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2019 (3) TMI 1202 - AT - Income TaxAddition towards income from Pisiculture - AO estimated the water spread area at 90% of the water spread area - assessee has taken 124 acres of agricultural land on lease and cultivated the fish ponds - AO did not accept the submission of the assessee and the guidelines of the CBDT to consider 70% of water spread area for estimation of income - HELD THAT - The assessee has taken 124 acres of land on lease for Pisciculture. The CBDT after considering the facts of the case held that 70% of the water spread area is reasonable. Therefore, we hold that for the purpose of estimation of income, considering 70% of the water spread area of 124 acres is reasonable and in consonance with the instructions issued by the CBDT. Except the letter given by the assessee to the bank, there was no other evidence brought on record by the AO by making physical inspection or any other evidence from the revenue authorities. This view is also supported by the order of this Tribunal in Krishna Fisheries supra. Therefore, we consider 70% of water spread area is reasonable. Estimation of income - HELD THAT - The decision relied upon by the assessee is distinguishable on facts and cannot be applied in the assessee s case. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. Hence, we direct the AO to estimate the income at ₹ 15,000/- per acre on 70% of the water spread area. The assessee s appeal on this ground is allowed partly. Unexplained cash deposits in the bank - assessee has taken the gold loan for carrying agricultural opearations and the gold loan was utilized for the said purpose - sale proceeds of the crops grown in the paddy field were said to have been deposited in the Bank account for repayment of the Bank loan, therefore, argued that the source stands explained, hence no addition is required to be made - HELD THAT - The assessee has not produced any bills and vouchers with regard to the agricultural operations and the expenditure incurred. The assessee also did not give break-up of expenses incurred for cultivating the 10 acres of agricultural land. The assessee neither furnished the break-up of expenses nor produced the bills and vouchers. The assessee also did not furnish the date of taking the gold loan. As per the bank account copy placed before us, the account was opened on 01.12.2012 by the time the entire agricultural operations of Rabi crop would be completed except the tilling activities. Therefore, the explanation of the assessee that the gold loan was utilized for the purpose of agricultural operations was also not supported by any evidence. In any case, for cultivation of 10 acres of agricultural land, the expenditure of ₹ 14.17 lakhs is exorbitant and unbelievable. The assessee submitted that he had sold the agricultural produce and the deposits were made out of sale of paddy. The assessee neither furnished the names of rice millers nor furnished the details of amounts received from various rice millers towards sale of paddy. - Decided against assessee Source of gold loan taken by the assessee which was available as a source for cash deposits - HELD THAT - The assessee has not furnished the actual date of taking the gold loan. The assessee also did not furnish the purpose of application of gold loan. The assessee being a business man, having fish ponds and liquor business, operating regular bank accounts and it is unbelievable to accept the contentions that cash was available intact. Therefore, it is beyond doubt that the assessee has applied the bank loan for the purpose which was not explained and the same cannot be taken as a source for deposits made in the bank account. Accordingly, on this count also, the assessee fails. Addition towards unexplained cash deficit - assessee explained that there was sufficient cash balance out of agricultural operations and AO did not convince with the explanation offered by the assessee - HELD THAT - In the instant case, the AO estimated the income from pisciculture as well as from sale of liquor after rejecting the books of accounts. The AO also made the unaccounted cash deposit as per books of accounts. Once, the AO rejects the books of accounts and estimate the income, the AO is not permitted to revisit the same books of accounts and bring the cash deficit as income in the hands of the assessee unless there are unexplained investments. Therefore, we set aside the orders of the lower authorities and delete the addition made by the AO. The appeal of the assessee on this ground is allowed.
Issues Involved:
1. Addition towards income from Pisciculture. 2. Addition towards unexplained cash deposits in the bank. 3. Addition towards unexplained cash deficit. Issue 1: Addition towards income from Pisciculture The Assessing Officer (AO) found that the assessee had taken 124 acres of agricultural land on lease for fish pond cultivation and declared to the bank that 90% of the water spread area was used, contrary to the 70% claimed during assessment. The AO estimated the income at ?15,000 per acre on 90% of the water spread area, based on comparable cases. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition. The Tribunal noted that the AO did not conduct a physical inspection to verify the water spread area and relied solely on the bank declaration. The CBDT guidelines recommend considering 70% of the water spread area. The Tribunal decided that 70% of the water spread area should be used for income estimation. Regarding the income estimation rate, the Tribunal found that ?15,000 per acre was reasonable, given the comparable cases and previous Tribunal decisions. Thus, the Tribunal directed the AO to estimate the income at ?15,000 per acre on 70% of the water spread area, partially allowing the assessee's appeal. Issue 2: Addition towards unexplained cash deposits in the bank The AO added ?14,17,500 as unexplained income due to cash deposits in the assessee's HDFC Bank account, which the assessee claimed were from agricultural income. The CIT(A) upheld this addition, noting that the net agricultural income declared was only ?2,00,000, and no evidence was provided to support higher gross receipts or agricultural activity. During the appeal, the assessee argued that the deposits were from the sale of paddy cultivated on 10 acres of land, funded by a gold loan. However, the Tribunal found that the assessee failed to provide evidence of agricultural operations, expenses, or the sale of paddy. The Tribunal also noted that the claimed expenditure of ?14.17 lakhs for 10 acres was excessive and unsupported. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing the appeal on this ground. Issue 3: Addition towards unexplained cash deficit The AO found a cash deficit of ?10,38,064 in the assessee's books and added this amount as unexplained income. The CIT(A) upheld this addition but acknowledged an arithmetical error of ?4,97,873 and directed the AO to correct it. The Tribunal observed that the AO had already rejected the books of accounts and estimated income from pisciculture and liquor sales. Therefore, revisiting the same books to identify cash deficits was not permissible. The Tribunal set aside the lower authorities' orders and deleted the addition, allowing the appeal on this ground. Conclusion The Tribunal's decision resulted in a partial allowance of the assessee's appeal, directing the AO to estimate income from pisciculture at ?15,000 per acre on 70% of the water spread area, upholding the addition of unexplained cash deposits, and deleting the addition for unexplained cash deficit. The order was pronounced on 22nd March 2019.
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