TaxTMI 
TaxTMI 
2017 (2) TMI 1112
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....d in not accepting the book results for Agriculture Income of the appellant. Whereas, learned CIT[A] has adopted following methodology for estimating income from Sugarcane and Vegetable/Fruits etc: * From Sugarcane Gross receipts, 54% is deducted towards agriculture expenses and amount paid towards contractual farming [Batai]. For arriving at this conclusion, Hon CIT[A] has totally relied on the facts of the case of Badshah Bagwan, and referring the facts of Badshah Bagwan's case, the formula of 54% deduction is applied. Whereas, in the case of appellant, not a single document has been found and seized to establish and substantiate that the appellant had given his land on contractual [Batai] farming. Hence, deduction on account of estimated expenditure and contractual farming is purely on assumption and presumption, hence needs to be disapproved. It is humbly prayed that, the book results of the appellant may kindly be approved. * Non Sugarcane sales for Vegetable/Fruits etc are estimated @ 150% of notional income from Sugarcane Sale. From said Gross receipts, 50% is deducted towards agriculture expenses and amount paid towards contractual farming [Batai], under the fol....
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....without documentary evidence would be giving undue advantage to the assessee vis-a-vis law abiding assessees. 5. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) was justified in partially deleting the addition on the issue of agricultural income ignoring the fact that the share of 46% of net agricultural income to assessee in batai/ adheli system means 46% of net agricultural income to farmer also, which leaves only 8% towards agricultural expenses for all the above assessment years, which is not acceptable. 6. The appellant prays that, the order of the Ld. CIT(A) be vacated and that of the AO's order may be restored. 7. The appellant craves leave to add, alter, amend, modify any of the above grounds raised, any other grounds at the time of proceedings before the Hon'ble Tribunal which may please be granted." 5. Similar grounds have been raised by the Revenue in ITA No.467/PUN/2013, relating to assessment year 1999-2000. 6. Briefly, in the facts of the case, search and seizure action under section 132 of the Act was conducted at the residential as well as business premises of Bagwan Group on 18.05.2006. The assessee being one of t....
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....al brother had been shown at 40% to 50% of gross receipts. The assessee was show caused as to why the agricultural income should not be considered at 40% of gross receipts. The assessee pointed out that the average expenses for agricultural activities ranges between 23.07% to 36.59%. He also pointed out that regular books of account for expenses were being kept and the details of expenses could be verified. The observation of agricultural expenses at about 40% of the receipts was in connection with field size of 1-5 acres, whereas field size of agricultural lands owned by the assessee was big i.e. ranging between 25-60 acres. The assessee also pointed out that multiple and sub-crops were regularly taken and hence, the yield ratio was high. The assessee also claimed that its irrigation facility was unique and also huge water storage capacities were created on field for constant water supply and hence, extraordinary results of output. The Assessing Officer however, did not accept the contention of assessee, where the assessee himself had agreed that in normal course the agricultural expenses for crop were atleast 40%. The Assessing Officer thus, re-computed net sugarcane receipts in ....
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....amongst other reasons establishes that the assessee had inflated his agricultural income from non-sugarcane crops as per his convenience. The assessee again was asked to furnish the details crop-wise area under cultivation which the assessee had failed to furnish and in the absence of the same, since the assessee was having agricultural income from vegetables, the same was estimated at Rs. 6,000/- per acre and rejecting the contention of assessee of paying 50% of the agricultural receipts to the farmers, the agricultural income of the assessee was worked out under para 20 of the assessment order at pages 12 and 13 of the assessment order. The Assessing Officer thus, computed the agricultural income in the hands of assessee in each of the years and worked out the excess agricultural income shown by the assessee year-wise. The Assessing Officer also noted that the capital of assessee as shown in the balance sheet was inclusive of agricultural income and where the assessee had inflated the agricultural income, then in turn, the assets shown through balance sheet to that extent became unexplained and addition of the said amount was made to the taxable income of the assessee. The Assess....
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....espect of agricultural income, it was a fact that there was no details of inputs for conducting agricultural activity and there were no details of daily expenses incurred on agricultural activity in the form of labour, power, water or of seeds and fertilizers etc. Further areawise land cultivation details were not available, sales of vegetables were all in cash and the sale bills were not serially numbered and were sometimes without dates etc. The CIT(A) was of the view that in the above said circumstances there were not sufficient reasons to estimate the agricultural income in the manner that the Assessing Officer has done. However, in the absence of reliable data maintained by the assessee the income has to be estimated in the hands of the assessee. The CIT(A) considered the land holdings of the assessee group and observed that the land holding had increased more than 3 fold during the period 1999-2000 to 2005-06. Further, the entire land holding had increased in rural agricultural areas. The CIT(A) thus inferred that the agricultural activity had been adopted by the assessee and family members as prime earning activity of the group. Another point noted by the CIT(A) as per Table....
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....by persons including Shri Harunbhai Abdulgani Bagwan, Shri Zakhir Hussein, Abdulhaq Abdulhameed Bagwan and Shri Namdeo Buva as per the CIT(A) appears to be in order. Therefore, the books of account maintained were held to be unreliable and inaccurate. Further the income was estimated in the hands of the assessee by applying ratio as in the case of assessee's brother Shri Badshah A. Bagwan and the average agricultural income per acre was computed as per Table No.2 at page 25 of the appellate order. The CIT(A) accordingly estimated the yield of sugarcane per acre and also the total acreage was determined. The CIT(A) also determined total acreage under the vegetables and flowers and rejecting the claim of the assessee and did not accept the Assessing Officer's view that under the batai system, gross produce is divided between the owner of the land and the tenant. The CIT(A) acknowledged that in respect of gross income from sugarcane cultivation there was no dispute as the same was obtained from sugar mills. However, the methodology of allocation of expenses as held in Shri Badshah Bagwan's case was adopted in the instant case also in respect of the income from vegetables and fruits et....
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....w percentage of expenditure. He further pointed out that where continuous water supply was available to the farm of the assessee from Panchganga river with separate pipeline and higher water storage capacities were created for constant water supply to fields, resulted in giving extraordinary profits which merits to be accepted. The assessee claims that it was maintaining proper books of account in respect of the expenses. The assessee pointed out that there was no merit in the orders of the authorities below in making the estimation wherein the Assessing Officer had estimated yield @ Rs. 6,000/- per acre wherein the CIT(A) had increased the yield per acre to Rs. 25,605/-. 15. The Ld. Authorised Representative for the assessee pointed out that in the agricultural operations carried out by the assessee the yield could not be constant because it depends on various factors, i.e. water supply, weather, nature of seeds etc. Our attention was drawn to the tabulated details filed in this regard and it was pointed out by the assessee that where the assessee has been showing the results which vary from year to year, the same should be accepted. The Ld. Authorised Representative for the asse....
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....Officer in the claim of the assessee and the documentation maintained by the assessee but he fairly agreed that the reasonable estimate merits to be made in the case of assessee. 19. The Ld. Authorised Representative for the assessee pointed out that the Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Vs. CIT reported in 26 ITR 775 held that even when estimation is to be made, no guess working could be applied and the estimation should be on some basis. Our attention was further drawn to the decision in the case of Sujan Singh Bundela Vs. ACIT reported in 3 SOT 0491 and the decision in the case of Late S.M. Bashir Vs. ITO reported in 13 TTJ 0236 wherein Assessing Officer estimated the income in the hands of the assessee. 20. The Ld. Authorised Representative for the assessee pointed out that the estimation made by the Assessing Officer was purely on guess work and the same could not have been applied. He also referred to the copy of 7/12 extracts filed wherein a noting was made as to Bhaggi palla, i.e.vegetables. He stressed that when there is large land holding, then many a times the revenue authorities make general reference but do not mention the crop particularly....
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....he claim of the assessee that it would yield higher results. In such circumstances the yield from such big farms would be more than the yield of an ordinary farmer who operates on a smaller field. The CIT(A) had acknowledged that the assessee's family is known in the area to be engaged in the cultivation of vegetables and fruits and where the assessee is undertaking such activity on a large piece of land and where the assessee is aggregating the agricultural land from year to year. Until and unless the said activity was giving good returns or yields the assessee would not continuously be engaged in such operation. Accordingly, the estimation made by the Assessing Officer by adopting the yield @ Rs. 6,000/- per acre is definitely on the lower side. The Assessing Officer had rejected the claim of the assessee as no organized sales activity was undertaken by the assessee. The assessee claimed that it was selling the agricultural produce in cash to various persons and it was not selling through Agriculture Produce Market Committee or any brokers. It is not relevant and not necessary for a farmer to compulsorily sell his produce through the broker or the marketing committee especially i....
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....s at Rs. 1,60,743/- and declared the net agricultural income at Rs. 5,20,315/-. The Assessing Officer had estimated the agricultural income at Rs. 49,777/- and the CIT(A) had estimated the same at Rs. 2,30,445/-. No proper basis has been adopted by either of the authorities to work out the agricultural yield in the hands of the assessee and work out the income thereafter. The case of the assessee is twofold that not only it has higher yield because of various factors but also the expenses on agricultural activities were controlled because of collective agricultural operations carried by it. We find merit in the plea of the assessee in this regard. However, in the absence of complete data being maintained by the assessee it is a fit case for estimating the income in the hands of the assessee. 23. Before working out the estimation in the hands of the assessee one more aspect which is to be kept in mind is the inference drawn by the Assessing Officer on the basis of certain statements recorded during the course of search and thereafter. Since the income has been estimated in the hands of the assessee no relevance is to be attached to the said statements. One of the person Shri Namdeo....
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....of the business cannot be outrightly rejected without assigning proper reason for the same but in the present case before us, the availability of books of account regularly maintained remained doubtful as the same was not found during the course of search and seizure or survey operations. The A.O nowhere has accepted any specific wording that books of accounts were found during the course of search or survey operation , hence existence of the same always remained in doubt. Under these circumstances, the only option left with the authorities below was to examine the possibility of acceptance of the claimed agriculture income by the assessee on estimate basis keeping in mind the area of land held by the assessee and agricultural activities, shown by the assessee thereon supported with evidence. The A.O noted that there was substantial cash deposits in the account of the assessee which were stated to be out of agricultural income. From the details furnished of agricultural income, it was seen that while part of agricultural produce was properly billed, some of vegetables and fruits were shown to have been sold in cash, these sales were not supported by third party evidence. Other sale....
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....getable, the ld CIT(A) has observed that compared to the land holding the sale of vegetables at Rs. 15 lakhs over the period of 7 years cannot be said to be an unlikely sum especially when the assessee is primarily an agricultural farm which has been set up for the agricultural activities. He has further noted that the A.O has added the entire amount shown as cash sales as income of the assessee from undisclosed income without appreciating that if this income is removed from the agricultural receipt, a peculiar situation emerges in which in almost all the years, the income is lower than the total expenditure debited to the books resulting in loss from agricultural activities, which is unusual to say. He has also noted that the production of fruits is within the standards published by Indian Government bodies. He has also noted that yield of fruits and vegetables per unit area was compared with the standards evolved by the National Housing Bank for the purpose of agricultural credit. He noted that except in the case of banana the standards of yield followed by NHB are much higher than the actual yield obtained by the assessee. He has noted further that in case of banana also while a....
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....e of the view, that it is a fit case to estimate the income from these activities of the assessees as holding of land of 74.32 acres by the assessee has not been denied nor this fact has been denied that the assessee is primarily an agriculture farm which has been set up for the business of agriculture. We are of the view that under the circumstances of the case, it would be reasonable to estimate the claimed income from fruits and vegetables by accepting the claim of the assessee in this regard upto the 80 % of the standard yield reported by NHB in the case of fruits and of ICAR in case of vegetable yield. Where the assessee has already shown the yield below 80% of the standard yield reported by the above government bodies, A.O should not disturb the same and accept it. It is ordered accordingly. The ground is thus partly allowed. Dairy Income." The issue which is arising in the present case before us is on similar footing as before the Tribunal in the case of Shri Venkateshwara Agricultural Farm (supra). The assessee's land holding is large and the family members of the Bagwan group are engaged in cultivation of vegetables and flowers and in some cases in fruits on the said land....
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....assessee has claimed that it has grown vegetables on its agricultural land holding and he pleads that the said vegetables are not grown on sharing system basis. We find merit in the plea of the assessee in this regard and accordingly we hold so. 26. The second estimation of agricultural income in the hands of the assessee is on account of sugarcane wherein part of the land was under the crop of sugarcane from A.Y. 2001-02 onwards. The question arose of estimation of the said agricultural income from sugarcane produce relying on the facts of Shri Badshah Bagwan and 50% was deducted towards agricultural expenses and paid towards contractual farming. Since the facts of the present case are at variance to the facts in Shri Badshah Bagwan, we find no merit in deducting any amount towards batai expenses in respect of the estimation of income arising from sugarcane plantation. We direct the Assessing Officer to apply 80% of the rates available to the surgarcane produce as sugarcane is sold to Mills. Necessary evidence would be furnished by the assessee to establish its case. The Assessing Officer shall give reasonable opportunity of hearing to the assessee before adjudicating the issue o....
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....nvestment made by the assessee holding that the substantive additions have been confirmed in the hands of respective Pat Sanstha/ Banks is erroneous, as substantive additions were not actually confirmed in the hand of respective Patsansthas/ Banks as claimed of the said Patsanstha u/s 80P(2)(a)(i) has been allowed by the CIT(A) by which entire additions u/s 68 of the Act nullified. 8. Without prejudice to the above ground Ld. CIT(A) has erred in not exercising his plenary powers which are conterminous with that of A.O as per ratio laid down by CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225, 229 (SC). 9. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in giving relief to the assessee for A.Y 2005-06 on the issue of negative cash balance by reworking the cash flow statements ignoring the evidences in respect of investments and expenses of the assessee brought out in the assessment order? 10. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in giving relief to the assessee for A.Y. 2005-06 on the issue of suo moto declaration of Rs. 15,00,000/- which was made by the assessee to ....
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....own by the respective persons and the balance belongs to the Institute. The contention of the assessee was rejected by the Assessing Officer in view of the notings in the diary. Further the Assessing Officer observed that as the assessee had shown bogus agricultural income then the same could not have been utilized for investment in FDRs. Accordingly, addition was made of Rs. 8,28,981/- on account of unexplained investment in FDRs in Soniya Pat Sanstha. 32. Further from the perusal of the cash flow statement, the Assessing Officer noted the investments made by the assessee during the year and again gave a finding that in order to source the said investments the assessee had inflated the agricultural income. Reference was made to the seized documents and the Assessing Officer came to the conclusion that the main source of income of the assessee was from money lending business which in turn was utilized for investment in assets and benami FDRs including negative cash in hand and hence the Assessing Officer treated the said investments as unexplained, though addition was made on account of unexplained of the agricultural income declared by the assessee. 33. The CIT(A) allowed the cl....
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.... non acceptance of agricultural income and the addition on account of FDRs there is no merit in the other grounds of appeal raised and the same are dismissed. ITA Nos. 171 to 181/PUN/2013 - Arish Shoukat Bagwan - (Assessee's appeal) ITA Nos. 489 to 499/PUN/2013 - Arish Shoukat Bagwan - (Revenue's appeal) 37. The Ld. Authorised Representative for the assessee pointed out that facts and issue in bunch of appeals relating to Arish Shoukat Bagwan for all the respective years are same, i.e. estimation of agricultural income and also ground of appeal No.6 in assessment year 2005-06 where addition was made on account of FDRs and other investments, which was deleted by CIT(A) and Revenue is in appeal. However, no addition is warranted on account of FDRs as amount is added in the hands of Pat Sanstha. Further funds are available with the assessee for the respective investments and no further addition is warranted in the hands of the assessee. 38. We find that the issue raised in this bunch of appeals filed by the assessee and the revenue for assessment years 1999-2000 to 2009-10 are identical to the issues raised in Anjum Shoukat Bagwan and our decision on all the issues would apply m....
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....ts and gain of business" and hence. is ineligible for deduction u/s. 80P(2)(a)(i). 3.(i) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) was justified in allowing deduction u/s. 80P(2)(a)(i) to the assessee ignoring the decision of Hon'ble Supreme Court in the case of The Totgars Co Operative Sale Society Ltd Vs. ITO, 332 ITR 283 held that deduction u/s. 80P(2)(a)(i) as allowable only on business income (ii) It has been held by Hon'ble Gujarat High Court in the case of Fakir Mohemad Haji Hasan Vs. CIT (2001) 247 ITR 290 that income u/s. 68 of the Act is a deemed income and is not to be computed under any of the five heads of income classified in section 14 of the Act. This view has been reiterated by Hori'ble Chattisgarh High Court in the case of Dhanush General Stores Vs. CIT (2011) 339 ITR 651. 4(i) The Ld. CIT(A) erred in relying on the decision of ITAT Pune in the case of Shri. Mahaveer Nagari Sahakari Pat Sanstha ignoring the facts that the said decision is distinguishable on facts in as much as in the said case the unexplained deposits were owned were up by the depositors as undisclosed income whereas in the present case no ....