Prashant Balasaheb Javalekar, Surat vs Department Of Income Tax

ITO, Ward-6(3) बनाम/Vs. Shri Prashant Balasaheb Javalekar Surat. B-102, GIDC Central Park Pandesara, Surat 394 210 PAN: AFJPJ 8178 G

(अपीलाथ / Appellant) ( यथ / Respondent)

राज व क ओर से/ : Shri Dinesh Singh, Sr.DR Revenue by नधा रती क ओर से/ : Shri S.B. Vaidya Assessee by सन ु वाई क तार ख/ : Date of Hearing 4th June, 2015

घोषणा क तार ख/ : Date of Pronouncement 19th June, 2015

आदे श / O R D E R

PER KUL BHARAT, JUDICIAL MEMBER : This appeal of the Revenue is

directed against the order of the Commissioner of Income-Tax (A)-IV, Surat dated 28.6.2011 for the Asstt.Year 2007-08.

2. The Revenue has raised the following grounds in the appeal:

"1. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.12,42,571/- made by the AO as per the provision of section 69C of the I.T. Act.

2. On the facts and circumstances of the case and in law, the CIT(A) ought to have upheld the order of the AO.

3. It is therefore, prayed that the order of the CIT-IV, Surat may be set aside and that of the AO restored"

ITA No.2526/Ahd/2011 3. Briefly stated facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment was framed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). By framing the assessment, the AO made addition of Rs.12,42,571/- under section 69C of the Act. Against this, the assessee filed appeal before the ld.CIT(A), who, after considering the submissions of the assessee deleted the addition and allowed the appeal of the assessee.

4. The only effective ground of the appeal of the Revenue is against deletion of addition of Rs.12,42,571/- made by the AO. The learned DR supported the assessment order and submitted that the CIT(A) was not justified in deleting the addition. He submitted that looking to the facts and the past records, it is highly improbable that the assessee could have earned agricultural income more than Rs.1,50,000/-, and therefore, the AO was justified in making addition of Rs.12,42,571/- as deemed income under section 69C of the Act. He further submitted that no proof of expenditure with regard to agriculture produce was filed and the assessee has inflated the agricultural income since no tax is required to be paid on such income. He submitted that the agreement between the assessee, and one Shri Suresh Javalkar for sharing of agriculture activities and sharing of produce was a sham agreement.

5. On the contrary, the learned counsel for the assessee supported the order of the CIT(A) and submitted that all the details and evidences were furnished before the AO, and the AO was not justified in making the addition.

6. We have considered submissions of both the parties and perused material available on record. We find that the ld.CIT(A) deleted the addition by observing as under:

-2- ITA No.2526/Ahd/2011 "5. I have gone through the facts of the case, the assessment order, submissions of the appellant as well as the decisions quoted. The appellant. has produced all possible evidences with regard to agricultural income - land holding, rent agreement, storage and sale of agricultural produce and certificate from Grampanchayat regarding cultivation. The appellant has also produced the lease holder before the A.O. and the lease holder accepted in his statement the terms of the lease agreement and the fact that dry grapes accruing to the share of the assessee was sent to Bhagvati Cold Storage as per directions. The A.O. has accepted the factum of agricultural activities and the existence of agreement for produce sharing. He has however disbelieved the quantum of produce and income based on report of Mr. Saneep Shah and investments made by the lease holder. The report of Mr. Saneep Shah was not made available to the appellant not was this report discussed during assessment proceedings. The objection of the appellant against the report being made the basis of estimation is therefore valid. The objection of the appellant against the A.O. considering gross receipts of the lease holder (Rs.3809198/-) as against net income earned by him is equally valid as the lease holder has to make expenses on agricultural activities. Further, in considering the investments of the lease holder, the A.O. has not considered value of vehicle and house owned by him for which evidences were submitted before him. In any case, making the investments of the lease holder as basis for estimate of agricultural income of the land owner is far - fetched when direct evidences are produced and not proved bogus. In view of the production of direct evidences relating to quantum of agricultural income, the action of the A.O. in treating part of the agricultural income as income from undisclosed sources u/s. 69C cannot be upheld. The addition of Rs.1242571/-treating agricultural income as income from undisclosed sources is therefore deleted."

7. The AO doubted the veracity of agreement on the ground that ratio of sharing agricultural income appeared to be unreasonable and unrealistic. As per AO, expenses incurred on agricultural operation would be even higher than the agricultural income received by the lessee. We find force into the contention of the AO. The assessee has not reflected the true picture of affairs, however, the AO has not made inquiry with regard to expenses incurred by the lessee. On the contrary, he proceeded to make addition on the basis of conjectures and surmises. After considering totality of the facts, and in view of the fact that in normal course, if the expenses are borne by the lessee, then share of agricultural

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produce remains 50% each of lessor and lessee. Therefore, we restrict the agriculture income to 50% of Rs.13,92,571/-, since the AO has not brought any material on record that the quantum of agricultural income is not possible. Hence, the addition made by the AO is restricted to Rs.6,96,285/-. Accordingly, the impugned order is hereby modified in the terms indicated hereinabove. This ground of Revenue's appeal is partly allowed.

8. The ground no.2 and 3 of the appeal are general in nature, need no separate adjudication.

9. In the result, the appeal of the Revenue is partly allowed. Order pronounced in Open Court on the date mentioned hereinabove.

Sd/- Sd/- (G.D. AGARWAL) (KUL BHARAT) VICE-PRESIDENT JUDICIAL MEMBER Copy of the order forwarded to: 1) : Appellant 2) : Respondent 3) : CIT(A) 4) : CIT concerned 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD

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