TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 273
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....caused to be made detailed enquiries with the relevant governmental authorities who confirmed that no licence was ever issued under the Goa fruit and ornamental plant nurseries (regulation) Act 1995 and no such nursery was for known to exist. 5. The Learned CIT(A) failed to appreciate the fact that the Assessing officer had also collected substantial direct and circumstantial evidence such as inadequacies in the documents, barren nature of the land, transaction between related persons, absence of registered labourers, lease rentals, low purchases of seeds and raw material, low quantum of expenses etc to reach a finding that the claim of agricultural income is a fiction. 6. The learned CIT(A) erred in not appreciating the existence of a colourable arrangement between the Assessee and her Son for the purpose of bifurcating the activity of the nursery into agricultural and business and is apparently made so as to enable her son to justify the claim of expenditure on acquisition of the plants. 7. The appellant craves leave to add, alter or amend all or any of the grounds of appeal before or at the time of the hearing 8. For these and other grounds that may be urged at the time of h....
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....was not ornamental, therefore, Assessing Officer has not allowed the exemption on agricultural income as claimed by the assessee and he has made the addition. 2.2. The matter carried to CIT(A) and CIT(A) has allowed the claim by observing as under: "7.3. In my opinion, on the basis of facts of this case, the conclusion drawn by the A.O. is ill-conceived and premature. The existence of land and Nursery is authenticated. The appellant had technical expertise available in the form of her son, Venkatesh, who is admittedly a Ph. D. in Horticulture Science. His entire business income is derived from selling of ornamental plants, which are indeed costly, and landscaping. If it was not agricultural income according to the A.O., the A.O has not made any efforts to find out the real source of her income, which he has chosen to term as deposits made from undisclosed sources. There is nothing in the statement of Mr. Venkatesh also, which even remotely indicates that plants were not grown by the appellant. The A.O. writes that the appellant is a 71 Yrs. Old retired teacher. What could be an undisclosed source for such an old lady? It is clear from the facts of this case that the A.O. has comp....
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.... made in the bank from income from undisclosed sources. 6. During the course of the Assessment Proceedings the assessee had explained and submitted the relevant details for claiming the tax exemption on agriculture income. 7. During the Assessment year, the assessee had claimed agriculture income of Rs. 24,27,770/- in addition to their other incomes. 8. Without considering the submissions made by the assessee, the AO has passed the order u/s 143(3) of the Income Tax Act"1961, dated 29.12.2011 considering net taxable income of Rs. 53,98,540/- after adding fixed deposits made in the bank of Rs. 47,85,000/-as income from undisclosed sources. 9. The assessee had appealed to CIT (A), against the order of the AO and the appeal has been decided in favour of the assessee and the additions made by the AO were deleted. In this connection we wish to make the following submissions for your kind consideration. 1. The assessee is pensioner and is engaged in Agriculture and has Nursery Farm by name M/s. handreshwar Farms at Survey No. 11, Kinaya Xetavoril Muddi, Cotombi, Quepem, Goa, spread across area of 10,150 square meters, the agriculture land belongs to Shri Mahadev Devasthan, Cotombi,....
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....fabricated. The compound had some shade nets in which no plants were seen and some plants standing therein distinctly had appearance of plants brought from somewhere and stored. No person was found inside the enclosure to attend or guard the place which had almost an abandoned appearance". B. Further, the AO has failed to recognize the scrutiny assessment order passed u/s 143(3) of the Income Tax Act"1961, of AY 2007-08 by ITO - Ward-2, Margao, Goa, and clause 4 of the order is produced below: "On visiting the nursery it was noticed that the plants in the nursery are grown in the land as well as in the pots of different sizes and all the activities like weeding, manuring, watering etc, all the agriculture operations are being carried out during the course of nursery operations." - Copy of the order enclosed - Annexure IV. C. Further, we bring on record the expert site inspection report dated 29.12.2011 carried out by Govt. Regd. Valuer Mr. C X Menezes, who is also Ex. Director of Agriculture, the relevant extract of the report is produced below: "5. Presently in the nursery, the propagation of plants of varieties such as various varieties of Durantas, Bougainvillas, Acalyphas, I....
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..... Hence the AO has erred in concluding to tax the deposit u/s 69 as "Un explained Investment" without rejecting the books of accounts. Further Section 69 is applicable to "assessee has made investments which are not recorded in the books of accounts if any maintained by him for any source of income..." In the present case, the assessee has maintained books of accounts, which are duly audited u/s 44AB of the Income Tax Act and all the fixed deposits are duly accounted and source of such investment are duly explained and accounted for. 8. Considering the above the additions made by the AO has been rightly deleted by CIT(A) in his order dated.06.11.2013. In para 7.3 of the order Hon. CIT(A) has observed that, "In my opinion, on the basis of facts of this case, the conclusion drawn by the A. 0. is ill-conceived and premature. The existence of land and Nursery is authenticated. The appellant had technical expertise available in the form of her son, Venkatesh, who is admittedly a Ph. D. in horticulture science. His entire business income is derived from selling of ornamental plants, which are indeed costly, and landscaping. if it was not agricultural income according to the A. 0., the ....
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.... Cotombi, Quepem, Goa, spread across area of 10,150 square meters. The agricultural land belongs to Shri Mahadev Devesthan, Cotombi, Quepem, Goa and has been leased to son of the assessee Shri Venkatesh Ganesh Prbhudessai from whom the assessee has obtained consent to carry out the agricultural activities on the land for more than 10 years and has been consistently filing their return of income. The books of account of the assessee has been audited by Charter Accountant u/s. 44AB of the Income Tax Act.1961 and the copy of the audit report along with the return. The assessee's son Shri. Venkatesh Ganesh Prabhudessai is proprietor of M/s. Hariyalee Nursery and he takes job works for landscaping, gardening and supply of plants from different parties in Goa. M/s. Chandeshwar Farms. M/s. Hariyalee Nursery purchases most of its plants from M/s. Chandreshwar Farms. The income of Hariayalee Nursery is taxed as business income. Considering that 90% of the sales made by M/s. Chandreshwar Farms are to M/s. Hariyalee Nursery only. We find that the assessee has not taken any licence under Goa Fruit and Ornamental Plant Nurseries (Regulation) Act, 1995 (Goa Act 13 of 1997). In the case of Assis....