INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G": NEW DELHI
BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
AND
SHRI K.N.CHARY, JUDICIAL MEMBER
ITA No. 3362/Del/2014
(Assessment Year: 2007-08)
Surinder Kumar Sanpal, Vs. ITO,
A-250, New Subzi Mandi, Ward-19(4),
Azadpur, New Delhi New Delhi
PAN: ABBPS5068C
(Appellant) (Respondent)
Assessee by : Shri Akash Garg, CA
Shri Abhiroop Aggarwal, CA
Revenue by: Shri N. K. Bansal, Sr. DR
Date of Hearing 28/02/2019
Date of pronouncement 15/05/2019
ORDER
PER PRASHANT MAHARISHI, A. M.
1. This is an appeal filed by the assessee against the order of the ld
CIT (A)-XXII, New Delhi dated 28.02.2014 for the Assessment
Year 2007-08.
2. The assessee has raised the following grounds of appeal:-
"1. That on the facts and circumstances of the case the learned
CIT(Appeals)-XXII has erred in law as well as on facts in
ignoring altogether the details in the capital account of
assessee in the firm M/s M.S.Traders, datewise details in his
personal savings bank account and his personal statement of
affairs for the financial year 2006-07 provided to explain the
nature and source of deposit of Rs. 17,00,000/- in capital
A/c ;
2. That on the facts and circumstances of the case the learned
CIT(Appeals)-XXII has erred in law as well as on facts in
treating the deposit of Rs. 17,00,000/- by cheques as
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deposits in cash and then taking support of various judicial
decisions unwarrantedly to confirm his biased opinion;
3. That on the facts and circumstances of the case the learned
CIT(Appeals)-XXII has erred in law as well as on facts in
disputing and/or rejecting the following claims and
documents about agricultural income of assessee of Rs.
11,24,800/- in F.Y 2005-06 and of Rs. 10,62,700/- in F.Y
2006-07 based on suspicion , highly stretched imagination
and a blatant twisting of facts and decisions in judicial
precedents :-
· Ownership and valuation of Agricultural land ,when
title deeds having been placed on record;
· Production of lemons on already planted trees ,when
income from sale of lemons has been appearing since
many previous years;
· Process of earning and receiving sale proceeds of
lemons sold, when procedure duly accepted by
assessing officer in his remand report and agricultural
activity having taken place about five year earlier;
· Distinguishing between 'assessee planted lemon trees
in the land' and 'land was having old lemon trees'
unwarrantedly as trees were undisputedly old( lemons
can not be taken from newly grown plants) and thereby
leveling a baseless allegation of having turned turtle;
· Sale bills of 2/3rd share of lemons at wholesale lemon
market at the place where land is situated;
· Agricultural income of assessee having been accepted
by same ITO in earlier A.Y- 2006-07 reflecting same in
ITNS-150 while calculating tax on income assessed u/s
143(3) of I.Tax act, 1961 and also appearing in his
'Statement of affairs as on 31.3.2006' submitted during
assessment, but the Ld. CIT(A)-XXII has disputed the
contents of assessment orders of his own department
unwarrantedly;
· Date wise details of savings Bank A/c of assessee for
the F.Y 206-07 having only 5(five) transactions on
receipt side and only 7(seven) transactions on payment
side and a detailed cash account showing receipts and
payment separately in the case of a partner of firm
,holding that CASH A/C, BANK A/C and Statement of
affairs of an individual do not constitute books of
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account and thereby ignoring capriciously a judicial
precedent whose ratio is exactly matching with that of
this case .
· Mangos from Mango trees, Guavas from already grown
Guava trees, apples from Apple trees and other such
produces are well known agricultural produce ,the sale
of which are well established 'Agricultural income' but
not so for Ld. CIT(A)-XXII.
4. That on the facts and circumstances of the case the learned
CIT(Appeals)-XXII has erred in law as well as on facts in not
considering addition of Rs. 17,00,000/- as a duplicate
addition in income as this amount is introduced in capital
account of firm by cheques issued out of Rs. 22,00,000/-
deposited in same Bank account in cash."
3. Brief facts of the case shows that assessee is an individual who
filed his return of income of INR 107210/. The major source of
income of the assessee is from sale and purchase of fruit and
vegetables as ,, Kaccha Aradtia. The case of the assessee was
selected for scrutiny and assessee was asked to furnish various
details amongst them was addition in capital account and details
of the agricultural income. The learned assessing officer noted
that during the year the assessee has shown an addition of INR
1,700,000 in his capital account for which assessee did not
furnish any details and therefore the addition to the extent of
that was made. Further on verification of the copy of the state
bank of India account of the assessee was found that assessee
has deposited INR 22,00,000/- of cash in the month of December
2006 for which no explanation was provided and therefore the
learned assessing officer made the addition of the same.
Consequently, assessment order u/s 143 (3) of the act was
passed by the learned AO on 31/3/2007 determining the total
income of the assessee at INR 4007210/. Assessee aggrieved
with the order of the learned AO preferred an appeal before the
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learned CIT A, who confirmed both the addition. Therefore
assessee is in appeal before us.
4. The learned authorised representative vehemently stated that the
a. Amount of cash has been deposited in the savings bank
account with the state bank of India for assessment year
2007 08 by the assessee and from that account only the
assessee has made further investment in the partnership
firm. Therefore there is a double addition, once of the
source of the income and second of the application of
income.
b. That assessee has earned total agricultural income of INR
1062700/- which has been shown in the cash account and
therefore the available total cash with the assessee was INR
2330773/- for the year. Out of which the assessee has
deposited the cash in the savings bank account. Therefore
the both the addition made by the learned assessing officer
and confirmed by the learned CIT A are incorrect.
c. That cash account submitted for financial year 2006 07
wherein the complete source of funds available with the
assessee is shown. He referred to the statement of affairs of
the assessee as on 31/03/2007, the details of the bank
account with the state bank of India.
d. Agricultural income shown by the assessee is not at all
disputed as there is no addition made by the learned AO on
that account.
e. Assessee owns 38 acre of the agricultural land and out of
which it has earned only INR 1,062,700/. Neither the
learned AO nor the learned CIT A both have found the
evidences submitted by the assessee not to be false. He
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submitted that assessee submitted the details of the lender
holding, the details of the sale of the agricultural produce,
the bills of sale, the manner of earning the agricultural
income, the expenditure incurred by the assessee on the
agricultural operation is nil because one third of the
agricultural produce is already given to the labor. He stated
that as there is no evidence which is found to be false, the
agricultural income is required to be accepted.
f. That as assessee is having agricultural income in cash on
year-to-year basis there is an opening balance available of
Rs. 1143449/ in the hands of the assessee. He submitted
the order of the assessment u/s 143 (3) of the act for earlier
years.
g. He further referred to the order of the learned CIT A
wherein he has held that agricultural income shown by the
assessee is bogus. He stated that the learned CIT A has
merely stated so without understanding that assessee is
having huge agricultural land, the expenditure incurred by
the assessee is nil because only to 3rd of the agricultural
produce have been sold by the assessee and one third is
towards the expenditure incurred by the cultivator of the
land.
h. That cash account submitted by the assessee showing the
opening balance, addition during the year, be drawn during
the year and the balance at the end of the year has been
held by the learned CIT appeal that it is merely a summary
of the capital account. He submitted that it is the cash flow
account which shows that wherefrom the case is generated
and wherefrom that it has been spent.
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In view of this he submitted that both the addition made by
the learned AO deserves to be deleted. He further relied upon
the decision of the honourable High Court in CIT vs.
LANDMARK INNOVATION (PRIVATE) LTD dated 08/08/2013
wherein it has been held that when the assessee is selling
agricultural producers in cash and deposit the same account
in the bank account of the assessee same cannot be added
u/s 68 of the income tax act on the ground that no primary
record of agricultural activities were made available.
5. He also raised an interesting argument that at the assessee is not
maintaining the books of accounts; the addition made by the
learned assessing officer u/s 68 of the income tax act does not
apply because nothing is credited in the books of accounts. He
stated that if the money is credited in the bank pass book/bank
account of the assessee the provisions of section 68 does not
apply as the assessee is not maintaining any books of accounts.
6. The learned Departmental representative vehemently supported
the orders of the lower authorities and submitted that the
assessee has failed to give any explanation before the lower
authorities and therefore the additions have been made. He
extensively read the order of the learned CIT A wherein the
additions have been confirmed after examining the only the
details furnished by the assessee with respect to the agricultural
income earned by the assessee. It was further stated that
assessee has not furnished any evidences before the learned
assessing officer and therefore the learned AO was left with no
option but to make the above addition.
7. We have carefully considered the rival contention and perused
the orders of the lower authorities. The brief fact shows that
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assessee is an individual who is a partner in different
partnership firms. During the year the assessee has deposited
INR 1,700,000 as addition to capital in a partnership firm namely
M/s M S Traders. The assessee has also deposited a sum of INR
2,200,000 in the state bank of India bank account of the
assessee. From the state bank of India bank account assessee
has issued cheques for deposit into the partnership firm of INR
17, 00,000. Therefore out of the deposit of INR 2,200,000 in
cash in the bank account with state bank of India which is the
source, the assessee after depositing the above sum in cash has
issued the cheques of INR 1,700,000 in favor of the partnership
firm as his capital. Therefore it is apparent that INR 2,200,000
has been added by the assessing officer as an income and once
again the addition of INR 1,700,000 is also made, therefore it is
apparent that there is a double addition in the hands of the
assessee. For this reason we direct the learned assessing officer,
reversing the order of the learned CIT A, to delete the addition
of INR 1,700,000 on account of deposit in the partnership firm as
his capital. In view of this ground number 1 and 2 of the appeal
of the assessee are allowed.
8. Third ground of the appeal is the deposit of INR 2,200,000 in
the savings bank account of the assessee deposited in cash by
the assessee source of which is shown by the assessee as an
agricultural income added by the learned assessing officer and
confirmed by the learned CIT A is under challenge.
9. First issue is that whether the assessee is having an agricultural
land which can result in to agricultural produce Admittedly, the
assessee is having the agricultural land of more than 38 acres,
the documents for which have already been submitted before the
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learned CIT A. However as originally the assessee stated that
he is having agricultural land of only 23 acres, despite the
documents of the agricultural land holding produced before the
learned CIT A, only for the reason that assessee is initially not
aware about the area of land, he disbelieved the holding of 38
acres of the land. As assessee has produced the documentary
evidence of 38 acres of the land in the name of the assessee on
which the agricultural activities are carried on, the land holding
of the assessee cannot be denied. Therefore the learned CIT A
committed an error by not accepting the ownership of the land
despite having the title deeds placed on record.
10. The 2nd issue is with respect to the production of lemon on
already planted trees. It is a fact that year to year assessee is
showing an agricultural land and agricultural income deriving
there from. During the year the assessee produced the sale bill
of 36722 kg of lemons INR 1062700. The sale bill is not disputed
by the AO of learned CIT appeal but the original production of
the lemon is disputed. When assessee has sold the lemon and
produces the bills before the lower authorities without examining
and proving the bill of the lemon sale falls it cannot be stated
that the assessee has not sold lemon at all. This is so also
because of the reason that in earlier years also the assessee has
sold lemon and same have been accepted in assessment
proceedings under section 143 (3) of the act for assessment year
2006 07. Even otherwise till to date the assessment under
section 143 (3 of the act for assessment year 2006 07 has not
been disturbed.
11. Third issue is of expenditure on agriculture. With respect to the
agricultural expenditure the assessee has stated that he has
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deputed the farmers who contribute for the cost of agricultural
activities including seeds and they keep one third of the
agricultural produce as their share for labour and expenditure.
The two third of the share of the agricultural produce remains
with the assessee and which has sold. The assessee submitted
that this is an oral agreement and there is no written agreement
with the cultivators. Just because there is no written agreement
with those persons, in view of the sale bill of the lemon,
consideration of which has been received by the assessee,
holding of the agricultural land sufficient to generate so much of
agricultural produce the claim of the assessee cannot be rejected.
12. Fourth issue is of having the factum of agricultural income
accepted by revenue in earlier years. In the earlier year the
assessee has shown agricultural income of rupees 1124800/ for
assessment year 2006 07 which has been accepted by the
assessing officer, therefore the revenue has accepted the claim of
the assessee that assessee is agricultural income. This year the
agricultural income shown by the assessee is less than what has
been shown by the assessee in earlier years despite being the
same area of the agricultural land.
13. Fifth issue is of sale of agricultural produce to various parties
from whom cash is received. The learned CIT A in para number
8.36 has been shown the various bills. Assessee submitted the
details of 4 traders who purchased lemon from the assessee. The
learned CIT A instead of making enquiries from these 4
persons, he merely referred to the various telephone numbers
mentioned on those bills and held that this belongs to different
locations. He also tried to analyze the handwriting on the
balance and stated that that the handwriting is similar. He
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further noted that even the mention of the name of the assessee
is in similar manner. It was further noted that the name of the
broker/Dalal has also not been mentioned. On the basis of these
findings in noted that all these 4 appeals are bogus. It is true
that all these observations of the learned CIT A on the basis of
the information submitted by the assessee, however, when the
learned CIT A so much of account on the veracity of the bills,
before saying that the bogus, he should have asked the assessee
to either produce those parties or made independent enquiry
with respect to the buyers. In absence of these it is merely an
allegation is which has not substantiated. Merely on allegation
and doubts the addition cannot be made. They needs to be
substantiated by due enquiry.
14. Sixth issue is whether provision of section 68 applies when the
assessee has not maintained the book of accounts. This issue is
no more an issue of debate in view of the decision of
Honourable Mumbai High court in case of Arun J Muchalla V CIT
[2017] 85 taxmann.com 306 (Bombay)/ [2017] 250 Taxman 362
(Bombay)/ [2017] 399 ITR 256 (Bombay) where in it has been
held that even in case of deposits in bank accounts provision
of section 68 applies. The Hon Bombay High court in that case
relied up on the decision of Honourable Supreme court in
Sudhir Kumar Sharma (HUF) v. CIT [2016] 69 taxmann.com
219/239 Taxman 264 (SC) after referring decision s such as
Baladin Ram v. CIT [1969] 71 ITR 427 (SC) (para 7), CIT v.
Bhaichand N. Gandhi [1983] 141 ITR 67/[1982] 11 Taxman 59
(Bom.) (para 7), Anand Ram Raitani v. CIT [1997] 223 ITR 544
(Gau.) (para 7), CIT v. Smt. Usha Jain [1990] 182 ITR 487/52
Taxman 12 (Delhi) (para 7), CIT v. Taj Borewells [2007] 291 ITR
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232 (Mad.) (para 8), Sudhir Kumar Sharma (HUF) v. CIT [2014]
224 Taxman 178/46 taxmann.com 340 (Punj. & Har.) (para 10) .
Therefore we reject that argument of the assessee that provision
of section 68 does not apply when the amounts are credited in
the bank account as assessee has not maintained the books of
accounts.
15. In the result Ground no 3 of the appeal is partly allowed.
16. Ground number 4 of the appeal has already been adjudicated by
the adjudicating ground number 1 of the appeal of the assessee
wherein we have held that there is a double addition in the
hands of the assessee with respect to INR 17,00,000/-.
Therefore now the ground number 4 becomes infructous.
17. In the result appeal of the assessee is partly allowed.
Order pronounced in the open court on 15/05/2019.
-Sd/- -Sd/-
(K.N.CHARY) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 15/05/2019
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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