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2007 (12) TMI 310 - AT - Income TaxValidity of the assessment framed under section 144 - Best judgment assessment - Addition made u/s 68 on non confirmation of sundry creditors - Income from nursery activity considered as agricultural income ?. Validity of the assessment framed under section 144 - HELD THAT - In our opinion there is no merits in the submissions of the Ld. Counsel made in this regard inasmuch as the same is not supported by any material on record. Mere filing of an affidavit does not substantiate the claim of the assessee that firstly the hearing had been adjourned from 27-3-2000 to 30-3-2000 on the direction of the Assessing Officer and secondly that the Assessing Officer had directed the counsel for the assessee to file the reply at 6.05 PM though AR had reached the office at 2.30 PM. Neither the affidavit of the AR of the assessee who had purportedly been issued directions to file the reply at 6 PM on 30-3-2000 has been placed nor any reasons have been stated that for non-filing of the affidavit of the AR of the assessee. Even otherwise CIT(A) on examination of the assessment records has noted that the Assessing Officer has specifically mentioned on the said letter filed on 30-3-2000 that place on file order already passed no cognizance can be taken . Therefore evidence on record clearly suggests that the letter was filed after the order of assessment had already been made which evidence has not been rebutted by any evidence much less independent evidence. In the circumstances the decision relied upon in the case of Mehta Parikh Co. v. CIT 1956 (5) TMI 4 - SUPREME COURT are not applicable to the facts of the case of the assessee. We therefore hold that the assessment made under section 144 of the Act was justified. Addition on unexplained cash credit under section 68 - HELD THAT - Applying judicial pronouncement in the case of Electra (Jaipur) (P.) Ltd. v. IAC 1987 (12) TMI 76 - ITAT DELHI-A which are fully applicable to the facts of the assessee we hold that the CIT(A) was not justified in not admitting the confirmation from M/s. Vijay Udyog as additional evidence. The Ld. CIT(A) has held reading the aforesaid confirmation that there is a difference in the balances as per confirmation and as per the books of account of the assessee. He has noted that balance as per the confirmation was Rs. 70, 862 whereas the balance as per the books was Rs. 52, 889 and therefore the difference was Rs. 11, 962 could not be explained. The said basis is also unjustified for the mere fact that details explaining the difference in balance has been filed at page 109 of the paper book which clearly shows that this difference of Rs. 11, 972.27 was in respect of goods returned during the financial year 1995-96 for which credit was not given by M/s. Vijay Udyog. Therefore the closing balance of M/s. Vijay Udyog in the books of assessee stands fully explained and as such the addition made untenable. We therefore direct to delete the same. Income from agricultural activity - agriculture income or income from other sources - HELD THAT - The assessee s case is that she holds agriculture land in Jonapur and on the said piece of land she planted a nursery. Therefore it is the agriculture land wherein agriculture operations are being carried on seeds are being sowed in the land and other agriculture operation are being done with the help of human skill and labour. The plants after they have attained its growth and are in a salable condition are then sold to customers. Therefore income earned by this process has to be called agriculture income. Since the assessee is doing both basic as well as subsequent operation while carrying out its business activities and as such applying the ratio of the decision in the case of Raja Benoy Kumar Sahas Roy 1957 (5) TMI 6 - SUPREME COURT the business of the assessee is agriculture within the meaning of section 2(1A) of the Act. We therefore direct to treat the income as the agriculture income of the assessee. In the result the appeal filed by the assessee is partly allowed.
Issues Involved:
1. Validity of assessment framed under section 144 of the Income-tax Act. 2. Addition of Rs. 58,859 on account of unexplained cash credit under section 68 of the Act. 3. Addition of Rs. 7,05,954 claimed as income from agricultural activity and held as income from other sources by the Assessing Officer. 4. Levy of interest under sections 234A, 234B, and 234C of the Act. Issue-wise Detailed Analysis: 1. Validity of Assessment Framed Under Section 144 of the Income-tax Act: The assessee filed a return of income on 2-11-1998 declaring a total income of Rs. 67,880. The Assessing Officer issued multiple notices which remained uncomplied with. The authorized representative of the assessee appeared in response to a notice under section 143(2) but sought adjournments and failed to appear subsequently. A show-cause notice dated 15-3-2000 was issued, and a partial reply was furnished on 20-3-2000. The assessee failed to appear on 27-3-2000, and the Assessing Officer framed the assessment under section 144 on 30-3-2000, computing the income at Rs. 14,58,810. The assessee contended that a reply was filed on 30-3-2000 at 6 PM but was not considered by the Assessing Officer. The CIT(A) upheld the assessment, noting that the reply was filed after office hours and the order had already been passed. The tribunal found no merit in the assessee's submissions, as the affidavit filed did not substantiate the claims. The assessment under section 144 was justified. 2. Addition of Rs. 58,859 on Account of Unexplained Cash Credit Under Section 68 of the Act: The Assessing Officer treated Rs. 58,869 as deemed income from undisclosed sources due to the absence of confirmation from M/s. Vijay Udyog. The CIT(A) upheld the addition, noting a discrepancy in the closing balances. The tribunal held that the CIT(A) was not justified in rejecting the confirmation filed as additional evidence, as the confirmation was forwarded to the Assessing Officer for comments, who did not make any specific remarks. The tribunal directed the deletion of the addition, noting that the difference in balance was satisfactorily explained. 3. Addition of Rs. 7,05,954 Claimed as Income from Agricultural Activity: The Assessing Officer treated Rs. 7,05,954 as income from other sources, citing lack of details regarding cultivation and the location of the farm within municipal limits. The CIT(A) upheld the addition, noting the absence of evidence of agricultural income. The tribunal referred to the assessee's past assessments where similar claims were accepted, including a deletion of a similar addition by the Tribunal for assessment year 1994-95. The tribunal found that the assessee had been cultivating the land since assessment year 1993-94, and the activities were supported by evidence such as Khasra Girdawari and sale/purchase records. The tribunal held that the income was agricultural, as the land was used for agricultural purposes, and directed to treat the income of Rs. 7,05,954 as agricultural income. 4. Levy of Interest Under Sections 234A, 234B, and 234C of the Act: The levy of interest under sections 234A, 234B, and 234C of the Act was noted as consequential, and no specific discussion or decision was provided on this issue. Conclusion: The appeal filed by the assessee was partly allowed, with the tribunal justifying the assessment under section 144, deleting the addition of Rs. 58,859 under section 68, and treating Rs. 7,05,954 as agricultural income. The levy of interest under sections 234A, 234B, and 234C was noted as consequential.
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