Kaushik (Accounts) (123 Points)
21 January 20161) Does anyone have judgement copy of ITAT Ahmedabad (Income Tax Appellate Tribunal) in the case of Dhirubhai L Narula ITAT Nos.2190 to 2192/Ahd/2004, order dated 17-04-2004 ?
This case has been taken as base by Income Tax to consider that the expense of 40% should be there on Agricultrure Sale receipt inrespect of corp
2) After this case, has there been any judgement aganist this case ?
Kindly share
manoj
(student)
(5205 Points)
Replied 21 January 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "SMC"
BEFORE SHRI MUKUL KUMAR SHRAWAT
JUDICIAL MEMBER
ITA no.2636/Ahd/2010
(Assessment Year:-2006-07)
Shri Kantibhai S Patel, V/s The Income-tax Officer,
15, Vrajvihar Society, Ward-6(4), Ahmedabad
LBS Road, Bapunagar,
Ahmedabad
PAN: AGPPP 6458 A
[Appellant] [Respondent]
Appellant by :- Shri P F Jain, AR
Respondent by:- Shri S A Bohra, Sr. DR
Date of Hearing:- 21-09-2011
Date of Pronouncement:- 26-09-2011
ORDER
This is an appeal at the behest of an assessee which has emanated from the order dated 12-08-2010 of the Learned Commissioner of Income-tax (Appeals)-XVI, Ahmedabad [the "CIT(A)"] for Assessment Year (AY) 2006-07. Though the grounds are argumentative in nature but for the sake of completeness are reproduced hereunder:-
[1] The Ld. C.I.T. (Appeals) has erred in law and on facts in upholding the addition of Rs.3,55,421/-as additional income for alleged un accounted expenses of agriculture income expenses of agriculture income estimated at 40% of the income, without properly appreciating the facts and circumstances of the appellant.
2 ITA no.2636/Ahd/2010 [2] He has erred in law and on facts in upholding the disallowance of estimated expenses holding the same as taxable income from other sources with out any evidence to justify the said inference.
[3] He has erred in applying the decision of ITAT in the case of DHIRUBHAI L. NARULA with out appreciating the facts that the said decision was never confronted either by 'the assessing officer or by the CIT appeal, there by denying the opportunity of rebuttal to the appellant.
[4] He has erred in law and on facts in ignoring the observation of the assessing officer as per para 3A of the assessment order that as per general norms the minimum amount of expenditure to be incurred for earning Rs.100/- agriculture Income is 40 paisa.
[5] He has erred in law and on facts in ignoring the decision of Ahmedabad ITAT in the case of Gopal B Bhoiwala ITA No.3008/Ahd/2009 decided on 08-01-2010 though mentioned in para 3 of his order.
[6] On the facts no addition of Rs.3,55,421/- without any evidence, ought to have been made.
2 The facts in brief as emerged from the corresponding assessment order passed u/s 143(3) of theIncome-tax Act, 1961 [hereinafter referred to as 'the Act'] dated 24-11-2008 were that the assessee in his individual capacity has filed a return declaring an income of Rs.1,35,240/- and the Assessing Officer ['AO' for short] has also noted that the assessee had derived agriculture income of Rs11,70,164/-. The bifurcation of the agriculture income as noted by the AO was that the assessee had entered into a contract with the three tribals and earned Rs.93,750/-, Rs.97,500/- and Rs.90,360/- as agriculture income. In respect of rest of the agriculture income, i.e., Rs.8,88,554/-, it 3 ITA no.2636/Ahd/2010 was observed that the agriculture income was earned on account of actual agricultural activity carried out by the assessee himself. It was noted by the AO that as per Ledger Account maintained by the assessee, no amount of expenditure for earning the said agriculture income was shown. As per the AO, such agriculture income should not have been earned without incurring expenditure like purchase of seeds, fertilizers, water charges, labour, transportation, etc. As per the AO, the assessee had not accounted for any of these expenditure. As per the AO's estimation for earning Rs.100/- as agriculture income, at least an expenditure of 40 paise is required. For this proposition, the AO has placed reliance on the decision of the ITAT Ahmedabad in the case of Dhirubhai L Narula & others in ITA Nos.2190 to 2192/Ahd/2004, order dated 17-04-2004, wherein it was held that expenditure to the extent of 40% of the gross receipts should be reasonable expenditure bound to happen to carry out the agricultural activity in Gujarat. As per the AO, after deducting the expenditure only net income has to be taxed in the hands of the assessee subject to allowability of statutory deductions. Since the assessee had claimed the entire gross receipts as agriculture income as exempt income, therefore, the amount equal to 40%, i.e., Rs.3,55,421/- was held by the AO as unaccounted expenses not disclosed in the return of income. The same was taxed as an additional income in the hands of the assessee. Being aggrieved, the matter had gone before the first appellate authority.
3 After discussing the facts of the case, the learned CIT(A) has noted that the AO had simply followed the decision of the 4 ITA no.2636/Ahd/2010 ITAT pronounced in the case of Shri Dhirubhai L Narula (supra). In the said decision it was held that where the details of expenditure were not available, then, to the extent of 40% of the gross receipts would be reasonable expenditure for earning of agriculture income. It was also noted by the learned CIT(A) that the crops like Bajri, Arenda, Wheat, etc. were grown by the assessee. The conclusion was drawn as under:-
"4. I've considered the submission made by the appellant and observation of the year, I find that on facts in the case of the assessee the decision of honorable ITAT in the case of Dhirubhai L Narula (Supra) is more applicable. The action of the AO is correct. The assessee is required to maintain details of various expenses like that of cost of seeds, fertilizer, water charges, labor charges, cultivation expenses and various other expenses. In the absence of these details, the action of the AO to treat 40% of the gross receipts as expenses is correct. Hence, the income to the extent of disallowance of these expenses is income from other sources earned by the assessee is taxable. The action of the AO is therefore correct. The ground of appeal is dismissed."
4 From the side the assessee, the learned AR Mr. P F Jain appeared and pleaded that the impugned addition was merely on adhoc basis, hence, deserves to be annulled. The learned AR has also pleaded that the AO had proceeded against the assessee without informing about the said addition. The AO has followed the order of the Tribunal but before making the addition, no opportunity was granted to the assessee. Alternatively, he has pleaded that some reasonable percentage can only be applied for the impugned disallowance. The learned AR has also pleaded that at the most the agriculture income which was assessed in the immediate preceding assessment year, i.e., AY 2005-06 may be adopted for the year under consideration to maintain the 5 ITA no.2636/Ahd/2010 consistency in the assessment proceedings. For this proposition, he has placed reliance on the following chart:-
Details of agriculture income for below mentioned years:
Sr. Asst. Year Amt. of Land A/c Tractor
No. Agri. as per Account
Income Balance
Sheet
1 2004-05 1,38,390 1,80,303 ---
2 2005-06 9,73,664 7,48,750 3,06,000
3 2006-07 11,70,164
4 2007-08 9,04,713
5 2008-09 8,10,197
6 2009-10 7,89,330
5 From the side of the Revenue, the learned DR Mr. S A
Bohra has stated that in the event of failure to submit the evidence of expenditure it was justified on the part of the AO to take guidance from the order of the Tribunal and, therefore, 40% of the gross receipts were held as an expenditure incurred to earn the gross agriculture income. It has also been argued by the learned DR that there was no evidence furnished by the assessee to demonstrate that the land was not cultivated by the assessee. Because of this reason, receiving of net share from the tillers was not acceptable to the Revenue Authorities.
6 I have heard both the sides at some length. I have carefully perused the orders of the authorities below in the light of compilation filed and case law cited. The only dispute is whether the income of Rs.8,88,554/- was the gross agriculture income or the net agriculture income as disclosed by the assessee. On one hand, the allegation of the AO was that it was gross agriculture 6 ITA no.2636/Ahd/2010 income and to perform the agricultural activity, at least 40% expenditure should have been incurred by the assessee. The AO got the support from an order of the Tribunal pronounced in the case of Shri Dhirubhai L Narula & others in ITA Nos.2190 to 2192/Ahd/2004, order dated 17-04-2004. I have examined the cited decision of the Tribunal and have noticed that in that case the said estimation of 40% was based upon the circumstances of that case as also the evidences made available on that record. Moreover in that case it was also under consideration that how much agriculture receipt was available to the assessee for investment purpose. Though a direction of allowing 40% expenditure were given against the gross agriculture receipts, but in my humble opinion those guidelines were restricted to the facts and circumstances of that very case. Be that as it was, at present, I am concerned with the facts of this case and have noticed that in the past this assessee had shown net agriculture income at Rs.9,73,664/- for AY 2005-06. Undisputedly, a consistent view is expected to be taken even in income-tax proceedings, especially, when the assessee has strongly contested that the crops were cultivated with the help of some other tillers who have incurred the expenditure and the assessee had got his net share of agriculture income. According to me, to maintain a consistency, it would be reasonable as also justifiable to direct the AO to adopt total agriculture income at Rs.9,73,600/- (assessed in the immediately past A.Y.05-06) as against the total agriculture income disclosed by the assessee at Rs.11,70,160/- (for the year under consideration A.Y. 06-07); with the result a difference of Rs.1,96,500/- shall be held as an unexplained 7 ITA no.2636/Ahd/2010 agriculture expenditure incurred , therefore, to be taxed in the hands of the assessee. Resultantly, the impugned addition of Rs.3,55,421/- is hereby reduced to Rs.1,96,500/-. The grounds raised are therefore partly allowed.
7 In the result, the appeal is partly allowed.
Order pronounced in the court today on 26-09-2011 Sd/-
(MUKUL KUMAR SHRAWAT)
JUDICIAL MEMBER
Date : 26-09-2011
Kaushik
(Accounts)
(123 Points)
Replied 21 January 2016
| Originally posted by : manoj | ||
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IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH "SMC" BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER ITA no.2636/Ahd/2010 (Assessment Year:-2006-07) Shri Kantibhai S Patel, V/s The Income-tax Officer, - - - - |
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Thanks Manoj
But I wanted the judgement of Dhirubhai case
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