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2009 (9) TMI 617 - AT - Income TaxDisallowance of agricultural income - the assessee filed three lease deeds evidencing the fact that the assessee had taken agricultural lands on lease - . The AO, therefore, came to the conclusion that the sale bills produced by the assessee were prima facie fictitious - The learned counsel for the assessee, on the other hand, relied on the order of the CIT(A) and submitted that there was nothing on record before the AO to come to a conclusion that 50 per cent of the agricultural income declared by the assessee was fictitious - When the transaction is done through intermediary, the assessee, as a seller cannot be held responsible for the defect in the receipt obtained from the purchaser through intermediary - In the case of Shiv Prakash vs. CIT the Hon ble Jammu and Kashmir High Court It was held that the order of the CIT(A) does not call for any interference - The same is confirmed and these appeals of the Revenue are dismissed Interest - wherein there is no ground of appeal regarding charging of interest under ss. 234A, 234B and 234C - The request of the learned counsel for the assessee is accordingly rejected
Issues Involved:
1. Deletion of disallowance of agricultural income. 2. Allowing the assessee's appeal by overlooking material brought by the AO for treating 50% of the claim as income from undisclosed sources. 3. Charging of interest under sections 234A, 234B, and 234C of the IT Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Disallowance of Agricultural Income: The Revenue contested the CIT(A)'s decision to delete the disallowance of Rs. 3,02,475 (Rs. 2,68,224 in asst. yr. 1998-99) made by the AO out of the assessee's claim of agricultural income. The assessee had declared substantial agricultural income for the assessment years 1997-98 and 1998-99, supported by lease deeds and confirmation from landowners. The AO doubted the quantum of receipts from the sale of agricultural produce, as the receipts from Krishi Upaj Mandi Samiti, Tilda, were found to be fictitious. Despite the intermediary's confirmation of the transactions, the AO was not convinced and disallowed 50% of the agricultural income, adding it as undisclosed income. The CIT(A) found no evidence to prove the assessee's agricultural operations were false or fabricated and concluded that the sales through the intermediary could not be doubted. The Tribunal upheld the CIT(A)'s decision, noting that the AO had no substantial evidence to disbelieve the agricultural income declared by the assessee. 2. Allowing the Assessee's Appeal by Overlooking Material: The Revenue argued that the CIT(A) overlooked material brought by the AO, which suggested that 50% of the agricultural income was from undisclosed sources. The AO had relied on an Income-tax Inspector's report and other conflicting evidence to disallow part of the agricultural income. However, the CIT(A) observed that the Inspector's report was obtained without giving the assessee an opportunity for cross-examination, thus lacking evidentiary value. The Tribunal agreed with the CIT(A), emphasizing that the AO's decision was based on suspicion rather than concrete evidence. The Tribunal cited judicial precedents, including the Supreme Court's ruling in Dhakeshwari Cotton Mills Ltd. vs. CIT, which held that assessments should not be based on pure guesswork without reference to any evidence. 3. Charging of Interest under Sections 234A, 234B, and 234C: The assessee's counsel argued against the charging of interest under sections 234A, 234B, and 234C, citing the Supreme Court's decision in CIT vs. Ranchi Club Ltd. However, the Tribunal noted that the issue of interest was not raised in the appeal or cross-objection by the assessee. The Tribunal distinguished the present case from the Jodhpur Bench's decision in ITO vs. Madan Lal, where the issue of penalty was allowed to be raised without a cross-objection. The Tribunal concluded that the assessee could not raise the issue of interest by mere argument at the hearing and rejected the request. Conclusion: The Tribunal dismissed both appeals by the Revenue, upholding the CIT(A)'s order to delete the additions made by the AO and confirming the agricultural income as returned by the assessee. The Tribunal also rejected the assessee's request to challenge the charging of interest under sections 234A, 234B, and 234C, as it was not raised through proper procedural channels.
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