claim of assessee as it is agricultural
income. In view of the decision of the Hon'ble ITAT in the case of
assessee in the earlier years, this amount is to be treated as agricultural
income and hence not liable to Income Tax. Hence, addition of
Rs.16,35,635/- is deleted.
11. In the relevant year, e appellant furnished two sets of financial
statements before the AO. One is with the original return of income that
the assessee claims as the unaudited, unsigned and provisional. The other
set is with the return of income filed subsequently after removing the
mistakes crept into the earlier one. The main difference between the two
sets of documents are that in the provisional statement, lease rent
receivable is taken at Rs.24,00,000/- and that is included in the income.
Along with this amount, an amount of Rs.80,876/- is added as income
out of actual lease money received Rs.35,000/- and sale of Scrub
Rs.45,876/-.
In the second set of financial statement, the assessee has taken out the
provisional receivable lease rent of Rs.24,00,000/- from the balance sheet
and the P&L account as this was a mistake and there was no such rent
receivable by the assessee. At no stage of assessment and subsequent
inquiry or examination by my predecessor Ld. CIT(A) there was any
finding that such rent is receivable by the assessee during the relevant
AY. Thus, appellant's submission finds some substance. Secondly, in the
second set of statements the expense of Rs.7,99,744/- invested in
Marudhar Farm Project has been capitalized and taken to the balance
sheet. The balance amount is shown as administrative expenses. Thus
assessee submits in the computation of income an income of Rs.35,000/-
as lease money and Rs.45,876/- as the sale of scrub.
For acceptance of the second set of documents as the revised claim of the
assessee made before the AO during the assessment the appellant relied
upon the decision of the Hon'ble High Court of Delhi in the case of
Mohan Makin Ltd. Vs CIT (2012) 348 ITR 109 (Delhi) wherein the
principle laid down by the Hon'ble Supreme Court in the case of CIT v.
Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC) is followed. In
this case, it was held that
7
ITA NO.5380/Del/2013
"The right of the assessee to relief was not restricted to the pleas
raised by him before the departmental authorities or before the
Tribunal. It was held that if for reasons recorded for the
departmental authorities in respect of the contention raised by
the assessee, grant of relief to him on another ground is justified,
it would be open to the departmental authorities and the
Tribunal, and indeed they would be under a duty to grant that
relief."
Thus, in the absence of any evidence on record to establish that assessee
had receivable income of Rs.24,00,000/- or received subsequently and in
view of the judicial pronouncements mentioned above the revise claim of
assessee has to be accepted."
6. None attended on behalf of the assessee. Ld. DR relied on the order of the
Assessing Officer.
7. We have heard ld. DR, gone through the orders of the lower authorities and
material available on record. After considering all the relevant aspects, we do not find
any infirmity in the order of the CIT (A) and upheld the same on these issued.
Accordingly, these grounds are dismissed.
8. In the result, the appeal of the revenue is dismissed.
Order pronounced in open court on this 25TH day of February, 2015.
SD/- SD/-
(GEORGE GEORGE K) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 25TH day of February, 2015
TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-IX, New Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.
|
