2019 (7) TMI 1310 - AT - Income Tax

Assessment u/s 153A - disallowance of claim of agricultural income earned from the lands taken on lease - the assessee did not even furnish any proof of agricultural activities was being carried out at the said lease hold land - HELD THAT - When the assessee has claimed to have been carrying out agricultural activity at such a large scale, the normal corollary would be that assessee might have incurred huge expenses in the form of purchase of seed, tilling/cultivation of land, electricity bills and transportation of the agricultural produce and above all proof of sale of agricultural produce. In our considered view, the evidences so furnished by the assessee in support of his claim are not sufficient to come to a conclusion that the assessee has been carrying out any agricultural activity at the lease hold land and earning agricultural income there from. Therefore, the finding of fact as arrived at by the authorities below cannot be disturbed. This ground of the assessee s appeal is dismissed. Addition of opening cash balance - HELD THAT - It is undisputed fact that the revenue has assessed business income from transport business by applying a net profit @ 8%. Therefore, it cannot be presumed that assessee was not having opening cash balance. Considering the totality of the facts, we delete this addition. Assessment of business income from transport business by applying a net profit @ 8% - HELD THAT - We find that the A.O. has estimated the profit without comparing with similarly situated persons. We find that the Tribunal in one of the cases has taken a view of net receipt @ 5.5%. We therefore taking a consistent view direct the A.O. to adopt the net profit @ 5.5% and re-compute the addition accordingly. 37. Ground No.3 is general in nature and needs no separate adjudication. Unsecured temporary loans - proof of returning the same was filed - HELD THAT - As perused the materials available on record and gone through the orders of the authorities below. The assessing officer has not given any finding whether these amounts were repaid during the year under consideration despite the matter was restored to the A.O. The assessee has placed on record proof of returning of amount through banking channel which is not rebutted by the revenue, therefore, we direct the A.O. to delete this addition Addition u/s 68 - HELD THAT - As perused the materials available on record and gone through the orders of the authorities below. It was incumbent upon the assessee to prove genuineness of the transactions, identity and creditworthiness of the creditors. The assessee has failed to discharge onus as placed on him to prove. Therefore, we do not see any infirmity in the order of the Ld. CIT(A) and the same is hereby affirmed. Unexplained bank a/cs of Fareeda Sultan - HELD THAT - As perused the materials available on record and gone through the orders of the authorities below. We find that the money credited to in the account of wife of the assessee amounting to ₹ 45,000/- has been added to the income of the assessee. In our view, the A.O. was not justified to make addition in the hands of the assessee. Without considering the fact that such a small amount could be saving from the gifts, etc. therefore, we direct the A.O. to delete this addition.

Issues Involved:
1. Legality of the assessment orders under section 153A/153C.
2. Justification of additions made by the assessing officer, particularly regarding agricultural income, rental income, and unexplained cash credits.
3. Application of net profit rate for the business income.
4. Admittance of additional grounds of appeal in the second round of appellate proceedings.

Issue-wise Detailed Analysis:

1. Legality of the Assessment Orders under Section 153A/153C:
The appellant argued that the additions made by the assessing officer were not based on any incriminating material found during the search, thus questioning the legality of the assessment orders under section 153A/153C. The Tribunal noted that the issue of legality was raised at a belated stage, and since the Tribunal had already set aside the assessment with specific directions, this issue could not be agitated at this stage. Therefore, the additional ground challenging the legality of the assessment was rejected.

2. Justification of Additions Made by the Assessing Officer:
- Agricultural Income: The Tribunal found that the assessee failed to provide sufficient evidence to support the claim of agricultural income from leased land. The authorities noted the absence of proof of agricultural activities, such as bills/vouchers for seeds and fertilizers, transport expenses, and proof of sale of agricultural produce. Consequently, the Tribunal upheld the disallowance of agricultural income from leased land.

- Rental Income: The Tribunal did not specifically discuss rental income in the summarized judgment, implying that the focus was primarily on agricultural income and business-related issues.

- Unexplained Cash Credits: The Tribunal upheld the addition of ?2,00,000 received from Anees Ahmed, noting that the assessee failed to provide supporting evidence such as a bank statement or return of income of the creditor. The Tribunal emphasized that the onus was on the assessee to prove the genuineness of the transaction and the creditworthiness of the creditor.

3. Application of Net Profit Rate for Business Income:
The Tribunal addressed the issue of estimating net profit rates for the assessee's transportation business. The assessing officer had applied a net profit rate of 8%, which the Tribunal found to be excessive. Referring to a previous decision in the assessee's own case, the Tribunal directed the assessing officer to apply a net profit rate of 5.5% instead, considering the nature of the business and past profit rates.

4. Admittance of Additional Grounds of Appeal:
The Tribunal discussed the legal precedents allowing the admission of additional grounds in the second round of appellate proceedings. However, it concluded that in the present case, the additional grounds could not be entertained as the issue of legality had already been addressed in the previous round of litigation. The Tribunal emphasized that the assessee had sufficient opportunity to raise these grounds earlier, and thus, the additional grounds were not admitted.

Conclusion:
- The Tribunal upheld the disallowance of agricultural income from leased land due to insufficient evidence.
- The addition of unexplained cash credits was sustained as the assessee failed to prove the genuineness and creditworthiness of the transactions.
- The Tribunal directed the assessing officer to apply a net profit rate of 5.5% for the transportation business, reducing the previously applied rate of 8%.
- The additional grounds challenging the legality of the assessment were not admitted due to the timing and previous opportunities to raise these issues.

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