AI Drafter 
TaxTMI 
TaxTMI 
2018 (1) TMI 1426
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....ile the Appellant cultivated "Banana and Ginger" which are Commercial crops. 3. The learned Respondent Assessing Officer has erred in law by rejecting the agricultural income to the extent of Rs. 29,32,653/-, on the ground that the sale consideration of the property was Rs. 27,00,000/-, since the land yield Agricultural receipts to the tune of Rs. 29,00,000/- cannot be imagined to be sold for Rs. 27,00,000/- by the seller. But the Assessing Officer failed to appreciate the fact that the seller is an ordinary agriculturist growing historical crops without employing much capital into the cultivation. Whereas the Appellant employed sizable amount of capital into the cultivation and grown commercial crops like banana and Ginger which are of high value crops. The yield derived from the developed land with the hightech agriculture applying professional way of cultivation cannot be compared with the consideration paid to a land which was not properly looked after. Thus the comparison is the mismatch. 4. The learned Respondent Assessing Officer has erred in the law by rejecting agricultural income based on the departmental enquiry reports, as the said report was not forth....
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.... AO the assessee furnished RTCs in support of holding of agricultural lands by him at Madhihalli Hobli, Konayakanahalli. However, as per the RTC it was seen that the lands were transferred to the assessee during the financial year 2014-15. The RTCs declared crops grown in the said lands as Ragi and Jowar. 6. The AO conducted certain enquiries in order to verify the authenticity of the claim with regard to cultivation carried out by the assessee. Local enquiries were made and spot inspection was done by the Inspector on 27.07.2016 and 28.12.2016. It was reported by the Income-tax Inspector that not much of cultivation was there in the said lands in earlier years and only Jowar was grown during the year. Thus, the AO found that the RTCs and the Inspector's report complimented each other. The AO also doubted the claim that by purchasing lands for Rs. 27 lakhs the appellant can have agricultural produce worth more than Rs. 29 lakhs in one year. 7. On the basis of the above findings the AO concluded that the claim of the assessee with regard to the receipt of agricultural income amounting to Rs. 29,32,653/- was false. Accordingly, he treated this as income from other sources. ....
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....agi and Jowar whereas, on the other hand, the appellant claimed growing ginger and paddy. Whatever may be the case, ginger and paddy cannot bring the appellant a whopping amount of more than 29 lakhs of rupees. iii. All the transactions claimed by the appellant are in cash. So the same cannot be verified beyond reasonable doubt." 11. In view of the facts of the case and the findings of the AO, the CIT(Appeals) concluded that the AO is justified in treating the amount of Rs. 29,32,653/- as income from other source and not from agriculture and hence upheld the addition of Rs. 29,32,653/- . 12. Against the order of CIT(Appeals), the assessee is in appeal before me. 13. The ld. AR submitted that the assessee entered into agreement to purchase the agricultural landed property measuring 26 acres 9 guntas at Madhihalli Hobli, Konayakanahalli Village, Madihalli Hobli, Belur Taluk, Hassan District on 17.01.2013 for a consideration of Rs. 27 lakhs. Out of this, the assessee has paid Rs. 15 lakhs on entering into sale agreement, balance amount of Rs. 12 lakhs was paid at the time of registration. The sale deed was entered into between the assessee and seller on 24.04.2014. I....
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....nts like expenses bills, indent copies, etc., copy of letter placed at page 51 of PB. 14. He further submitted that product noted in the RTC that Ragi & Jowar is the historic record that was being cultivated much earlier. The said certificate was issued without verifying the latest position modifying the record. Since the revenue record was not updated from time to time, it cannot be considered as conclusive evidence. According to the ld. AR, after taking possession of land, he changed cultivation of the crop which was not updated by the revenue authorities. 15. The ld. AR submitted that according to the revenue, enquiries were carried out. Local enquiry and spot inspection was conducted through the Income Tax Officer ward-2 Masan, on 27th and 28th December 2016, to verify the authenticity of cultivation carried during the year 2013-14. As per the said enquiry, it appears, it is reported that there was no much cultivation in the said lands in the earlier years and presently only, jowar is grown. No other details of the report are found in the impugned order. 16. He submitted that the assessee was totally unaware of the enquiry or inspection conducted by the ITO at the back....
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....t of sale dated 17-1-2013 between Sri Nived M Prasanna and Mr. Anil C Gowda for transfer of agricultural lands at Konayakanahalli village, Hassan District, it is stated that the assessee has paid advance of Rs. 15 lakhs and the balance of Rs. 12 lakhs to be paid before the registering authority. However, on perusal of the sale deed dated 24-4-2014 it is noticed that the purchaser i.e., assessee has purchased the property by paying sum of Rs. 27 lakhs on the date of registration, relevant extract from the sale deed is as under: " Whereas the purchaser has offered to purchase the properties for consideration Rs. 27 lakhs which is the presets mantel and reasonable fair value and the vendor has accepted the afar and agreed to sell it at the said consideration. Now this deed witnesseth that in pursuance of the same a sum of Rs. 27 lakhs paid to vendor by the purchaser in cash before undersigned witness the vendor here acknowledges receiving said amount." 18.1.2 Though the assessee states that the agreement is entered into on 17-1-2-13 and advance of Rs. 15 lakhs paid and the balance of Rs. 12 lakhs to be paid before the registering authority, the registered de....
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.... 18.3.1 During the course of proceedings, the assessee furnished RTCs in support of holding of agricultural lands by him at Madhihalli Hobli, Konayakanahalli. When a query was raised that as per the RTCs the lands were transferred to the assessee during 2014-15, the assessee claims that the data of sale deed mentioned in the RM are not conclusive document to prove since the possession of the property was given to the assessee much before the sale deed and that the assessee had started cultivation during FY 2013-14. Further with regard to the crops grown were ragi and jowar as per the RTCs. The assessee claims that the Revenue authorities have not verified the latest position and modified the crop details which were cultivated by him viz., Banana and Ginger. 18.3.2 If the assessee claims that the RTCs cannot be relied upon for the date of transfer of lands to the transferee and the crops mentioned in the RTCs to be not the actual crop grown in the said lands by the assessee, then why is such a document relied upon by the assessee to prove that the lands are held by him. (iv) Quantum of agricultural income declared and the quantum of sale consideration paid. ....
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....agreement is an afterthought and fabricated one. 20. I have heard both the parties and perused the material on record. The AO decided the issue against the assessee on the primary reason that possession of agricultural land was not at all handed over to assessee on entering into agreement of sale on 17.01.2013. He was of the opinion that possession of agricultural land was handed to assessee on 24.04.2014. According to the AO, since the agricultural land was handed over only on 24.04.2014 for the assessment year under consideration, the assessee could not have earned agricultural income for the FY 2013-14 relevant to AY 2014-15. However, the assessee filed books of account before the AO vide letter dated 07.11.2016, but there is no finding given by the AO regarding the correctness of books of account produced by the assessee. He relied only on the RTC issued by Village Accountant. 21. Further, the assessee filed affidavit dated 27.11.2016 wherein it is confirmed that handing over of possession of agricultural property to assessee as per clause (7) of the said agreement. This affidavit was filed by the assessee before the CIT(Appeals). But neither the CIT(Appeals) nor the AO v....
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....rfuge or a dubious or a colourable device adopted. In such a case, the AO will be merely removing the façade to expose the real intention of the parties cleverly cloaked and if that intention is discovered to be the evasion of taxes, it cannot be given the effect to, merely because all the steps taken as component parts of the arrangement are legally correct or valid. The right of the parties to enter into the transaction according to their free will or choice has always been protected, the only rider being that both the professed intention and the real intention should be the same. The income-tax authorities have without exception been denied the right to vary the terms of the contract between the parties merely because the agreed terms are not to their liking in the sense that they do not add to the statistics of collection of taxes. Thus, all commercial arrangements and documents or transactions have to be given effect to even though they result in a deduction of the tax liability, provided that they are genuine, bona fide and not colourable transactions. 24. In the present case, the assessee produces the agreement to sell wherein there is a clause of handing over poss....