TaxTMI 
TaxTMI 
2012 (10) TMI 669
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.... view of the Assessing Officer that the source of loan from M/s NF Farms is not genuine. 2. During hearing, we have heard Shri R.A. Verma, learned Senior DR and Shri Manjeet Sachdeva, ld. Counsel for the assessee. The crux of arguments on behalf of the Revenue is that there is a categorical finding in para 4.1.2 of the impugned order that it is difficult to generate over Rs. 80 lacs from agricultural income out of 17.64 acres of land that too with a very nominal investment of Rs.4,36,246/- especially when the learned CIT(A) itself noted that the genuineness of sale of baby corn was not established and it was reflected as cash sales by the assessee. It was also pointed out that even the assessee could not furnish the names and addresses o....
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....) was served upon the assessee on 4.8.2010. In response to the said notice, the assessee filed details and produced books of accounts along with bank statement which were test checked on random basis. It was noticed that the assessee took Rs.50 lacs as unsecured loans from M/s NF Farms which in fact is an AOP of the partners of the assessee firm itself, meaning thereby that the members of the AOP and the partners of the assessee firm are the same persons. The genuineness and source of such unsecured loans was asked to be furnished. The assessee was also asked to furnish various details as mentioned at pages 3 onwards of the assessment order dated 20.12.2010. Subsequently, vide order sheet entry dated Ist December, 2010, the assessee was als....
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....nuine and the AOP was constituted by virtue of deed dated 1.4.1999, the AOP is growing high breed baby corn and the receipt from cash sales of such baby corn is deposited in the bank account and from there through account payee cheques, the assessee received loan from time to time. It was further claimed that NF Farms made sales to restaurants, hotels and dhabas who make cash payment, therefore, the sale should not be doubted. It has been further claimed that the agricultural income is derived from agricultural operation and hence it is exempt under the Act. The expenditure for agricultural production was also claimed to be normal and such income cannot be termed as business income. The Assessing Officer analysed the genuineness of agricult....
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.... including supply of water, labour problem, insects, manure and fertilizers, high cost of agricultural produce, etc. The profit is alarmingly very high. We will be glad if such a huge profit is actually earned from farming. The claim mentioned in the chart is, therefore, factually incorrect. From any angle, roughly the agricultural production cost cannot be less than 50% of the agricultural production. It is pertinent to mention here that the assessee claimed that majority of cash sales was made to restaurant, hotels, dhabas, etc. but no proof of the same was produced by the assessee at any stage. Even otherwise, the sale was made to particular hotels then nothing prevented the assessee to submit the details of such sales with the help o....
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....e sales were made except saying that sales were made to Restaurants, hotels, Dhabas etc. But the question arises as to whether any addition for this reason could be made in the hands of the assessee firm. The Assessing Officer in the case of partners have not even questioned the genuineness of huge sales made by N/s NF Farms rather they ahve satisfied themselves by simply making an addition as regards to the unexplained expenses in the agricultural operation in production of the babycorn. No effort has been made by any of them to ascertain whether M/s NF Farms has really been producing the socalled hybrid babycorn and if so whether four rotations were made in a year before accepting the huge share of their products from the said AOP M/s NF ....
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....he genuineness and extent of the agricultural income and to tax the surplus shown by them in the hands of those members itself. 5. In the result, the appeal is allowed." 3.1 If the reasoning and the facts mentioned in the assessment order, observations made in the impugned order specifically in para 4.1.2 (reproduced hereinabove) and the assertion made by the learned respective counsel, are analysed, the undisputed fact is that the members of the so called AOP (M/s NF Farms) and the partners of the assessee firm are the same persons. There is a categorical finding in the assessment order, impugned order and also in our view that the agricultural income of Rs.86,30,344/- is practically not possible to be grown out of 17.64 acres of lan....