9911796707
TMI Blog2003 (9) TMI 703X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows : The assessee is an individual who derives income from agriculture and also share income from the firm. In the return of income for the assessment year 1997-98, the assessee declared agricultural income of Rs. 6,04,950. Similarly, for the assessment year 1998-99, the assessee declared agricultural income of Rs. 5,36,448. In support of the agricultural income the assessee filed three lease deeds evidencing the fact that the assessee had taken agricultural lands on lease and following were the details of the lands taken on lease: ( i )Agricultural land to the extent of 39 acres in Khasara No. 302/23 and Khasara No. 302/30 of Village Mohbatta from one Shri Arun Agrawal son of Shri Lakhanlal Agrawal. ( ii )Another land to the extent of 39 acres in Khasara No. 302/28 in Mohbatta Village was taken on lease from one Shri Ripudaman Agrawal son of Shri Devdatta Agrawal. ( iii )Another about 15 acres of land in Khasara No. 302/32 in Village Mohbatta was taken on lease from one Jyoti Agrawal son of Shri Bharat Agrawal. Apart from confirmations of lease in favour of the assessee, the owners of the lands also confirmed the fact that they received the lease amounts as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nandkishore Sahu to the effect that if the sales have been effected to Binni Enterprises through Mandi turned out to be untrue, the assessee cannot be held responsible for the same as admittedly, the assessee had dealt with only through the intermediary Shri Nandkishore Sahu and did not know the purchaser. The Assessing Officer, however, was not convinced with this reply given by the assessee. Consequently, Shri Mohd. Farooqh, the friend of the assessee who introduced Kochayas Shri Nandkishore Sahu to the assessee as well as Shri Nandkishore Sahu who acted as Kochayas or intermediary in the sale of the agricultural produce of the assessee were examined by the Assessing Officer. In their examination, they confirmed the fact as stated by the assessee. Mr. Nandkishore Sahu, Kochayas, deposed that he had arranged for sale of the agricultural produce of the assessee and earned commission thereon. He also stated that whatever Mandi receipts were given to him by the purchaser had been given by him to the assessee. The Assessing Officer also examined one Shri Rameshwar Dewangan who was an employee of the assessee who was looking after the land of the assessee. He deposed that two thousand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident from the statement of land owners 1. Shri Ghanshyam Sunder Agrawal. 2. Shri Makhan Gopal Agrawal, Shri Baidu Hari Agrawal and other three farmers that from their land 30 per cent to 40 per cent of the total production is earned as net income. Even if, it is assumed that the assessee has done agricultural production, there is no possibility of earning more than 30 per cent after deducting lease rent. Considering the above facts, 50 per cent of agriculture income i.e., Rs. 3,02,475 (which is disproportionate) is being disallowed and added to the total income of the assessee. Since the assessee has furnished inaccurate particulars of his income in the return therefore, penalty proceedings under section 271(1)( c ) is initiated separately. Rs. Total income as shown in the return 2,17,750 Add : Agriculture income (as discussed) 3,02,450 Total income 5,20,225 Agricultural income 3,02,475 Assessed under section 143(3). Issue demand notice and challan. Charge interest as per law. Issue penalty notice under section 271(1)( c )." Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum of agricultural income. In the absence of evidence, on the part of the assessee, to substantiate the agricultural income, it was submitted by the learned Departmental Representative that the addition made by the Assessing Officer was justified. According to him, the CIT(A) has not taken due note of the various findings in the order of assessment while deleting the additions made by the Assessing Officer. He, therefore, submitted that the orders of the Assessing Officer for both the years under consideration be restored. 7. 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 Assessing Officer to come to a conclusion that 50 per cent of the agricultural income declared by the assessee was fictitious. Referring to the observations of the Assessing Officer about the returns from the agricultural land prior to the lease of the lands by the owners in favour of the assessee, he submitted that the return from the agricultural operations depends on various factors, like quality of paddy grown, quality of seeds, irrigation facility created, monsoon factor and over all efficient ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce to the purchaser who passed on the Mandi receipt and he in turn, gave this Mandi receipt to the assessee. The fact that the Mandi receipt evidences the sale of produce to Binni Enterprises is not in dispute. 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. Admittedly, the assessee did not have knowledge about the purchaser and it was Shri Nandkishore Sahu who knew the purchaser. The fact that the agricultural produce were sold and the price as stated in the receipt has been paid to the assessee has been categorically affirmed by the intermediary Mr. Nandkishore Sahu. The quantum of sale proceeds stated to have been received by the assessee on sale of agricultural produce cannot, therefore, be disputed. With regard to the quantum of income earned by the lessors of lands prior to the lease in favour of the assessee, as rightly contended by the learned counsel for the assessee, yield of agricultural produce depends on several factors and there can be no formula of universal application. Besides all these, the Assessing Officer has not brought out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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