AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1222
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....nder section 143[1] on 27-09-2010. Thereafter the case was selected for scrutiny assessment, notices under section 143[2] and 142[1] were issued and various details called for and the assessee was asked to explain its exact nature of agricultural income and justification for claiming it as exempt being income derived from agricultural operations. In compliance thereof the assessee submitted that they have got agricultural land of 49.82 bighas in Kamode village, Dascroi Taluk, wherein Teak plants, Sevan trees were planted 8/10 years ago. All the basic operations necessary for the purpose of effectively pricing the produce from the land are carried out under the personal supervision of the partners. They have their own borewell facilities and essential equipment, infra structure. Necessary integrated activity which constitutes agriculture is undertaken and performed in regard to the land and agricultural produce namely the Teak trees and Sevan plants were sold and disclosed in the return of income. Thus the assessee claimed the income derived therefrom shown as 'agricultural income'. After verification of the records and a perusal of ledger account of agricultural income, copies of s....
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....e Assessing Officer vide his letter dated 25-08-2014 disposed of the objections raised by the assessee on reopening of assessment and passed detailed order upholding the reopening of assessment under section 147 is valid in law. The AO after considering the above explanations, evidences, other materials on records and satisfied that the cultivation of Teak trees and Sevan trees and claim of agricultural income by the assessee firm. Thus the AO accepted the income derived from agricultural lands and sale of Teak trees and Sevan trees, however the claim of expenditure incurred by the assessee namely Rs.5,75,975/- which comes to nearly 0.73% on the sales thus showing total gross income of Rs.7,83,72,525/- which comes to a net worthy 99.27% of total sales which was not acceptable. But the Ld. CIT [Appeals] in Assessee's own case for the assessment year 2013-14 adopted at 5% on the gross agricultural income as reasonable expenditure, the AO following the above ratio of expenditure for the present assessment year and making a disallowance of Rs.37,22,695/- as unexplained expenses under section 69C of the Act vide reassessment order dated 18-08-2017. 7. As against this the reassessment o....
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....see more particularly pages 27 to 67 which is a reply letter dated 17.10.2011 to the notice issued under section 142[1] by the assessing officer, during the original assessment proceedings wherein the assessee filed the documents namely ledger account of agricultural income, copies of 7/12 & 8A records for proof of agricultural land, copies of sales invoices, salary and bonus account, details of other source of income [there is no other source of income], details of bank accounts, utilisation of agricultural funds, etc. Thus during the original assessment proceedings all the details were produced by the assessee and the AO accepted the agricultural income shown by the assessee. When the assessment was reopened u/s.148 and in reply to the show cause notice issued u/s.142[1] dated 09.08.2017 wherein the assessee filed detailed reply with evidences before the A.O. The Ld. Senior Counsel taken as through the Paper Book at pages 115 to 178. 10.1. The assessee submitted various details on the agricultural income derived from sale of Teak trees, Sevan trees and copy of sale register, sales invoices containing terms and conditions subject to which sale transactions are executed along with....
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....of Principal Commissioner of Income-tax, Surat vs. Shreeji Prints (P.) Ltd. reported in [2021] 130 taxmann.com 294 (SC) wherein the SLP filed by the Revenue was dismissed as follows: Section 69 read with section of the Income-tax Act, 1961 - Unexplained investments (Unsecured loans) - Asst year 2013-14 - Assessee-company had received unsecured loans from two different companies - Commissioner noting that said loans were shown as investment in assessee's name in balance sheet of companies, exercised his revisionary powers and passed an order without giving an opportunity to of being heard, invoking Explanation 2 to section 263 - High court by impugned order held that since Assessing Officer has made inquires in details and accepted genuineness of loans received by such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial! to interest of revenue - Whether SLP against said impugned order to be - Held, yes [Para 2] [In favour of assessee] 10.4. Further Reliance is also placed on the jurisdictional High Court judgment in the case of Commissioner of Income Tax vs. Kamal Galani reported in [2018] 95 taxmann.com 261 (Guj.) wherein ....
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....he Assessing Officer and having satisfied after verification of records, the claim of agricultural income was accepted by the AO. Thereafter when the reopening of assessment was initiated on the ground that there is failure on the part of the assesse in disclosing true and full information to the department, again the assessee submitted details called for in support of its claim of agricultural income. The AO having satisfied the generation of income from agricultural activities, however made an addition u/s. 69A namely 5% of gross sales of the agricultural product as an expected expenditure ought to have been incurred by the assessee. Thus, the Ld. PCIT is totally without jurisdiction has invoked the present revision proceedings which is not justifiable in the eye of law. 10.6. The Ld. Senior Counsel Mr. S.N. Soparkar further submitted that the reassessment proceedings was a subject matter of appeal before the Ld. CIT(A)-3, Ahmedabad and vide his order dated 18.07.2017 has dealt with the issue of agricultural income in very detailed manner. As per Explanation 1(c) of Section 263 when a subject matter has been considered and decided by Ld. CIT(A), the same subject matter cannot be....
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....al years. The A.O. has observed that appellant has not maintained stock register or details of opening and closing stock and stand taken by the appellant that sales are of standing trees is specious cannot be accepted because A.O. has not disputed agriculture sales shown by appellant in year under consideration and even he has called for information u/s. 133(6) from buyers of such trees and such parties have duly confirmed such transactions. It is also observed that A.O. has deputed tax inspector who has given his report vide letter dated 23/03/2016 wherein he has stated that there are fields of teak plantation and his inquiry nowhere reveal that there were no standing teak trees hence such observation made by A.O. is incorrect. 5.7. It is observed that while estimating agriculture expenses @ 20%, the AO has stated that buyer of the trees have shown very low expenditure for cutting of trees and doubted the method of transpirations. It is observed that during the course of assessment proceedings appellant has submitted copy of sale bills raised by it wherein it has been clearly stated that responsibility of cutting the trees are on buyers and such facts are admitted buyers in noti....
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....n above and the dynamics involved in timber cultivation, it is held that appellant should have incurred expenditure to the extent of 5% of teak tree sale and same is worked out at Rs. 60,38,662/- and as appellant was unable to explain source of such expenditure. The same is considered to be adequate to meet ends of justice. Therefore, the addition made by A.O. is restricted to Rs. 60,38,662/- and appellant gets relief of Rs. 1,81,15,987/-. Thus, both the grounds of appeal are partly allowed. 10.8. In support the same, the ld. Senior Counsel referred to jurisdictional High Court judgment in the case of Commissioner of Income Tax -Vs.- Nirma Chemicals Works (P.) Ltd. reported in [2009] 182 taxmann.com 183 (Guj.) wherein held as follows: 17. Thus, the Commissioner of Income-tax is entitled to revise an assessment order insofar as the order is erroneous and prejudicial to the interest of the revenue, but Explanation (c) places an embargo on the Commissioner of Income-tax in case of subject matter of any appeal which has been considered and decided in such appeal. In other words, before the Commissioner of Income-tax exercises the jurisdiction under section 263 of the Act, the Commis....
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....ficer, his initial order, the order of the first appellate authority, the direction issued by the first appellate authority and which was given effect to by the Assessing Officer. All these would denote that something which was very much part and parcel of the appellate authority's order and dealt with extensively therein is now sought to be revised and revisited. Firstly, if the income of the Assessee from the film is Rs.11,25,00,000/-, then, whether the explanation of the Assessee that it is not so deserves to be considered or not by the Assessing Officer is grievance No. 1/ground No. 1 before the first appellate authority. Secondly, if that is taken to be the income of the Assessee and without admitting it to be so the cost of production of the film needs to be deducted by applying Rule 9A of the Income Tax Rules. Thus, that is ground No. 2 in the memo of Appeal before the first appellate authority and in his order dated 12th October, 2011. Both these matters are very much part of the revisional authority's order dated 29th March, 2012. The attempt to reopen them cannot be saved as clause (c) of Explanation below sub-section (1) of section 263 of the Income Tax Act, 1961....
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....ars for cultivation of Teak trees, Sevan trees, bank statements, ledger account and the buyers of the trees and sevan trees. Further Agreement entered with Torrent Power Grid Ltd. to cut some of the Teak trees for transmission line which pass through the assessee's land. After considering the above explanation, evidences and other materials on record, the Assessing Officer satisfied that cultivation of Teak trees and Sevan trees by the assessee's firm. Thus, the assessing officer accepted the income derived on the sale of Teak trees and Sevan trees of Rs.7,83,72,835/- from the agricultural land. However, the claim of expenditure incurred by the assessee of Rs. 5,75,975/- was found to be on a very lower side and therefore adopted at 5% on the sale of agricultural income of Rs.37,22,695/= as allowable expenditure by the assessee. 12.1. Thus we are of the considered view that the Assessing Officer while framing assessment order as well as reassessment order made proper enquiries with evidences. The Assessing Officer has accepted the explanations and completed the reassessment order u/s. 143(3) rws 147 of the Act. It is not the case of the assessee that the A.O. has not conducted nece....
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....ssee and the assessee also had made detailed replies to the above notice with proper evidences and necessary records which are discussed in para 12 of this order. Thus the Assessing Officer having carried out such detailed enquiries satisfied with the explanation offered by the assessee, it is not open for the Ld. PCIT to thereafter Revise the assessment on mere apprehensions and surmises. 12.4. In the light of the above facts and legal position, we are of the considered view that the Assessing Officer had made detailed enquiries and after applying his mind and satisfied genuineness of the claim of agricultural income, which is plausible view adopted by the Assessing Officer. Therefore the Revisional proceedings initiated u/s. 263 is liable to be quashed. 12.5. Our above view is further supported by the Rulings of the Hon'ble Supreme Court and High Court judgements on this subject which would throw useful light on the scope of enquiry under Explanation 2 to Section 263 of the Act, which are as follows: (a) CIT vs. Nirav Modi [2017] 77 taxmann.com 78 (SC) Section 68, read with section 263, of the Income-tax Act, 1961- Cash credit (Gift) - Assessment Years 2007-08 and 2008-09 - ....
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.... a plot from Maharashtra Industrial Development Corporation (MIDC) - Allotment of plot was made by MIDC in February, 2006 - Assessee relinquished its right, title and interest in said plot in favour of other company - While filing return for relevant assessment year, assessee claimed that liability for payment of tax was not attracted - Assessing Officer taking a view that assessee did not carry on any business activity during relevant year or earlier years, accepted assessee's clam - Commissioner passed a revisional order setting aside assessment on ground that income earned by assessee was in nature of business income - Tribunal noted that Assessing Officer had thoroughly examined issue during course of scrutiny assessment proceedings and, had given a very categorical finding that any property whether connected with business or not other than stock-in-trade was a capital asset - Thus, Tribunal set aside revisional order passed by Commissioner - High Court upheld Tribunal's order - Whether, on facts, SLP filed against High Court's decision was to be dismissed - Held, yes [Para 2] [In favour of assessee] (d) CIT vs. Shree Gayatri Associates [2019] 106 taxmann.com 31 (S....