TaxTMI 
TaxTMI 
2014 (11) TMI 95
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s 263 of the Act was issued on 16.12.2013. The relevant portion of the show cause notice containing the reasons for treating the order as erroneous and prejudicial to the interest of the revenue is re-produced herein below: "1. The AO has accepted your claim of agricultural income of Rs. 3086191, which was claimed as exempt from taxation. As per the information available on record, your business is 'trading of seeds. It is, therefore, clear that the company is engaged in the business of trading of various kinds of hybrid seeds and therefore, the Income generated from this activity is assessable as business Income rather than agricultural Income. 2. From the details of payments made towards PF contribution, it is noticed that the employees' share of contribution amounting to Rs. 278118 was not remitted to government account within the due date and hence the Same should have been disallowed u/s 36(l)(va). 3. In your case, a survey u/s 133A of the Act was conducted on 29.8.2011 and books of account / documents were impounded As per the information available in the impounded material, there is a detailed account of crop wise and product wise quantity sold through vari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mother) seed and production of high yielding hybrid seeds of various crops and their marketing. (ii) The germplasm is collected and planted in company's research farms. Subsequently by using some agricultural scientific process and by on-farming activity, high yield breed of foundation seeds of various crops are produced (iii) With this hybrid breeds, the company cultivates foundation seeds in the companies agricultural farms on company own lands and on leased lands. (iv) The hybrid seed thus then produced are retested and distributed to farmers tor multiplicity of production. (v) The farmer produces hybrid seeds with the foundation seedstaken from the assessee company, by sowing their agricultural lands and by the process of agricultural activity. (vi) The hybrid seeds, thus produced by the farmers are produced by the assessee company and after some process to meet the market conditions and packed to suit trouts of the seeds and then they are sold in commercial markets". 5. The AR further submitted that the assessee did not claim the entire income from the above mentioned activities as agricultural income but it has only treated that portion of the income up ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd assessee should maintain proper record of expenditure and books of accounts for such so called agricultural operations. 8. The CIT also relied on the decision of Pioneer Overseas Corporation vs. DCIT (International Taxation) (35 SOT 0467). The CIT also stated that the jurisdictional Tribunal's decision in the case of Vibha Agrotech Ltd., as relied on by the assessee, is different from the case of the assessee since in that case the Tribunal found it as a fact that the assessee carried out agriculture. 9. With respect to the second issue being disallowance of employee's share of contribution to PF amounting to Rs. 2,73,118, the CIT perused the chart furnished by the assessee showing the amount under consideration being deposited to the credit of the employee account on various dates before the date of filing the return of income u/s. 139(1) of the Act. The assessee has also submitted that section 43B was amended with effect from 1.4.2004 providing for allowance of such payment if the payment is actually made on or before the due date of filing the return of income in respect of the previous year in which the liability to pay such income was incurred. 10. The CIT(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epting the sales figures disclosed in the P&L account cannot be held to be sustainable in Law and the material impounded in the survey proceedings containing discrepancy in sales was not confronted with the assessee so as to find out the correct turnover. The CIT held that the order has become both erroneous and prejudicial to the interest of the revenue 13. The next issue is in respect of addition of unexplained cash deposit of Rs. 9,50,000 claimed to have been received from 3 investors. The AR of the assessee submitted that a chart showing party-wise break-up of capital introduced into the company during the year has been produced before the AO which is as under. According to the AR, along with the chart confirmation letters from the 3 investors were also filed. Sl. No. Amount Name of the shareholder No. of shares (Rs.) 1. M. Sabir 97837978370 2. P.V. Rama Rao 94681946810 3. S. Venu Gopal 56809568090 4. G. Vinod Kumar Rao 34716347160 5. A.V.R. Prasad 31560315600 6. Asif Riaz 5000 50000 7. K. PurushothamRao 3000 30000 Total 32,36,030 14. The CIT held that in respect of the remaining three investors no information wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Act after careful verification of all the information furnished. It was also contended that the notice u/s. 148 dated 28.3.2013 was issued and proceedings u/s. 148 are pending for the A.Y. 2009-10 on the same issue. Therefore, simultaneous proceedings u/s. 263 is not correct and void ab initio. The learned counsel for the assessee relied on the decisions in the case of Malabar Industrial Company Ltd. vs. CIT (243 ITR 83) (SC), Spectra Shares & Scrips (P) Ltd. vs. CIT (36 taxmann.com 348) (AP), Srinivasa Hatcheries (P) Ltd. vs. DCIT (81 ITD 36) (Hyd), Inventaa Chemicals Ltd. vs. ACIT (42 SOT 249) (Hyd), New Cyberabad City Projects (P) Ltd. vs. ITO (33 taxmann.com 280) (Hyd). 18. The learned counsel for the assessee argued that all the five issues viz., (1) agricultural income, (2) PF contribution, (3) addition on account of unaccounted sales, (4) unexplained cash deposits and (5) addition of share capital introduced, have been examined and explained and thoroughly enquired by the AO, as the assessee had replied to AO's request to furnish information to the queries in his letter at page 110 of the Paper Book. Hence, it was argued that it is mere change of opinion on th....