TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1097
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....he Assessment Unit and answered by the appellant. II. The order of the Ld.Principal Commissioner of Income tax, Madurai-1 is opposed to the facts of the appellant's case and the law applicable to such facts. III. The Ld.Pr.CIT failed to note that the coffee beans after harvesting were not subjected to processes like curing roasting and grinding and accordingly sub-rule (1) or (1A) of Rule 7B of the Income tax Rules, 1962 does not apply to the appellant's case. IV. The Ld.Pr CIT failed to note that letters from the buyers evidencing sale of uncured coffee beans were provided and accordingly Rule 7B of the IT Rules, 1962 has not application. V. The Pr CIT erred in not taking into account the Explanation below Rule 7B of the IT Rules, 1962 and the definition of the term 'curing' as assigned in sec. 3(d) of the Coffee Act, 1942 (7 of 1942). VI. The Ld.Pr CIT failed to note that the assessment Unit, NFAC, Delhi issued a long questionnaire with as many as 15 queries all relating to 'agricultural income', considered the appellant's reply to all the points and thereafter passed the scrutiny assessment order under section 143(3) accepting the income retuned including agricultural ....
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.... and coffee picked dried and sold as raw coffee. Even though part of the agricultural income is from sale of coffee, you have not admitted any Business Income. It may be pointed out that it is not possible for the estates to sell raw coffee without curing / processing. As per the TNAU",. OF Tamil Nadu As per the TNAU AGRITECH PORTAL University Agricultural (https://agritech.tnau.ac.in/postharvest/pht_plantationcrop_coffee.html) the curing process prepares the coffee beans for market. Most of the bills produced for sale of agricultural produce show sale of coffee. The descriptions found in some of the bills such as 'robusta parchment, robusta cherry. As per rule 7B of Income Tax Rules, 1962, 25% of the income derived from the sale of coffee grown and cured, has to be deemed as business income and in the case of sale of coffee grown, cured and roasted and grounded, 40% of the income has to be deemed as business income. iii. During the scrutiny proceeding, the above aspects were not examined by the Assessing Officer. Without proper enquiry and non-application of mind, the Assessing Officer completed the assessment u/s 143(3) r.w.s. 144B of the Act, 1961 without considering the facts....
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....Rule 7B raised by the AO. Thus, during the assessment proceedings, the AO has not enquired into applicability of Rule 7B, i.e. whether before selling coffee beans, the assessee has done only pulping/drying and has not done any processes involved in 'curing' (other than pulping) mechanically and without such enquiry, he has accepted the claim of agricultural income which include income from coffee. Thus, the Assessing Officer has not conducted proper inquiry and verification with regard to the issue whether the assessee has done any mechanical processes other than pulping or the assessee has done pulping alone. 5.6 In para 3 and para 5 of his reply dated 14.01.2025, the assessee has stated ver subjected to the process of curing by him before being sold and that the coffee beans after pulping and drying were sold as such to the curer. In support of this claim, he has enclosed a letter dated Nil issued by Namazco International Trades and Exports in which it is stated that raw and uncured coffee was purchased by it from C.T.Ramanathan (assessee) for Rs. 5,49,375/- vide invoice no 276 dated 23.05.2019. On 04.02.2025, the AR also filed such confirmation letter issued by M/s.Jee....
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....the record of the order of the PCIT and submissions of the assessee. 8. The questionnaire/ Annexure to notice u/s 142(1) dated 05.11.2021 vide DIN ITBA/AST/F/142(1)/2021-22/1036740938(1) is as under: ANNEXURE ".....Kindly provide the following details: 1. Provide the details of Nature and type of Agricultural income along with details of processes undertaken. 2. Provide the details of Measurement of Agricultural land in acre. 3. Details of Whether Agricultural land is owned or held on lease. 4. Details of whether Agricultural land is irrigated or rain fed. 5. Provide the details of Name of district along with PIN code in which Agricultural land is situated 6. Copy of Khatauni (crop record maintained by State Govt) 7. Doumentary evidences with regard mode of sale of Agricultural proceeds along with copy of contracts, if any. 8. Documentary evidences with regard to following Expenses :- - Seed - Fertilizer -Pesticides Koshmaali Daan INCOME TAX DEPARTMENT - Labour Charges - Water Bill - Electricity Bill - Processing cost Depreciation on fixed assets - Land cess - Other Taxes - Interest on working capital 9. Provide the details of In case....
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....strict. Karnataka State. (6). Copy of Khatauni (crop record maintained by State Govt.) - Copies of crop record (5 sheets) issued by RTC Agriculture Committee, Govt, of Karnataka is enclosed. Also a copy of the Certificate of Registration of a Registered Owner as per the Coffee Market Expansion Act, 1942 issued in the year 1978 is enclosed. (7). Documentary evidence with regard to mode of sale of Agricultural proceeds along with copy of contracts, if any :- Dried raw coffee beans and pepper are sold to different dealers and payment directly sent to bank account by NEFT/RTGS/Bank Transaction. Copies of the following bills are sent herewith :-- S. No. Name of trader. Bill date. Bill amount (Rs.) 1 Na Mazco Trades & Exports. 02-05-2019. 7,32,500. 2 Jeelani Coffee Curers. 04-05-2019. 4,94,125. 3 -do- -do- 1,52,955. 4 Spices Ind. 07-05-2019. 3,35,838. 5 Na Mazco Trades & Exports. 23-05-2019. 5,49,375. 6 Jeelani Coffee Curers. 30-05-2019. 79,000 7 -do- -do- 63,200. 8 -do- 25-06-2019. 3,09,400. 9 -do- -do- 4,71,835. 10 ECOM GILI. Coffee Trading P. Ltd. 22-07-2019. 2,62,878. 11 Swamy Traders. 27-07-2019. 1,75,000. 12 -do- 30-07-2019. 1....
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....ross. 5426518. Less: Expenses. 980734. Rs. 44,45,784. Aggregated Income. Rs. 49,63,500. It would be appropriate to state that, as already mentioned in the answers to Query Nos. I and 7 above, the raw coffee beans, after drying, are sold as such i.e. without "curing" and, therefore, the provisions of sub-Rules (1) and (IA) of Rule 7B(1) of the Income tax Rules, 1962 are not applicable. Accordingly, the entire sale proceeds of raw coffee beans as reduced by expenses is admitted as 'agricultural income'. (13). Details of Kisaan Credi card, if any :- None. (14). Copy of Cash flow statement. if any :- Not applicable. (15). Copy of all bank statements :- S. No. Bank Name A/c. No. 1 ALLAHABAD BANK 50004722180 INOPERATIVE 2 CANARA BANK 0688101015785 ENCLOSED 3 CENTRAL BANK OF INDIA 3700505380 ENCLOSED 1 ICICI BANK LIMITED 048701500659 INOPERATIVE 5 ICICI BANK LIMITED 607901004253 ENCLOSED 6 ICICI BANK LIMITED 602501139081 ENCLOSED 7 ICICI BANK LIMITED 602501133403 ENCLOSED 8 ICICI BANK LIMITED 607901006499 ENCLOSED 9 INDIAN BANK 538662656 ENCLOSED 10 INDIAN OVERSEAS BANK 030601000028645 ENCLOSED 11 INDIAN....
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.... INCOME TAX DEPARTMENT - Labour Charges - Water Bill - Electricity Bill - Processing cost Depreciation on fixed assets - Land cess - Other Taxes - Interest on working capital 9. Provide the details of In case of land held on lease, the amount and documentary evidence of lease rent paid, if any. 10. Details of In case Agricultural income is declared first time then Date & source of investment in land, if any 11. Details of sale of immovable property during the year, if any. 12. Copy of Nature & details of Total Income, if any. 13. Details of Kisaan Credit card, if any 14. Copy of Cash flow statement, if any 15. Copy of all bank statements along with annexures Further, we also find that assessee categorically explained the controversy in the light of the Rule 7B(1) as under: "It would be appropriate to state that, as already mentioned in the answers to query Nos.1 and 7 above, the raw coffee beans, after drying, are sold as such i.e; without "curing" and, therefore, the provisions of sub-Rules (1) and (1A) of Rule 7B(1) of the Income Tax Rules, 1962 are not applicable. Accordingly, the entire sale proceeds of raw coffee beans as reduced by expenses ....
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.... of the Hon'ble Delhi High Court dated 01.03.2024 passed in ITA No.1428/2018 in the case of Pr. Commissioner of Income Tax -2, Delhi Vs M/s Clix Finance India Pvt. Ltd. which after considering section 263 of the Act and various settled judgments of the Hon'ble Supreme Court and Hon'ble High Courts held as under: "15. We have heard the learned counsel appearing on behalf of the parties and perused the record. 16. Vide order dated 06.11.2019, this Court framed the following question of law:- A. Whether, in the facts and circumstances of the case, the Hon'ble ITAT was justified in quashing the order under Section 263 of the Income Tax Act? 17. The brief controversy involved in the present appeal pertains to the invocation of revisional jurisdiction under Section 263 of the Act by the CIT to set aside the original assessment order dated 30.03.2005. 18. Before adverting to the merits of the case, it is apposite to refer to the power of the revisional authority of the CIT envisaged as per Section 263 of the Act. For the sake of clarity, the relevant extract of Section 263 of the Act is reproduced as under: ''263. Revision of orders prejudicial to revenue (1) The [Principal Ch....
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....quiry or verification which should have been made, the same would bestow a revisional power upon the Commissioner. However, the said Clause or any other condition laid down in Explanation 2 does not warrant recording of the said enquiry or verification in its entirety in the assessment order. 21. Admittedly, in the instant case, the questionnaire dated 02.11.2004, which has been annexed and brought on record in the present appeal, would manifest that the AO had asked for the allowability of the claims with respect to the issues in question. Consequently, the respondent-assessee duly furnished explanations thereof vide replies dated 09.12.2004, 20.12.2004 and 06.01.2005. Thus, it is not a case where no enquiry whatsoever has been conducted by the AO with respect to the claims under consideration. However, this leads us to an ancillary question? whether the mandate of law for invoking the powers under Section 263 of the Act includes the cases where either an adequate enquiry has not been made and the same has not been recorded in the order of assessment or the said authority is circumscribed to only consider the cases where no enquiry has been conducted at all. 22. Reliance can b....
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....om the record of assessment that AO has applied its mind, the proceedings under Section 263 of the Act would fall in the category of Commissioner having a different opinion. Paragraph 8 of the said decision reads as under:- 8. In view of the above discussion, it is apparent that the Tribunal arrived at a conclusive finding that, though the assessment order does not patently indicate that the issue in question had been considered by the Assessing Officer, the record showed that the Assessing Officer had applied his mind. Once such application of mind is discernible from the record, the proceedings under section 263 would fall into the area of the Commissioner having a different opinion. We are of the view that the findings of facts arrived at by the Tribunal do not warrant interference of this court. That being the position, the present case would not be one of "lack of inquiry" and, even if the inquiry was termed inadequate, following the decision in Sunbeam Auto Ltd. (2011) 332 ITR 167 (Delhi) (page 180) : "that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter." No substanti....
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....y loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. (See 'Rampyari Devi Saraogiv CIT[(1968) 67 ITR 84(SC)] and in ''Tara Devi Aggarwal v.CIT[(1973) 3 SCC 482:1973 SCC (Tax) 318:(1973) 88 ITR 323].) [Emphasis supplied] 26. Recently, the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P) Ltd. [2023 SCC OnLine SC 371], while relying upon Malabar Industrial Co. Ltd., has discussed the sanctity of two-fold conditions for the purp....
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....sion was, therefore, allowed to the assessee. Hence, there is no error or prejudice to the interest of revenue. As regards second issue it was noted that interest rate swap was an actual loss and only the net loss of Rs. 114.05 lacs after setting of gain of interest rate swap was claimed as deduction. However, we find that both these issues were duly examined by the AO vide Questionnaire dated 2.11.2004 (Page 1-2 of the Paper Book) to which replies dated 9.12.2004, 20.12.2004 and 6.1.2005 (Page No. 3-39 of Paper Book-1) were furnished and, therefore, the finding of the Ld. CIT that the issues were not examined properly was not correct. Even the Ld. CIT has not pointed out the definite and specific error in the original assessment order and observed that the inquiry made by the AO was inadequate or improper without first pointing out the error in the original assessment order passed by the AO, particularly because both the aforesaid issues were duly examined at the stage of the original assessment proceedings, hence, the impugned order is beyond jurisdiction, bad in law and void-ab-initio''. 29. It is discernible from the aforenoted findings of the ITAT that both the claims were d....