2015 (9) TMI 703 - AT - Income Tax

Validity of Reopening of assessment - Held that - The reopening under section 147 is sought within four years from the end of the relevant assessment year. The department was having definite information in the shape of the statement of Shri Dilip J. Desai, who has denied to have made purchases of agriculture produce from the assessee in his statement recorded on oath by the department. Copy of the statement of Shri Dilip J. Desai was provided to the assessee and an opportunity to cross-examine him was also granted by the department to the assessee. In these facts of the case, it could not be said that the reopening of the assessment under section 147 is based on no information or it is a case of mere change of opinion on the part of the AO. Thus the action of the AO in reopening the assessment by issue of notice under section 147 was valid - Decided against assessee. Failure to discharge the burden of proving the agriculture income with substantive evidences - CIT(A) deleted the addition - Held that - We find that the AO in the immediate succeeding Asstt.Year 2005-06 has accepted the agriculture income declared at higher figure of ₹ 9,39,660/- by the assessee in scrutiny assessment framed under section 143(3) of the Act vide order dated 22.2.2007. The assessee has filed a chart showing the details of gross agriculture income, expenses incurred on agriculture operations etc. for the Asstt.Year 2001-02 to 2006-07. The assessee has also filed copy of the agreement dated 1.5.2003 entered into by the assessee with Shri Dilip J. Desai. Copies of the affidavits of three neighborhood farmers confirming that Shri Dilip J. Desai has plucked mangoes from the land of the assessee were also filed. We find that the Revenue could not controvert single evidence filed by the assessee in this behalf. The issue is covered in favour of the assessee with the decision of the ITAT, Ahmedabad in the case of co-owner of the same agriculture land, Smt. Nirmalaben Ramanlal Shah for the same Asstt.Year 2004-05 wherein the agriculture income from the same agriculture land including the fruits from the orchard declared by the assessee, were accepted. - Decided in favour of assessee.

Summary

Issues:
1. Validity of reopening of assessment under section 147 of the Act.
2. Addition of &8377; 8 lacs as agriculture income.

Analysis:

Issue 1: Validity of reopening of assessment under section 147 of the Act:
The Revenue appealed against the CIT(A)'s decision to quash the reassessment proceedings under section 147 of the Act. The Revenue argued that the reassessment was based on specific information received regarding the denial of purchases of agriculture produce by Shri Dilip J. Desai. The department provided the assessee with the opportunity to cross-examine Shri Dilip J. Desai. The Tribunal found that the reopening under section 147 was valid as it was within the prescribed time limit and based on concrete information. The Tribunal held that it was not a case of no information or change of opinion, thus allowing the Revenue's appeal.

Issue 2: Addition of &8377; 8 lacs as agriculture income:
The Revenue contested the deletion of the addition of &8377; 8 lacs by the CIT(A), claiming that the assessee failed to prove the agriculture income with substantive evidence. The assessee, owning agriculture land with mango and chikoo trees, had declared consistent agriculture income accepted in previous assessments. The Tribunal noted that the assessee had provided detailed evidence of agriculture income, including ledger accounts, revenue records, and agreements with other parties. The Tribunal found that the Revenue failed to refute the evidence presented by the assessee. Citing a similar case where the Tribunal accepted the agriculture income, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision.

Conclusion:
The Tribunal partially allowed the Revenue's appeal regarding the validity of reopening the assessment under section 147 of the Act. However, the Tribunal dismissed the Revenue's appeal against the deletion of the addition of &8377; 8 lacs as agriculture income, affirming the CIT(A)'s decision. The assessee's Cross-Objection was dismissed as the ground was not pressed.